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Starbucks and GMCR form long-term partnership

Starbucks to support expansion of GMCR’s Keurig platform beyond North America

May 8, 2013
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Seattle-based Starbucks Coffee Co. and Waterbury, Vt.-based Green Mountain Coffee Roasters Inc. (GMCR) signed an agreement to expand their 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.

Starbucks and GMCR first entered into a partnership in March 2011. Following a successful product launch, Starbucks has shipped more than 850 million Starbucks coffee K-Cup packs, it says. This extended partnership recognizes the success of the Starbucks and GMCR strategic relationship and both companies’ desire to broaden, deepen and significantly extend their partnership, the companies say. With expanded availability and distribution, sales of Starbucks coffee K-Cup packs increased more than 75 percent in March 2013 compared with the previous year. And last month, Starbucks coffee K-Cup packs were named one of the Top 10 launches of 2012, according to Chicago-based Information Resources Inc. (IRI).

Under the new minimum five-year agreement, Starbucks will add brands and varietals to the 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 also 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 chief executive officer, 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. 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.”

Brian P. Kelley, GMCR’s president and chief executive officer, added in a statement: “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. 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.”

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