May 21, 2013

Starbucks and Green Mountain Coffee in Strategic Long Term Relationship

Green Mountain and Starbucks

It's nice to see that your coffee parents aren't getting divorced, and it looks like Starbucks and Green Mountain are going the distance with their single serve coffee business relationship. Starbucks hopes to triple the number of SKUs they have with single serve coffee packs - including K-Cups and VUE packs. So far the two of them have shipped 850 million Starbucks K-Cups, and they hope to do this for a minimum of another 5 years. Congrats Mom and Dad coffee and we hope you two continue to rock out the hits for all of us in the single serve coffee world. Full release after the jump.

Starbucks and Green Mountain Coffee Roasters Enter Into Expanded, Long-Term Strategic Partnership

Starbucks to Support Expansion of GMCR's Keurig Brewer Platform Beyond North America and Triple the Number of Starbucks Single Serve Pack SKUs for Keurig Brewers Over Time

SEATTLE & WATERBURY, Va.--(BUSINESS WIRE)-- Starbucks Coffee Company (NASDAQ: SBUX), the world's largest coffee retailer, and Green Mountain Coffee Roasters, Inc. (GMCR) (NASDAQ: GMCR), a leader in specialty coffee and coffeemakers, have signed an agreement that provides for the expansion of their successful partnership for the manufacturing, marketing, distribution, and sale of Starbucks- and Tazo-branded single serve packs for use in GMCR's Keurig® single serve brewing systems globally.

Starbucks and GMCR first entered into partnership in March 2011. Following a very successful product launch, Starbucks has shipped more than 850 million Starbucks® coffee K-Cup® packs. Today's announcement recognizes the tremendous success of the Starbucks and GMCR strategic relationship, and both companies' desire to broaden, deepen and significantly extend their partnership.

The new, minimum five-year agreement announced today is a global single-serve coffee industry game changer. Under the new agreement, Starbucks will add brands and varietals to the already robust Starbucks® K-Cup® and Vue® pack portfolio of offerings for Keurig® single cup brewers, ultimately tripling the number of Starbucks® products and adding brands offered on the Keurig® platform. New brands will include Seattle's Best Coffee®, Torrefazione Italia® coffee, Teavana® Teas, and Starbucks® Cocoa. The new agreement reinforces Starbucks position as the exclusive licensed super premium coffee brand on the Keurig® K-Cup® and Vue® platforms, and further extends the Keurig® system's position as the exclusive low-pressure single cup brewing system for fresh-brewed Starbucks® coffee, Tazo® tea and the aforementioned Starbucks brands. Financial terms of the agreement were not disclosed.

"Starbucks new agreement with GMCR strengthens our leadership position in the premium single cup category, the segment of our industry that has grown nine times faster than the overall coffee category during the past year and a category that now accounts for more than 25 percent of total coffee sales in grocery," said Howard Schultz, Starbucks chairman, president and ceo. "The new agreement also affords us the opportunity to expand our successful K-Cup® and Vue® pack portfolio of products and brands beyond North America and to market them on a truly global scale over time. It's a win-win-win agreement for both companies and for premium coffee consumers around the world. Going forward, not only will Starbucks continue to leverage GMCR's growing installed Keurig® brewer base totaling millions of North American households, but GMCR will directly benefit from the many Starbucks brand assets we bring to bear on the coffee marketplace as it pursues global expansion of its business and platform."

"With steady, strong consumer adoption, our innovative Keurig® brewing system has proven to be a disruptive technology for the hot beverage category, providing consumers the benefits of convenience, consistent great taste and -- importantly -- beverage variety, while providing our partner brands a valuable channel for growth. This agreement further strengthens our North American partnership with Starbucks and expands our relationship to explore global single-serve opportunities," said Brian P. Kelley, GMCR's President and CEO. "We have been delighted with the performance of the Starbucks brand portfolio and are confident the Keurig® system has significant, untapped potential to continue to change consumer behavior. And we are looking forward to offering a greater variety of premium Starbucks® coffee and Starbucks brands to consumers around the world for the long-term."

With expanded availability and distribution, sales of Starbucks® coffee K-Cup® packs increased more than 75 percent in March 2013 over the previous year. And just last month, Starbucks® coffee K-Cup® packs were named one of the top 10 launches of 2012, according to Information Resources, Inc. (IRI), a leading market research company focused on the consumer packaged goods (CPG) and retail industries.

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Posted by Jay Brewer at May 21, 2013 5:23 AM

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