Kraft Foods Inc. plans to start selling its Gevalia coffee brand in grocery stores in August, raising its stake in the increasingly competitive coffee industry and going up against former partner Starbucks.
Gevalia, now sold only online or through mail order in the U.S., is a nearly $400 million global brand. Kraft says it is the top coffee brand in Sweden and has a significant following in the U.S.
Kraft already has a $5 billion global coffee business with brands such as Maxwell House in the U.S., Carte Noire in France and Jacobs in Germany. Gevalia would become Kraft’s premium U.S. brand.
“This is the right step for us in the U.S. premium category,” said Domenic Borrelli, vice president of Kraft’s U.S. coffee business. “Kraft Foods knows coffee — it’s in our DNA. By tapping into our global coffee pipeline, we’ll have more products and innovations to come. We intend to continue to win in the coffee category in the U.S.”
The company will sell 10 Gevalia products and add several Gevalia coffee discs in June for its Tassimo single-cup brewing system.
Kraft Foods, based in Northfield, Ill., faces tough competition on grocer’s coffee shelves.
A number of top-selling brands, such as Maxwell House and Folgers, are performing well as consumers brew more of their coffee at home. In more expensive premium coffee, Starbucks Corp., which ended a retail distribution agreement with Kraft in March, has made increasing sales at grocery stores and other retailers a priority.
Kraft and Starbucks are still in arbitration to settle financial and other outstanding matters from the contract.
The coffee category is also growing more complicated as a number of companies try to develop their single-serve or on-demand coffee brewing business, such as Tassimo, that is only beginning to take off in the U.S.
Shares of Kraft rose 42 cents to $32.38 in afternoon trading.