By Lisa Baertlein
LOS ANGELES (Reuters) - STARBUCKS (SBUX.NQ)Corp
The announcement ended speculation that Starbucks would debut its own single serving brewer, sending Green Mountain's shares up more than 23 percent in premarket trading.
Both companies said the single-cup coffee market is the primary source of growth for the U.S. coffee industry, estimated by some analysts to be as large as $4 billion.
The companies will sell Starbucks coffee and Tazo teas pods for Green Mountain's popular Keurig machines at wholesale clubs, drugstores and grocery stores in North America starting this autumn.
The announcement follows a Reuters report last month that the two rivals would join forces in the booming $4 billion U.S. single-cup coffee segment.
Early in 2012, Starbucks cafes will begin selling Green Mountain's Keurig brewers as well as Starbucks coffee and tea pods.
Starbucks will be the exclusive licensed super-premium brand for the Keurig brewer for the length of the deal. The companies did not disclose terms.
Starbucks, the world's largest coffee company, has been looking to expand beyond its namesake cafes and wants to be a big player in the new and fast-growing single-serve coffee segment.
Green Mountain's Keurig enjoys a near monopoly in the U.S. single-cup coffee sector, with more than 80 percent market share, beating out rivals including Kraft's Tassimo machine, Sara Lee's
Many U.S. office workers are familiar with Keurig because the machines -- which allow users to make one cup of the coffee or tea of their choice at a time -- are a common fixture in company break rooms.
Starbucks on March 1 terminated an agreement by which it provided coffee discs for Kraft Foods Inc's
Starbucks entered the single-cup U.S. coffee market in September 2009 with the launch of its Via instant coffee. Some analysts think sales of Via could hit $1 billion globally by 2015.
Vermont-based Green Mountain has expanded rapidly through acquisitions, particularly Keurig. At the close of the stock market on Wednesday, shares of Green Mountain were trading at more than 35 times analysts' average earnings per share estimates for 2011.
Green Mountain shares were up $9.86 at $53.50. Starbucks were up $1.71 at $36.25.
(Reporting by Lisa Baertlein and Phil Wahba; Editing by Derek Caney)
