Green Mountain to make Kirkland K-Cups for Costco

A Green Mountain Coffee single-serve K-Cup is pictured in New York, May 3, 2012. REUTERS/Brendan McDermid

(Reuters) - Green Mountain Coffee Roasters Inc GMCR.O will add the Kirkland Signature brand to its lineup of K-Cups as it battles lower-cost competitors, in a deal with Costco Wholesale Corp COST.O that sent its shares up 9 percent.

Green Mountain has seen a host of private label brands launch cups compatible with its Keurig machines. Analysts have said these store brand products stand to pressure prices in the category overall, and potentially, Green Mountain’s profit margins.

The Kirkland Signature K-Cup, which will be sold in two varieties in 100-count boxes, “creates more options for value-oriented consumers,” Green Mountain said in a statement.

Its shares closed $2.16 higher at $26.34 on the Nasdaq on Thursday.

Reporting by Martinne Geller in New York; editing by Tim Dobbyn and Matthew Lewis