Tuesday, February 17, 2004

P&G enters single-serving coffee market



By John Nolan
The Associated Press

In the competition for the hearts and palates of coffee drinkers, Procter & Gamble Co. is jumping into a new product category that allows people at home to brew single servings of cafe-style coffee from specially designed packets and machines.

[img]
Michael Griffith, president of Global Beverages at Procter & Gamble, talks about the company's new Home Cafe coffee maker.
(AP photo)
Promoters say the technique offers speed and convenience, allowing a drinker to brew in one minute a cup of a certain coffee flavor, followed by a different blend for another person, if desired. It is faster and more user-friendly than waiting five or six minutes for a conventional coffee maker to turn out a pot of java that requires each consumer in the household to share the same flavor, said Michael Griffith, president of P&G's global beverage business.

Griffith said he hopes the new coffee maker will eventually prompt people to retire their automatic-drip coffee makers, which came into use in the 1970s. Unlike those, the new units use pressure to force hot water down through the coffee, which advocates say wrings more taste from the blend, similar to the method espresso makers use.

"What we're looking at here is the next revolution in coffee making," Griffith said during an interview in his Cincinnati office.

P&G on Tuesday is announcing details of its new alliance with coffeemaker producers Black & Decker, Krups, Mr. Coffee and Hamilton Beach to come out with "Home Cafe"' single-cup coffee - in flying saucer-shaped, teabag-like packets called "pods" which fit into the coffeemakers designed for their use. The new "Home Cafe"' line, in the works for three years, will feature P&G's Folgers and Millstone brands.

Typically, each pod holds 5 to 9 grams of coffee. The first of the coffee makers from the P&G-led alliance will be Black & Decker's black plastic Applica model, followed by those of the other manufacturers in the alliance.

The suggested retail price for the coffee maker will start at $59.99. The Folgers and Millstone coffee supplies for those machines are to sell at a suggested retail price of $3.99 for a pack of 14 to 18 pods.

They will appear on store shelves first in the test market of Boise, Idaho, in late February and then nationally in May, Griffith said.

The alliance plans to spend more than $50 million in the first year promoting the products, P&G spokeswoman Tonia Hyatt said.

Roger Deromedi, chief executive officer of Kraft Foods Inc., has said he plans to announce details of what will be Kraft's competing product when he attends the annual Consumer Analyst Group of New York conference on Wednesday.

It is to be the first major new product announcement for Deromedi at the Northfield, Ill.-based food maker since he took over sole control of Kraft in December. Kraft's coffees include Maxwell House and the upscale Gevalia brand.

Other food industry giants are working on their own versions of the cafe-quality coffeemakers including Sara Lee Corp., according to published reports. And several versions of the product have been introduced to the market in recent years for use in offices.

Kenneth Davids, author and co-founder of Coffee Review, an Internet-based buyer's guide to coffee, said he is surprised by the interest that the big companies are showing in the product.

"It didn't seem to be making a tremendous dent in the food service business, and the cup it makes didn't seem to be impressing people," Davids, who is based in Berkeley, Calif., said Monday. "I didn't see much buzz."

The coffee brewed by the single-serving units won't match the experience of freshly ground coffee, said John Gant, a master roaster for the Gimme coffee store in Ithaca, N.Y.

"The problem with it is this coffee is pre-ground and pre-packaged in little pods," Gant said. "It has the opportunity to stale tremendously."

But, Gant said, the price of the new units designed for home use is a relative bargain for coffee aficionados. Buying a small espresso grinder, for instance, could easily cost $500. Large ones sell for $900 and more.

It is too soon to tell how coffee drinkers will react to the new offerings, said spokesman Joseph DeRupo of the National Coffee Association. Its industry statistics indicate that coffee consumption has declined slightly, going from 3.2 cups per day in 2002 to 3.0 cups per day in 2003. But the overall number of coffee consumers, including those who say they drink it daily and those who sip it occasionally, increased from 161.2 million in 2002 to 166.6 million in 2003.

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On the Net

Home Cafe: http://www.home-cafe.com

Kraft Foods: http://www.kraftfoods.com

Coffee Review: http://www.coffeereview.com

National Coffee Association: http://www.ncausa.org




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