Shares ofspecialty coffee maker,
Keurig Green Mountain, Inc.
) rose 2% after it announced an amendment to its five-year
agreement with coffee giant,
) which will provide it with better business terms. In exchange,
Starbucks will be giving upexclusivity license for the high-end
K-Cup pods that it distributes for Keurig Green Mountain.
Under the exclusive deal, Starbucks sells its coffee in
single-serve pods -Vue and K-Cup portion packs - that can be
brewed on Keurig Green Mountain's Keurig brewers. However, the
terms have now been amended to rule out the exclusivity terms in
exchange for improved business terms and access to wider variety
of K-Cup packs for Keurig Green Mountain.
KeurigGreen Mountain has similar several strategic agreements
with other coffee and beverage companies like
Dunkin Brands Group Inc.
) to offer the signature drinks of these companies in Keurig
Green Mountain's K-cups and Vue packs.
In fact, on Mar 14, Keurig Green Mountain signed a similar
partnership deal with Peet's Coffee & Tea, a specialty coffee
and tea company. Under the deal, Peet's will manufacture and
distribute a line of its coffee and tea products in K-Cup packs
that can be used on Keurig brewers.
After the expiry of the K-cup patents in Sep 2012, competition
intensified for Keurig Green Mountain after several unlicensed
versions of the portion packs became available, which were
competitively priced. As a result, the company lost a significant
share in the past few quarters. In order to protect its market
share, Keurig Green Mountain is now approaching all major
retailers so that they use Keurig Green Mountain's portion packs
instead of their own unlicensed versions.
Currently, Keurig Green Mountain has a Zacks Rank #4
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