UPDATE 1-Green Mountain down on Starbucks' rival launch plans

By Mihir Dalal and Lisa Baertlein BANGALORE/LOS ANGELES, Nov 12 (Reuters) - Shares of Green Mountain Coffee Roasters Inc fell 5 percent after Starbucks Corp said it would launch its own single-cup coffee maker, a move that could challenge Green Mountain's near monopoly in the market and dashes hopes of a partnership between the companies. The world's largest coffee company confirmed a Wall Street Journal report that it would sell a single-cup brewer and accompanying pods as an extension of its Via instant coffee line-up. Starbucks, which currently partners on Kraft Foods Inc's Tassimo, a rival to Green Mountain's Keurig, did not announce a release date. "Simply put, this is negative for Green Mountain Coffee Roasters in that it increases competition in single-cup coffee, where the company's Keurig brand has an approximate 80 percent share of the category," Stifel Nicolaus analyst Mark Astrachan said in a note to clients. However, SunTrust Robinson Humphrey's William Chappell said he was uncertain whether a Starbucks launch would pose a threat to Green Mountain, which has crushed competition from food giants such as Sara Lee Corp and Kraft Foods. "We doubt that a Starbucks-owned machine would change the competitive landscape and it could actually help GMCR if Tassimo's exclusive relationship with Starbucks is scrapped," said Chappell, who backed his "buy" rating on Green Mountain stock. Some analysts had believed that a collaboration between the companies -- which might have involved Starbucks making coffee refills for Green Mountain's Keurig brewers -- would have been mutually attractive. The possibility of such a move had increased after Starbucks said it would end a distribution deal with Kraft earlier this month. However, the company has not yet said whether it would end its partnership with Tassimo, too. SunTrust's Chappell said Starbucks' announcement seems to end the possibility of a near-term partnership with Green Mountain. Vermont-based Green Mountain declined to comment. Shares of Green Mountain were down 4 percent at $31.46 on Friday afternoon on Nasdaq. Starbucks shares were down 2 percent at $30.16. (Additional reporting by Lisa Baertlein in Los Angeles; Editing by Anne Pallivathuckal) Keywords: GREENMOUNTAIN/ ([e-mail]; within U.S. [phone]; outside U.S. [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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