Prepared Foods January 24, 2005 enewsletter

In the U.S., bottled and canned coffee has barely caught on at all, except for the likes of Frappuccino. Coke does not sell coffee in America, though Georgia Coffee makes its way to a few specialty stores from overseas.

As the year begins, a handful of U.S. companies have taken a fresh look at the ready-to-drink coffee business. There are new products, including ones named for cinnamon-roll seller Cinnabon and celebrity chef Wolfgang Puck.

The question is whether this mini-category is ever going to become something big.

Ready-to-drink coffees have been available in the U.S. for years, although the niche has been dominated by a partnership of Pepsi-Cola North America and Starbucks -- makers of Frappuccino and DoubleShot.

According to Beverage Marketing Corp., Frappuccino held 81.2% of the market in 2003. DoubleShot had another 7.6%.

Tracey Doucette, vice president and general manager of the Starbucks/Pepsi partnership, said the category is growing, including 13% in 2003. "The numbers pretty much speak for themselves," she said.

The issue is that Frappuccino is a big fish in a small pond. The category had a wholesale value of just $308 million in the U.S. in 2003, according to Beverage Marketing. Ready-to-drink teas, by contrast, sold about $1.5 billion.

Statistics suggest there is room for growth in ready-to-drink coffee. Americans, after all, love to drink cup after cup of coffee -- about 45% of adults are consumers, according to Beverage Marketing.

However, research from Morgan Stanley shows that only 9% drink bottled or canned coffees. Consumption skews higher among young people -- 14% of 18-to-24-year-olds.

Glaceau, a company best known for Vitaminwater drinks, is getting into the business with a line of canned drinks sold under the name America's Best Brew. So far, they have limited availability.

Carol Dollard, chief operating officer for Whitestone, N.Y.-based Glaceau, said the company is not interested in copying Frappuccino, which Glaceau sees as too heavy and dessert-like.

Instead, Glaceau has aimed for something that tastes like iced coffee. "I don't think it's really been offered that way up until now," Dollard said.

Brain Twist, a small New York beverage company, headed in the other direction, with a canned coffee sold under the sweet-sounding Cinnabon name.

The missing player here is obvious: Coca-Cola, which is not in the U.S. ready-to-drink coffee market.

While Coke lays claim to being the world's biggest seller of such coffees, that stature is attributed to the company's massive Georgia Coffee business in Japan and sales of Nescafe in Asia and Europe.

In the U.S., Coke tried Planet Java but dropped the product in 2003. Spokesman Ray Crockett said Coke is now just keeping an eye on the market.

Suzanne Brown, an Atlantan who has followed the coffee and tea business for more than 20 years, said Coke's lack of an entrant might be the missing piece of the puzzle in U.S. bottled coffee.

"Pepsi needs to have a big player to contend with," said Brown, who runs Brown Marketing Communications. "That's going to raise the bar."