One-cup coffee battle brewing

08:42, February 24, 2011      

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Big food and beverage makers, including Kraft Foods Inc and Sara Lee Corp, are maneuvering to get more of the small but growing one-cup coffee market in the United States.

The small segment of the high-end coffee market has been in the news lately, due in part to the pending dissolution of a deal between Kraft and Starbucks Corp, whereby Starbucks provides coffee for Kraft's Tassimo one-cup brewer.

Kraft and Starbucks are disputing the terms of ending their partnership, by which Kraft also distributes bags of Starbucks coffee at supermarkets.

Despite the dent in sales the loss of Starbucks would cause, Kraft Chief Executive Irene Rosenfeld said she was committed to that business.

"Single serve has been an important part of our portfolio. It's growing quite nicely around the world and we expect that that will continue to be a key part of our coffee portfolio," Rosenfeld said at an industry conference in Boca Raton, Florida.

Kraft also sells the mid-range coffee brands Maxwell House and Yuban. It is unclear what premium brand will replace Starbucks and Kraft has declined to comment on any specifics, given the ongoing fight with Starbucks.

The demise of Starbucks' partnership with Kraft has led many to wonder what the world's biggest coffee maker will do next as it seeks growth outside its namesake cafes.

Marcel Smits, chief executive of Sara Lee, which has the Senseo brand one-cup brewer, said the flurry of headlines and focus on the single-serve market are good for the industry and prove coffee is an exciting business.

"It adds buzz to the category," said Smits at the same conference.

The buzz comes as Sara Lee is planning to split into two companies - one focused on its North American meat brands such as Jimmy Dean and Hillshire Farm, and one on coffee and tea brands such as Senseo, Douwe Egberts and Pickwick.

Green Mountain also announced a deal on Tuesday with Dunkin' Donuts to bring that company's coffee onto its machines.

Analysts said bringing in such a popular brand lessened the potential competitive threat from Starbucks.

Source: Shanghai Daily
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