Starbucks expands K-Cup deal with Green Mountain

Starbucks Corp. has expanded its partnership with Green Mountain Coffee Roasters Inc. for the production of K-Cup packs, tripling the number of brands available for the single-cup platform, the company said Wednesday.

The new five-year agreement comes as the Seattle-based coffee giant positions itself to take its consumer packaged goods, or CPG, division global. Last week, Starbucks said it was restructuring management to set up growth for its retail business overseas.

Financial terms of the deal were not disclosed.

“Starbucks’ new agreement with Green Mountain 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,” Starbucks chair, president and chief executive Howard Schultz said in a statement.

“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,” he added, noting that Green Mountain will benefit from the many Starbucks-brand assets that are growing worldwide.

“It’s a win-win-win agreement for both companies and for premium coffee consumers around the world,” Schultz said.

Starbucks Channel Development, what the company calls its CPG business, operates in 20 of 62 countries where the company’s coffeehouses are located. Officials said there’s room for growth, especially in China, where a rapidly expanding middle class is hungry for more Starbucks-branded products, the company said.

In the U.S., K-Cups have become a significant revenue booster, credited with driving the company’s 7-percent increase in net revenue of $343.5 million during the second quarter for channel development alone.

Starbucks first signed with Green Mountain in March 2011 for the manufacturing, marketing, distribution and sale of Starbucks- and Tazo Tea-branded K-Cups, which are designed for use in Green Mountain’s Keurig and Vue brewing systems. Since the launch, Starbucks has shipped more than 850 million K-Cup packs, the company said.

Under the new agreement, K-Cups will also be available for Seattle’s Best Coffee, Torrefazione Italia Coffee, Teavana Teas and Starbucks Cocoa.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout