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Americas: Keurig Green Mountain partners with Kraft Foods to grow single-serve market dominance

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Keurig Green Mountain has announced a partnership with Kraft Foods to make the latter’s branded coffees—including Maxwell House and Gevalia—for Keurig’s single-serve brewing systems.

The deal is the latest in a string of moves by Keurig, which previously partnered with Coca-Cola to allow people to make various Coke beverages at home.

Keurig also previously announced an agreement to distribute packaged McDonald’s coffee to retailers, thus allowing consumers to make McCafé drinks at home with their Keurig machines.

Keurig Green Mountain had coffee sales of almost US$1.4 billion in 2013, increasing 25%.

Single cup accounts for 97% of company sales with the remaining share coming from ground/whole bean sales as well as a small contribution from ready-to-drink iced coffee.

The company’s 15% share of the U.S. retail coffee market is second only to J.M. Smucker, according to a Packaged Facts report entitled Coffee and Ready-to-Drink Coffee in the US: Retail and Foodservice, 8th Edition <http://www.packagedfacts.com/redirect.asp?progid=86583&productid=8133971>.

The report says Keurig’s growth is driven by penetrating at-home and away-from home locations with its brewing systems and driving usage frequency of its single-cup beverages in those brewing systems.

“The company is successful at leveraging licensed partnerships with brands and retailers to increase awareness of its proprietary brewing system,” says research director David Sprinkle.

“This latest partnership with Kraft only further underscores the brand’s ability to both pair itself with major coffee players, and underscores how much American coffee drinkers appreciate the ability to replicate their favorite chain restaurant or coffeehouse products at home.”

In terms of brand performance, Keurig Green Mountain’s proprietary brand captures the largest share (38%) of single-cup sales, worth US$522 million in 2013, followed distantly by Donut House Collection.

Keurig Starbucks and Keurig Eight O’Clock have provided the biggest single-year gains for the company, as both were up more than 500%.

Another of Keurig’s strong points concerns the variety of channels through which it interacts with customers, ranging from supermarkets, department stores, mass merchandisers, club stores, and convenience stores; to restaurants, hospitality accounts, office coffee distributors, and partner brand owners; and to the internet via its websites.

However, it has penetrated far more households than workplaces and foodservice locations, which (along with colleges/universities) it has targeted for growth, according to the research company.