Kraft Prepares Global Coffee Launch

18 February 2004

Kraft Foods is readying its biggest product launch in nearly a decade -- a new coffee preparation system.

The beleaguered US giant -- the world's second largest food company (after Switzerland's Nestlé) -- hopes the launch, its largest since the mid-1990s, will lift the company after a dismal few months. Its earnings have sagged following increased competition from the private-label sector and several new product disappointments.

Kraft will work alongside an unnamed appliance manufacturer to offer a low-pressure coffee brewing system. This will be promoted as a quick and cheap way to make single cups of coffee at home that taste like those from restaurant and café professional machines.

Kraft will offer coffee 'pods' (similar to tea bags) that are compatible with the equipment. These will be marketed within its existing Maxwell House and Gevalia brand ranges.

The new product is the first to be unveiled since Kraft appointed Roger Deromedi as sole chief executive in December (he previously shared the role with the high-profile Betsy Holden). Indeed, the coffee system was developed by the group's international division, which Deromedi used to manage.

Kraft hopes to roll out the range first in Europe later this year, then in the US. However, it faces established competition. Sara Lee and Philips introduced the Senseo low-pressure coffee system in Europe four years ago, and US appliance firm Salton launched a similar product under its Melitta brand in September.

• STOP PRESS (Wednesday 08.30 GMT)
P&G 'Me Too' Rains on Kraft's Parade

Procter & Gamble on Tuesday announced it too is poised to enter the burgeoning market for low-pressure home coffee brewing systems.
    Like Kraft, P&G will introduce a single-cup system using coffee 'pods' to produce a "coffee-house style" beverage. Branded Home Café, it will be marketed within the fmcg giant's Folgers and Millstone brand range.
   No fewer than four different appliance-makers -- Applica, which makes Black & Decker appliances, Krups, Sunbeam and Hamilton Beach -- will produce Home Café coffee machines for P&G.

Data sourced from: Financial Times; additional content by WARC staff