Mr. Deromedi has been seemingly focused most on innovation with Kraft's single-serve Tassimo beverage system, which is expected to drive higher margins than the lackluster ground coffee segment. But Kraft also needs to boost Maxwell House, which now trails Procter & Gamble's Folgers.
It's hoping to do so by returning to spending levels of nearly $60 million with new advertising (itself the result of intensive consumer research) and upping the ante in stores with new packaging and point-of-sale materials that flag the benefits of its various roasts for increasingly finicky coffee drinkers.
"Overall, we need to connect better with consumers," said Linda Harelick, VP-marketing for coffee at Kraft. The numbers back that up. According fo Information Resources Inc., in the the $1.6 billion ground-coffee segment Maxwell House sales fell 4.4% to $248 million compared to the base Folgers brand's roughly 1% gain to $382 million. for the 52 weeks ended March 20. Folgers' Coffee House brand, meanwhile, climbed 22% to $94 million.
Looking for the insights that could help it regain share in the category, Ms. Harelick said Kraft has invested in in-home research with Maxwell House consumers to determine insights that could trigger increased purchases.
Finding that the brand represented home, community and connectedness most of all, Kraft and its agency, Ogilvy & Mather, New York, developed a TV campaign set to the Madness tune "Our House" that features groups and places within the community, like a firehouse, where people can connect over Maxwell House. The first spot, "Ladder 59," breaks this week and will be followed by additional spots later this month as well as public relations, consumer promotions and Internet activities all centered around the idea of connectedness.
The advertising is the highest outlay for the brand in five years, during which time Kraft's expenditures on Maxwell House have dropped from $57.5 million to $31.3 million, according to TNS Media Intelligence/CMR. The campaign follows last year's product improvement of the blue-can Original Maxwell House and its French Roast as well as the launch of Maxwell House Cafe Collection premium pods for the single-serve systems (although Kraft's own proprietary Tassimo machines use T-disks that will eventually feature Maxwell House).
To make it easier for consumers to find the variety they're looking for, Kraft is altering packaging to flag its Original as rich, its French Roast as bold and its Master Blend as smooth, packaging that will be called out via in-store tactics such as shelf signs and trade ads that entreat consumers to "find your perfect roast."
But despite the initiatives, Wall Street is skeptical. Neuberger Berman analyst Bill Leach said, "Like Velveeta, Maxwell House is a 1950s icon and I don't think they can ever turn it around." He suggested that Kraft is truly pinning its hopes on Tassimo as, "battling it out with Folger's in the no-growth ground-coffee category seems like a fruitless endeavor."
The advertising is the highest outlay in five years. It will also up the ante in stores with new packaging and point-of-sales materials