Starbucks recommits to Green Mountain
Starbucks will sell coffee for Green Mountain’s single-serve machines for at least five more years — at the same time it markets a competing machine.
Seattle Times business reporter
Starbucks will continue making coffee and tea inserts for Green Mountain Roasters’ Keurig single-serve brewing systems for at least the next five years, the two companies said Wednesday.
Green Mountain is the company that bought Seattle-based Tully’s Coffee’s wholesale business four years ago.
The Waterbury, Vt., company’s stock took a hit last year, when Starbucks said it would market its own single-serve coffee machines, called Verismo. That machine appears to be in direct competition with Green Mountain.
Wednesday’s announcement of the renewed agreement indicates Starbucks is committed to Green Mountain’s Keurig technology, as well as its own, at least for now.
Starbucks first entered a partnership with Green Mountain in March 2011, following heavy speculation that the coffee-shop chain was going to acquire the Vermont company.
Starbucks CEO Howard Schultz wrote in a memo to executives shortly before that deal was struck: “[T]hese are very early days, and history has demonstrated time and again that patents alone do not determine market winners — deep customer engagement, best-in-class experiences and quality do.”
Green Mountain’s patent for the Keurig machine pods recently expired.
Some thought Schultz’s memo meant Starbucks had tried unsuccessfully to buy Green Mountain and would compete with it instead. That speculation appeared to be confirmed when Starbucks said last year it would market its Verismo, which are now on the market.
At the same time, sales of Starbucks packets for Green Mountain’s Keurig machine were up 75 percent this March over the previous March, Starbucks said.
The additional commitment was announced after the stock market closed Wednesday. At that time, Green Mountain also announced a 42 percent increase in its second-quarter profit. Its shares climbed 16 percent to $69.15 in after-hours trading, after rising 92 cents, or 2 percent, to $59.48 in regular trading.
Starbucks’ stock went up 22 cents to $62.41 in regular trading, then rose 54 cents to $62.95 after the late-day announcement.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org. Twitter @AllisonSeattle.