UPDATE 1-US Starbucks shops to start K-Cup sales next week

Thu Jun 7, 2012 2:36pm EDT

* Sales to start Tuesday, June 12

* Starbucks expects K-cups to boost FY12 EPS by 3-5 cents

* Shares in Starbucks, Green Mountain up modestly

By Lisa Baertlein

June 7 (Reuters) - U.S. Starbucks Corp stores will begin selling single-serve K-Cup coffee pods for Green Mountain Coffee Roasters Inc's popular Keurig brewers on June 12, the company told Reuters on Thursday.

The move, which comes months earlier than some on Wall Street had expected, will expand points of sale to most of the company's roughly 11,000 U.S. shops and should help boost results at both Starbucks and Green Mountain.

Single-cup brewers make fresh cups of coffee, or even espresso drinks, in seconds. The single-cup category is small compared with the overall coffee sector, but growing rapidly.

Due to strong sales through grocery stores, retailers like Target Corp and Starbucks own online store, executives from the world's biggest coffee chain in April said the contribution from K-Cups to this fiscal year's profit could come in at the top end of the forecasted range of 3 to 5 cents.

"From Starbucks' perspective, we view the earlier-than-expected roll out as a positive," Janney Capital Markets analyst Mark Kalinowski said in a client note.

"That said, keep in mind that marketing spend by Starbucks regarding K-Cups could be heavy, and as such, this could place a lid on the ultimate EPS upside potential from K-Cups both for the remainder of fiscal 2012 and for fiscal 2013 as a whole," he said.

The move also should benefit Green Mountain during a typically slower seasonal period for coffee, Kalinowski said.

Green Mountain gets the bulk of its profits from K-Cup sales.

Shares in Starbucks were up 1.4 percent to $54.23, while Green Mountain was up 0.3 percent to $24.59.

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