Kraft And McDonald's Form Coffee Alliance

By Sam Lewis

McCafe coffee products to be tested in select supermarket aisles next year

Back in 2011, Starbucks and Kraft’s partnership came to quite a bitter end. Kraft, the owner of the Tassimo Brewing system, formed a partnership which created a line of Starbucks coffee Tassimo T-Discs. Starbucks called the products “unacceptably poor,” inevitably leading to a court battle, which Starbucks won. This left Kraft with a bitter taste in its mouth that was more than just bad coffee. Now, Kraft is out looking for another partner in the food service and hospitality industry to strengthen the beverage side of the company.

An Oct 30 conference call between analysts and Kraft’s CEO Tony Vernon revealed that the food manufacturer is now testing a partnership featuring McDonald’s’ McCafe Premium Coffee. “Kraft and McDonald’s are out selling a test market as part of a comprehensive coffee collaboration in the U.S.,” Vernon says in the call. “We want to work with McDonald’s to help consumers enjoy McCafe Premium Coffee in the comfort and convenience of their own homes.”

The test is expected to take place next year in several still undisclosed markets. Test markets will receive McCafe coffee in several new formats including roasted, bagged, and single serving cup coffee formats that will be in the coffee aisle of grocers and other retailers. The price point of all testing products remains undisclosed.

A statement from McDonald’s says it will be “building on the momentum of our McCafe beverages in our restaurants by expanding these options.” This may turn out to be a beneficial move on McDonald’s’ behalf. The restaurant has received a big boost in sales by inserting McCafe beverages into its menu. With chains like Starbucks and Dunkin’ Donuts selling consumers coffee in bags and single serving cups in retail aisles, it makes sense for a worldwide food leader like McDonald’s to capitalize on that market.

For Kraft, the partnership presents an opportunity with a household name to market and distribute products that are likely succeed. Kraft’s beverage segment received a boost in 2011 when it began selling Gevalia coffee to supermarkets. By adding another proven brand to its beverage line, Kraft is likely to see continued growth within it.