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Starbucks gives up exclusive license to high-end Keurig pods

[March 15, 2014]  By Phil Wahba

(Reuters) — Starbucks Corp <SBUX.O> will get a wider selection of Keurig Green Mountain Inc's <GMCR.O> single-serve K-Cup coffee packs, in exchange for giving up the exclusive license for Keurig's highest-end coffee pods, the companies said on Friday.

Keurig Green Mountain shares rose 8 percent on Friday to $114.71 on speculation changes to the agreement will open the door for it to secure licenses with other leading coffee brands with which it does not already have such arrangements.

"We think the amended agreement allows Green Mountain to pursue a relationship with Peet's, the largest unlicensed super-premium not currently on the Keurig system," Stifel Nicolaus analyst Mark Astrachan said in a research note.

The new terms to the Starbucks-Keurig deal are changes to the five-year agreement the two companies reached last year that tripled the number of Starbucks drinks sold in K-Cups, adding Seattle's Best and Torrefazione Italia coffees, Teavana teas and Starbucks cocoa.

Under terms of the 2013 deal, which replaced their first agreement in 2011, Starbucks kept the exclusive rights to be the licensed "super-premium coffee" brand on the Keurig K-Cup platforms.

The Keurig machine popularized the use of pods, small packets containing everything from coffee, tea or hot chocolate powder, for easy, in-home, one-cup brewing of hot drinks.

The company has sold more than 30 million Keurig machines around the world for use in homes, offices and other locations.

(Reporting by Phil Wahba in New York; editing by Paul Simao and Diane Craft)

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