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.


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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.