Green Mountain's Slam Dunk

Starbucks' (Nasdaq: SBUX) plans in the single-serve coffee market brewed up a ton of rumors recently, but the coffee giant's moves now sound more than a little lukewarm. That's because Green Mountain Coffee Roasters (Nasdaq: GMCR) is partnering up with rival Dunkin' Donuts in the single-serve coffee market.

As it stands, Green Mountain's already got agreements with companies like Caribou (Nasdaq: CBOU), JM Smucker's (NYSE: SJM) Folgers and Millstone, Hain Celestial (Nasdaq: HAIN), Newman's Own, and many others to provide K-Cups for its Keurig single-serve brewers. Now that it's got Dunkin' Donuts on the list, this fresh cup o' caffeinated competition sounds like a coup for Green Mountain -- at Starbucks' expense.

Starbucks recently announced a deal to provide single-serving coffee in hotel rooms through Courtesy Products, but that hardly sounds exciting by comparison. Many investors had really wanted to hear that Starbucks and Green Mountain would team up with K-Cups, but it's increasingly sounding like Starbucks will go it alone in the single-serve market.

Meanwhile, Dunkin' Donuts appears to enjoy a cult following that can't bear to drink Starbucks, which could make this a major win for Green Mountain and its Keurig brewers. That said, the Dunkin' Donuts K-Cups will only be available in the donut chain's stores, which could limit the impact for the time being.

Green Mountain stock's too expensive for my blood, packing major risks to boot. However, its deal with Dunkin' certainly could lure in new customers while slam-dunking some of Starbucks' plans for a better foothold in the single-serve market. After all, the more Keurig single-cup brewers installed in consumers' households, the less potential customers there are to wander into Starbucks' stores on a regular basis, or even to buy Via instant coffee, its own version of a single-serve convenient cup.

What do you think of this development? Brew up some fresh insights in the comments box below.