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Originally published February 15, 2011 at 7:27 PM | Page modified February 16, 2011 at 12:57 PM

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Deal to bring Starbucks' Via to hotel rooms

Starbucks announced Tuesday that it will partner with St. Louis-based Courtesy Products to provide its Via Ready Brew in 500,000 U.S. hotel rooms and promised more single-serve news to come.

Chicago Tribune

CHICAGO — Starbucks announced Tuesday that it will partner with St. Louis-based Courtesy Products to provide its Via Ready Brew in 500,000 U.S. hotel rooms and promised more single-serve news to come.

The announcement follows speculation as to which partner the Seattle-based coffee giant would select for its push into the single-serve coffee market.

Starbucks expects to take control of its grocery and single-serve coffee business March 1, after it ends a 13-year agreement with Kraft Foods. The coffee chain has had an exclusive arrangement with Kraft's Tassimo machine, which has lagged competitors in the U.S.

Keurig, owned by Waterbury, Vt.-based Green Mountain Coffee Roasters, is the leader in the single-serve brewing market, with a 71 percent share, according to Janney Capital Markets.

"The single-serve coffee category in the U.S., and much of the world for that matter, is in its beginning stages of development," Jeff Hansberry, president of Starbucks' Consumer Products Group, said in a statement. "At this very early stage, there are numerous contenders, and no demonstrated, long-term winners related to either format or machines."

Hansberry added that more announcements will be forthcoming as Starbucks continues "to expand our presence in the premium single-serve category."

Starbucks is making Via packets for Courtesy's patented CV1 single-serve machine. The products will be available this fall.

Starbucks wants to become a bigger player in the single-serve market, which has been doubling in size each of the past three years. Single-serve comprises about 7 percent of the home coffee market, but is expected to reach 10 percent by 2012.

"Courtesy Products is continually looking for ways to innovate as well as provide our customers with amenities to make traveling more comfortable for their guests," Jim Theiss, CEO of Courtesy Products, said in a statement. "We know guests staying at luxury and premium hotels value a great cup of coffee. By pairing Starbucks coffees with our CV1 machine, we will be able to deliver a quick and delicious high-quality cup of Starbucks coffee right in their room or suite."

Starbucks launched Via in Chicago and Seattle two years ago, followed by a national launch in fall 2009. The product has generated more than $180 million in retail sales.

Although Starbucks' Tuesday announcement provided some answers about its single-serve strategy, a bigger question is who will distribute Starbucks' packaged coffee to grocery stores. That business represented the bulk of what Kraft and Starbucks did together, generating sales of about $500 million a year.

A federal judge ruled last month that Starbucks could end that relationship, but Kraft said it will appeal.

Information from Seattle Times staff

is included in this report.

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