Is a Starbucks-Green Mountain Partnership in the Works?

Van Winkle expects single-cup coffee sales, including brewing machines and coffee pods, to rise to $4 billion in the U.S. this year.

Richard Haffner, head of global beverage research at Euromonitor, told Reuters that U.S. sales of single-serve coffee pods (excluding brewing machines) grew to $600 million in 2010. Global sales were $4.3 billion last year.

Vote: Should Starbucks partner with Green Mountain or launch its own single-cup brewing machine?

Van Winkle added that, "What is new to our conclusions, based on these most recent articles, is that we suspect a Starbucks-Green Mountain partnership might revolve around the launch of a new Keurig brewer technology that is about to be tested. Both articles indicate that a partner has yet to be announced. However, we know that Keurig's patent portfolio around single-serve gives it a significant advantage by limiting competitive risk, and that the company has a brand that resonates with consumers."

Commenting on the "more than coincidental" timing of a new Keurig brewer launch from Green Mountain, Van Winkle went on to say that "attaching to the new Keurig technology could put Starbucks in a position to expand the range of beverages available, to lead a better solution than is in the market today, and to be the driver of adoption utilizing its stores for distribution."

"Keurig is the dominant brand in single-serve coffee with rapidly rising consumer adoption of its brewers seeding a market opportunity that Starbucks can't resist," Van Winkle said.

Despite widespread speculation about a Starbucks-Green Mountain partnership, Starbucks spokeswoman Lara Wyss would not confirm any such agreement.

"Starbucks is currently exploring all options to expand its presence in the premium single-cup coffee category, beyond our initial entry with Starbucks Via Ready Brew," she told Reuters.

"Single-serve is still in the earliest stages and no clear delivery system has been established as the gold standard so it is important for us to look at all options," Wyss said.

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