SEATTLE -- Starbucks agreed to give up its right to be the exclusive purveyor of "super premium" coffee to Keurig Green Mountain, as the maker of the Keurig K-cup brewing system devises new strategies to fend off a recent surge in competitors in the burgeoning market for single-serve coffee pods.
Keurig saw important intellectual property licenses protecting the K-cup expire in 2012. Since then, rival coffee producers have been manufacturing pods compatible with the best-selling brewing system without paying license fees to Keurig.
Starbucks has been an important partner for Keurig, launching licensed K-cups in late 2011, and last year signed a five-year agreement that allowed Starbucks to add more brands to its K-cup line-up. Through the end of last year, Starbucks had shipped more than 2 billion K-cup pods.
The companies announced Friday that the deal was amended to end Starbucks' exclusivity at the top of the line of K-cup's products, in exchange for "improved business terms" and the opportunity to market a wider variety of pods.
Also on Friday, Keurig announced it struck a new deal with Starbucks rival Peet's Coffee & Tea, which broke into the single-cup pod market seven months ago. Financial terms were not disclosed, but Keurig will distribute licensed K-cup packs for coffee and tea.
Sales of coffee made in single-serve brewing systems barely existed five years ago but now account for more than a quarter of every dollar Americans spend on coffee to drink at home. The category, led by Keurig, is growing quickly, even as others challenge its dominance.
Keurig executives have said that unlicensed K-cups have taken 14 percent of the market. To counter the growth of these often-cheaper rivals, Keurig is launching a new version of its brewing system and also seeking to lure unlicensed K-cup makers into becoming licensed partners.