Starbucks and Green Mountain/Keurig

The Wall Street Journal reports that Starbucks has struck an agreement with Green Mountain Roasters. Starbucks will sell pods of its branded coffee for Keurig single-serve coffee brewing machines at various supermarkets, club stores, and the like. Starbucks may soon sell the K-Cup pods and Keurig machines at its stores and through its website as well.

Some rumors had swirled that Starbucks might even acquire Green Mountain, but in the end, a contractual arrangement took place. I find this development interesting in light of yesterday's blog post about GM deciding to acquire a sub-prime lender. GM had been working with an outside finance company, but chose to acquire it. Starbucks chose to go the route of partnership and contractual arrangement, rather than acquisition. Starbucks may have concluded that they can achieve most of the benefits of cooperation without the costs associated with doing a deal and subsequent acquisition integration. Now, they may eventually choose the acquisition route... this may just be a step toward even closer cooperation. Starting with this cooperative arrangement seems like a good "real option" approach. In other words, let's make an investment now in a partnership with the option of coming closer together down the road. Let's first learn about each other and get to know one another first. Perhaps too we'll learn we can cooperate perfectly well without having to integrate fully.