* Starbucks wants dominant position in single-cup market
* Green Mountain's Keurig brewer now dominates segment
* Green Mountain shares jump on news of negotiations
(Recasts to add Starbucks talks; adds LOS ANGELES to dateline,
By Lisa Baertlein and Mihir Dalal
LOS ANGELES, Feb 14 Starbucks Corp (SBUX.O) and
Green Mountain Coffee Roasters GMCR.O are in partnership
negotiations, a source close to the talks told Reuters on
Monday, sending Green Mountain shares surging.
Starbucks, the world's biggest coffee chain, wants to be a
big player in the new and fast-growing single-serve coffee
segment that Green Mountain currently dominates with its Keurig
Starbucks on Sunday said it planned to announce a new
product for the single-cup coffee market in the near future,
reviving speculation of a tie-up between the two companies.
The person close to the partnership talks would not say if
the pending announcement would involve Green Mountain.
A Starbucks spokesman declined comment on the negotiations.
Before news of the talks broke, Green Mountain spokeswoman
Suzanne DuLong said the company had no comment on speculations
around potential partnerships.
Green Mountain shares surged as much as 13.5 percent to a
new lifetime high of $47.81 before backtracking. Shares, which
were briefly halted after Reuters reported the talks, closed up
6.7 percent to $46.35.
Shares of Starbucks rose 0.7 percent to $33.58.
Canaccord Genuity analyst Scott Van Winkle said: "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."
On Sunday, Starbucks said it wants to keep all its options
open, including partnerships with other firms, extensions to
its Via instant coffee line or even selling single-cup brewing
The news came as Starbucks prepares for the March 1
termination of an agreement by which it provides coffee discs
for Kraft Foods Inc's KFT.N Tassimo one-cup home brewer.
Starbucks is also ending its grocery distribution agreement
with Kraft on March 1.
Green Mountain enjoys a near monopoly in the single-cup
coffee sector -- with more than 80 percent market share -- and
has hammered competition from bigger companies such as Kraft
and Sara Lee SLE.N, which sells the Senseo brewer.
JPMorgan analyst John Ivankoe said in a December note to
clients that a single-cup product could easily be a $1 billion
revenue opportunity for Starbucks in the U.S. alone.
(Editing by Bernard Orr)