Nation’s Restaurant News reports in a long-expected move, and one that could net Starbucks Corp. as much as $200 million in incremental sales during year one, according to an analyst, the largest coffeehouse chain finalized its licensing deal for single-cup distribution.
Green Mountain Coffee Roasters Inc. will partner with Seattle-based Starbucks Corp. to help the coffeehouse giant stake its claim in the $2 billion, single-cup premium coffee category.
Terms of the deal announced Thursday were not disclosed. The licensing relationship will allow for the manufacturing, marketing, distribution and sale of Starbucks and Tazo Tea brand K-Cup portion packs for use in Green Mountain’s Keurig Single-Cup brewing system.
The news boosted Starbucks’ stock price more than 9.9 percent on Thursday, to close at $37.97. During the day Thursday, the stock hit a new annual high of $38.21.
Analysts hailed the move, saying the sale of single-cup Starbucks coffee and Tazo tea for the home Keurig user will generate incremental sales similar to the company’s instant Via Ready Brew, which in its first year surpassed $135 million in sales.
Securities analyst Sharon Zackfia of William Blair & Co. wrote in a report Thursday that sales of K-Cups will largely be incremental, as sales of Via have been, “with some potential modest cannibalization of whole bean sales, but at a very favorable margin.”
Read more: Nation’s Restaurant News