Kraft to Expand Europe Tassimo Sales While Raising Coffee Prices
Kraft Foods Inc. (KFT), the world’s second- biggest food company, will double the number of countries where its Tassimo beverage machines are sold to 20, said Hubert Weber, the company’s European coffee president.
Kraft will bring Tassimo to Denmark, Norway, Poland, the Czech Republic, Hungary, Romania, Russia and other countries, Weber said in an interview today in New York. Kraft, based in Northfield, Illinois, has begun another round of price increases for its coffee brands in Europe, which include Jacobs, Kenco, and Carte Noire, he said.
Coffee prices have almost doubled in the past 12 months, which has led Kraft to raise prices on many of its products in order to maintain its profit margins. In Europe, single-serve coffee should make up as much as 80 percent of coffee sales in 10 to 15 years, as consumers seek convenience and the ability to make espresso-based drinks at home, Weber said.
“Roast and ground coffee is now commoditized,” he said.
Revenue from Tassimo beverages in Europe rose by about 30 percent last year, Weber said.
Last year, Sara Lee Corp. (SLE) and Casino Guichard-Perrachon SA (CO) began selling coffee capsules that work with the Nespresso system sold by Nestle SA (NESN), based in Vevey, Switzerland. Nestle has sued Sara Lee, Casino and Ethical Coffee, the producer of the capsules that Casino is selling, in France for alleged patent infringement.
Kraft, which makes pods compatible with Sara Lee’s Senseo system, doesn’t make Nespresso-compatible capsules. Weber said the company had no plans to do so, as “the patent is so strong there’s no legal way to sell it.”
Kraft generates about $5 billion in coffee sales worldwide, and is the world’s second-biggest buyer of coffee after Nestle.
Organic sales of Nespresso coffee capsules rose about 20 percent in the first quarter, Nestle said last month.
Kraft rose 5 cents to $34.27 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 8.8 percent this year.
To contact the reporter on this story: Matthew Boyle in New York at Mboyle20@bloomberg.net.
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.
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