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Kraft, McDonald's to Roll Out Bagged McCafe Coffee Nationally

Chain Has Said Bagged McCafe Will Help Restaurant Sales

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McDonald's and Kraft Foods Group will roll out McCafé bagged coffee at grocery, mass merchandise, club and drug stores nationwide after testing the product last year.

The rollout, starting in early 2015, will include ground, whole bean and single-serve McCafé coffees. McDonald's in 2012 began selling packaged coffee in some of its Canadian restaurants.

"We understand there is huge demand for at home options and we've built great success with our McCafé coffee in restaurants. So, it was a natural next step to provide customers with McCafé coffee to enjoy in their own home," said Greg Watson, senior vice president, McDonald's U.S. Menu Innovation, in a statement.

The brand is expected to be positioned as a premium product, in keeping with McDonald's long-held positioning of McCafé in its restaurants and the test in select markets last year. McDonald's and Kraft did not respond to questions about which agency will handle marketing. A spokesman for Kraft said "integrated marketing support -- including TV, digital, social, PR and sampling" is expected. A McDonald's spokesman also said there would be an integrated campaign but that it's too soon to discuss details.

Varieties of the McCafé packaged coffee will include Premium Roast, Breakfast Blend, French Roast, Colombian, Premium Roast Decaf, French Vanilla, Hazelnut and French Roast Whole Bean. Single-serve will include Premium Roast, French Roast and Premium Roast Decaf.

The chain originally rolled out McCafé in 2009 with a massive marketing push for coffee and espresso drinks. It has since rolled out seasonal drinks from time to time, along with smoothies and frappes.

The move comes at a time when McDonald's is struggling to reverse a sales slump. Last year, the chain said among its main areas of concentration for 2014 would be coffee and improving operations and the customer experience.

McDonald's U.S. Chief Brand and Strategy Officer Kevin Newell said late last year that selling bagged coffee outside its restaurants would create "greater awareness and sell more coffee in our restaurants." At the time, he noted that more than 70% of coffee consumption in the U.S. happens at home. He said the retail test "highlights how serious we are about elevating McCafé brand potential."

McDonald's is coming a bit late to the game in grocery stores, where Starbucks and Dunkin' Donuts have long offered their bagged coffee.

Kraft was previously in a distribution deal with Starbucks for grocery-store sales. That relationship soured in early 2011 after Starbucks complained that Kraft failed to effectively market the product, later resulting in a split. Starbucks late last year was ordered to pay Kraft $2.7 billion for "improper termination" of the deal. Kraft got back into the premium coffee market later in 2011 with a deal to sell Gevalia coffee in supermarkets.

"In a competitive category that is growing rapidly and changing every day, this new partnership with McDonald's represents a whole new era in the world of at-home premium coffee," said Nina Barton, vice president of coffee for Kraft Foods, in a statement. "By tapping into the loyal McCafé fan base already built by McDonald's and leveraging our deep coffee category expertise here at Kraft, we have the ability to reach a larger audience than ever before, really giving this brand room to thrive."

Contributing: E.J. Schultz

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