KRAFT FOODS: THE COFFEE POD LAUNCH
CASE TOPIC Geoff Herzog is the product manager for coffee development at Kraft Foods Canada. After reviewing successful results of single-serve coffee pod systems, he wondered whether it would be successful in other areas. It was July 6, 2004, and Herzog had just learned that Kraft Foods North America was planning an aggressive launch of coffee pods in the United States. He then had only a month to decide whether or not the company should proceed with a simultaneous launch in Canada, or await the U.S. results.
HISTORY OF KRAFT FOODS Kraft Foods was founded as a cheese manufacturer in 1903. They had evolved into North America’s largest food and beverage company and the number two player in the
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Finally, the fifth objective was to build a leaner cost structure through better use of assets to generate savings for reinvestment in brand building. It is important to note that Kraft Foods was the world leader in coffee sales, with 15% of the global market. In Canada, Maxwell House and Nabob brands combined to make up 32% of the market share. Nestle followed behind at 17% and Proctor & Gamble with 9%. Private labels accounted for nearly 23% of the market. Smaller companies accounted for the remaining 19% of the market. Maxwell House, which is a line of products by Kraft, was Canada’s top retail brand of roast and ground coffee. Nabob was second, but was the leader in western Canada.
MARKET STRATEGY The target market for Kraft SSP in Canada was accessed by Herzog. He found that it consisted of coffee lovers between the ages of 25 to 54. These individuals were well educated, which in turn meant that they had a higher income. On average, the target market consisted of adults who made $91,000 per year. Another interesting fact was that nearly 75% of this target market was married. 88% lived in single-detached homes in urban areas. The urban areas were population rich provinces of Ontario, Quebec, British Columbia, and Alberta. These areas were characterized by high levels of consumption, and their interests included exercising, entertaining at home, gourmet cooking, household decorating, gardening, and taking exotic
• Kraft Foods Inc., is the largest food and beverage company in North America and the second largest in the world. Was founded in 1903 by James L. Kraft.
Green Mountain Coffee Roaster’s Keurig Single Brew system is dominating the U.S. market with an overwhelming market share. Analysts expect sales of single-cup brewing systems to continue to grow in the U.S. and competitors are eyeing a piece of the pie. An analysis of Keurig’s current position, based on Michael E. Porters 5-Forces, highlights a number of key areas of opportunity and risk for the company. Handled correctly, the Keurig product line should continue its growth, however, a number of significant pitfalls threaten its dominance.
The Kraft Company has been around for a long time now. Personally I believe you must have a protective firm, not allowing other companies to steal your ideas and product. This will give the firm advantage over others.
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