Green Mountain Strikes Coffee Deal With Costco

WATERBURY, Vt. (AP) -- Green Mountain Coffee Roasters (Nasdaq: GMCR  ) has struck a deal with Costco (Nasdaq: COST  ) to manufacture store-brand packs of coffee for the retailer.

Green Mountain developed two blends for Costco's Kirkland Signature lines, a lighter breakfast blend and a darker roast.

Costco will begin selling the single-serve coffee pods, for use in Green Mountain's Keurig single-cup brewing system, in mid-December.

Green Mountain pioneered the single-serve coffee in the U.S. It has partnered with a number of companies, such as Tully's Coffee, Newman's Own, and Caribou Coffee (Nasdaq: CBOU  ) .

The company has struggled, however, as its patents expire and competitors release their own single-serve coffee makers. That includes Starbucks (Nasdaq: SBUX  ) .

Shares of Green Mountain Coffee Roasters had fallen 65 percent since its high this year of $69.75 in February.

Shares of Green Mountain jumped $2.10, nearly 9 percent, to $26.28, after it announced the agreement with Costco, which is the largest wholesale club in the nation.

The Motley Fool owns shares of Costco Wholesale and Starbucks and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters, short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, and short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Costco Wholesale, Green Mountain Coffee Roasters, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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