Sara Lee takes aim at single-serve coffee market

By Emily Bryson York
Posted Feb. 22 at 2:35 p.m.

Sara Lee may be breaking up, but company executives say that will make it much more focused on the business in which it competes.

Chief Executive Marcel Smits laid out Sara Lee’s plans at the Consumer Analysts Conference of New York Tuesday morning to take share from Nestle, the international leader in single-serve coffee.

Single-serve, made from individual pouches brewed in specialized machines, has become the latest battleground for the coffee industry. Starbucks, Dunkin’ Donuts, Green Mountain Coffee Roasters and even retailers such as Wal-Mart are expected to play a crucial role in the U.S. battle.

Sara Lee’s coffee business is primarily international.

However, when Sara Lee divides into meat and coffee companies early next year, its U.S. coffee business will be part of the predominant European coffee company, currently being referred to as “CoffeeCo.”

Its headquarters has not been selected.  It may remain in Downers Grove, where the meats business, which will assume the Sara Lee name, is to be headquartered.

The European market is much more mature, as premium coffee has been popular there for many years.

Smits noted that “there is a strong trend toward single-serve and that drives a lot of the value growth.” The market is particularly attractive to beverage manufacturers because it commands a higher price per serving, insulating it somewhat from swinging commodity costs.

“We have strong market shares, we have powerful brands, we have a strong pipeline of innovation, and we will soon have greater focus and with focus will come a burning ambition,” Smits said.

Sara Lee launched Senseo, a single-serve coffee platform in 2001. Last year, it introduced L’Or espresso capsules in France, with 120 million capsules  sold. The capsules, now available in other markets, are UTZ certified, meaning they were harvested in a socially and environmentally sustainable manner.

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