Kraft Food: the Coffee Pod Launch

Geoff Herzog is the product manager for Kraft Foods Canada; He has learned that Kraft Foods North America was planning on a launch of coffee pods in the United States. He had less then a month to decide if Kraft should proceed with the launch in Canada. Because Kraft owned the two major coffee brands in Canada, Maxwell House and Nabob the branding strategy would be needed. He had to also set a wholesale and retail price for the coffee pods, also their flavors to decided on and should they use traditional distribution or direct-to-store delivery (DSD). He also had to develop an effective adverting and promotion strategy with a limited budget.

There are four major brands in Canada that are competitors for Kraft, the first one is One-To-One an Germany’s Melitta which joined Salton the maker of the George Foreman Grill, together they made the Melitta One-on-One SSP Machine; it can brew two sizes of coffee using a filtered system the could provide a coffee-bar value at home. You can also change the spout of the coffee machine to make cold or hot tea. The One-to-One Machine is available In Canada with six-flavor javapod samplers.

Melitta was the only SSP system that used 9.7-gram javapod; Home Café, Senseo and Bunn, which used the 7-gram coffee pod. Even thought the other coffee pods were interchangeable across manufacturers they could not be used on the Melitta and vice versa. They were sealed with oxygen-free foil to keep the flavor; they retailed at $4.99 for a package of 16 they had three different flavors, 100% Arabica Medium Roast, 100% Colombian, and Light Roast.

The second competitor is Home Café system, which partnered with Proctor and Gamble, and two leading makers of small appliances: Applica Inc. (owner of Black & Decker) and Jardine Corporation (owner of Mr. Coffee, Rival and Sunbeam). Home Café used a pressured-brewing technology that delivers a single serving fresh coffee, which brewed less, then a minute bring out the flavor of the coffee