Sara Lee Corp Executive Chairman Jan Bennink thinks it is time for his company to reinvest in the single-serve coffee market.
Back in 2001, when it teamed up with Philips to launch the Senseo machines that brew single cups of coffee in seconds, it was a pioneer of that market.
But in recent years it let that business languish, especially in the United States, allowing Green Mountain Coffee Roasters Inc and its Keurig machine to become the dominant player there.
«Our Senseo machine is a very unsexy machine,» Bennink told Reuters in an interview on Thursday. «If I talk to my daughter and ask her if she wants a free Senseo machine, she says ‘No thank you, Pop.'»
«That’s a very simple answer you get from the youth — they don’t want to be associated with Senseo. That will change.»
Sara Lee, which reported better-than-expected quarterly profit on Thursday, will discontinue Senseo in North America as of March 31, except on select websites. But at the same time, it is working to make the machine more appealing, especially for young people, to tap growth overseas.
Sara Lee is one of many companies including Nestle, Kraft, Green Mountain, Starbucks and privately held Mars looking to tap the growth of single-cup coffee. While increased competition has some bears worried about the sustainability of current profit margins, bulls point to consumers’ growing desire for convenience and high-quality coffee at home
The company last week announced that it took full control of its Senseo business by buying out partner Philips. Bennink said that was a bet on single-serve machines but also machines that grind fresh beans, another area of growth.
In another sign of interest in the single-serve coffee market, Wal-Mart Stores Inc said it would add the relatively unknown Esio Beverage System to its lineup of coffee machines.
Single-portioned coffee — known either as cups, discs or pods — makes up only 8 percent of total worldwide coffee sales, but category bulls say that should grow as more people take advantage of their convenience.
«Americans are showing signs they’re hooked,» said Bevmark Consulting CEO Tom Pirko. «We’re ready for the simplest possible way to make coffee. Bring on the pods. We’re now pod people.»
He predicted that as more players jump into the ring, equipment prices will come down, which will lure more consumers.
Single-cup coffee brewers now start at about $50 but can cost as much as $800 for models that make barista-worthy espresso drinks with frothed milk and shut themselves off.
The global leader is Nestle SA, whose Nespresso system holds a 35 percent share, according to Euromonitor International. It is followed by Sara Lee’s Senseo brewers with 18 percent, and Kraft Foods Inc’s Tassimo with 8 percent.
Green Mountain, which controls more than three-quarters of the U.S. market, ranks fourth globally with less than 8 percent.
Source: reuters.com/article/2012/02/03/us-coffee-idUSTRE81203720120203
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