Dunkin’ Donuts picks Keurig for single-cup brewing system

  • 25 Feb 2011 11:28 AM
    Message # 532985

    Dunkin’ Donuts will partner with Green Mountain Coffee Roasters Inc. to offer packets of its coffee for the Keurig single-cup brewing system. The news, released yesterday, comes a week after rival Starbucks Corp. said it would use a Keurig competitor.

    Dunkin’, a Canton-based coffee-and-baked-goods chain, entered the single-serve home coffee business last year, with packets that can be used in single-serve machines made by Mr. Coffee, Cuisinart, Black & Decker, and others.

    This summer, Dunkin’ will roll out its single-serve K-Cup portion packs from Keurig, a unit of Waterbury, Vt.-based Green Mountain that is the dominant player in the single-serve market.

    The packets will be available only at participating Dunkin’ Donuts restaurants, and not in grocery stores.

    “Our goal is to give our customers more ways to enjoy Dunkin’ Donuts coffee,’’ said Dunkin’s president, Nigel Travis.

    Dunkin’s move comes after one of its biggest competitors chose another company for its single-serve offering, despite speculation it would partner with Green Mountain. On Feb. 15, Green Mountain shares fell 6 percent when Starbucks said it would team up with Courtesy Products, whose CV1 brewer is in about 500,000 US hotel rooms.

    Still, speculation continues that if Starbucks wants to break into the home brewing market, it could reach a deal with Green Mountain once the Seattle coffee chain ends its exclusive arrangement with Kraft Food Inc. on March 1.

    “The reality is that Keurig single-serve home brewers are becoming a major force in home coffee consumption,’’ said Scott Van Winkle, an analyst with Canaccord Genuity, an institutional investment bank. “If you’re not available in K-Cups, you’re going to lose market share.’’

    Green Mountain Coffee’s chief executive, Lawrence J. Blanford, estimates that Keurigs are in 6 percent to 8 percent of the US homes that own coffee machines.

    Blanford declined to discuss Starbucks yesterday, but said the agreement with Dunkin’ is part of a strategy to align “with the strongest coffee brands.’’

    In a note to investors, a Janney Capital Markets food analyst, Mitchell Pinheiro, said that the Dunkin’ deal is a big score for Green Mountain.

    “The Dunkin’ Donuts K-Cup agreement is a nice win for Keurig as it brings one of the strongest US coffee brands into its portfolio,’’ the analyst wrote. Janney owns Green Mountain shares.

    Pinheiro also indicated he does not expect the Dunkin’ deal to pressure Starbucks into joining Keurig. “The Dunkin’ coffee flavor profile is vastly different than Starbucks,’’ he said.

    Green Mountain Coffee shares closed down 71 cents to $41.10.

    Chris Reidy can be reached at reidy@globe.com.


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