TakeAway: An advertising battle is breaking out in the single-serve coffee business as the holiday season nears.
The single-serve business—in which consumers pop “pods” or cartridges into household machines that brew individual cups of coffee, espresso and other java drinks—is gaining traction in the U.S. after becoming popular in Europe.
This is a highly competitive market with plenty of room to grow, but holiday spending is still expected to be fairly low due to the economy.
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Excerpted from the Wall Street Journal, “The Single-Serve Push” By Suzanne Vranica, October 14, 2010
Nestlé is just one of the companies that have either started or will start major ad pushes, geared toward the holidays. Other players include Kraft, Green Mountain Coffee Roasters, Mars, Royal Philips Electronics and Sara Lee.
Currently, only about 7% of U.S. households have a single-serve coffee machine. About 60% of the coffee machines are sold during the holiday months, though companies make most of their profits selling the containers or “pods” that hold the coffee.
The onslaught of advertising comes as consumers remain cautious about spending. Single-cup coffee typically costs less than $1 a serving, but consumers have to spend between $100 and $400 on the machines. There are also upscale models that cost well above $500. Still, food companies and analysts say consumers may be more willing to make coffee at home rather than buying it from local cafes.
Edit by AMW
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Full Article:
http://online.wsj.com/article/SB10001424052748703673604575550191974954922.html?mod=WSJ_hps_editorsPicks_3
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