Starbucks has been looking to beef up its presence in the fast-growing single-cup coffee market and Green Mountain is considered one of its leaders. Rumors swirled last month that the two were in potential partnership talks.
The agreement announced Thursday between the Seattle coffee chain and the single-serve coffee brew maker provides for the manufacturing, marketing, distribution and sale of the pods for Green Mountain's Keurig single-cup brewing system.
Terms were not disclosed. Green Mountain's stock jumped $3.96, or 9.1 percent, to $47.60 in premarket trading. The shares have traded between $21.83 and $47.81 over the past year.
The companies plan to make the K-Cup single-cup pods available at food, drug, mass, club, specialty and department store retailers in the U.S. and Canada starting in the fall.
Starbucks may have a captive audience once the pods become available for Keurig machines, as President, CEO and Chairman Howard Schultz said in a statement that its research indicated that more than 80 percent of Starbucks customers do not yet own a single-cup brewer.
Starbucks is already a player in the single-cup market. Last year it rolled out Via Ready Brew. In February the company announced a single-cup coffee deal with privately held Courtesy Products. The agreement will have Starbucks providing coffee for Courtesy's brewers in up to 500,000 hotel rooms starting this fall.
When the Courtesy deal was announced, market speculation softened that a potential Starbucks-Green Mountain partnership would occur. But Starbucks said at the time that its customers should still "look for further announcements."