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Green Mountain Deal 'Major' for Investors: Starbucks CEO

Thursday, 10 Mar 2011 | 5:11 PM ET
AP

On the day that coffee giant Starbucks announced the partnership with single-serve provider Green Mountain, Starbucks CEO and chairman Howard Schultz, stopped short of saying how much investors could expect from the arrangement, but called it a “major opportunity,” whose economics would be accreted next year.

“We get to leverage the installed base that Green Mountain

has. There are over 12 million [Green Mountain] machines out there,” said Schultz.

“We look at Starbucks core customers, 80 percent of which have not bought a single-serve machine yet.”

Neither company has released the fiscal particulars of the deal, but Schultz told CNBC Thursday that Starbucks did not put up capital.

The Green Mountain partnership completes the circle giving Starbucks a “portfolio” in the single-serve arena, said Schultz.

“It [the partnership] builds off of the success we’ve had with VIA [Starbucks’s instant coffee in individual packets] in the last year, the other single-serve solution we’ve had with our coffee, which is now a $200 million business,” he added.

Starbucks CEO on Green Mountain
An outlook on the beverage company's business strategy and the company's partnership with Green Mountain, with Howard Schultz, Starbucks chairman/CEO and founder and CNBC's Herb Greenberg.

“Just a few weeks ago, we announced the relationship with Courtesy, which gives us a single-serve solutions in 500,000 hotels.”

Schultz said he’s not concerned about inflation, but the cost of coffee, which recently rose, then dropped.

He said the China represents a growth area, but expressed concern about the US market, which has a “fragile” economy.

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