Starbucks Corp will provide ground coffee for use with Courtesy Products' CV1 one-cup brewers in as many as 500,000 upscale hotel rooms in the United States beginning this autumn, the company said on Tuesday.

Looking for growth beyond its namesake cafes, the world's biggest coffee chain signaled the deal would be the first of many in the fast-growing single-cup brewing segment.

Financial terms of the Courtesy deal were not disclosed.

The announcement comes as Starbucks prepares for the March 1 termination of an agreement by which it provides coffee discs for Kraft Foods Inc's Tassimo one-cup home brewer.

Starbucks is also in partnership negotiations with Green Mountain Coffee Roasters , a source close to the talks told Reuters on Monday. Starbucks and Green Mountain declined comment regarding those talks.

Shares of Green Mountain were down 3.8 percent, or $1.74, at $44.61, while Starbucks was off 0.6 percent, or 21 cents, at $33.37.

Many analysts expect a tie-up between the two companies because Green Mountain dominates the U.S. single-cup market with its Keurig brewer.

Canaccord Genuity analyst Scott Van Winkle estimates that U.S. sales in the single-serve coffee category will approach $4 billion in 2011, including brewing machines and coffee pods.

The single-serve coffee category in the U.S., and much of the world for that matter, is in its beginning stages of development, Jeff Hansberry, president of Starbucks' consumer products group, said in a statement.

At this very early stage, there are numerous contenders and no demonstrated, long-term winners related to either format or machines, said Hansberry.

Starbucks has said that it wants to keep all its single-serve options open, including partnerships with other companies, extensions to its Via instant coffee line or even selling single-cup brewing machines.

Look for further announcements from Starbucks as we continue to expand our presence in the premium single-serve category, Hansberry said.

Our suspicion is that Starbucks will partner with the leading products on a market-by-market basis, with little likelihood of exclusivity for a particular platform, William Blair & Co analyst Sharon Zackfia said in a client note on Tuesday.

The agreement with Courtesy could be the first clue as to this strategy, given Courtesy's pre-existing penetration in many premium hotel chains, Zackfia said.

(Editing by Derek Caney, Dave Zimmerman)

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