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    Kraft, Starbucks Team Up on Branded Beverages for Tassimo

    NORTHFIELD, Ill. - Kraft Foods Inc. here has forged a new alliance with Starbucks Coffee Co. to pump up its Tassimo hot beverage system in the U.S. and Canada by adding select varieties of the latter's popular coffee to its in-store lineup.

    NORTHFIELD, Ill. - Kraft Foods Inc. here has forged a new alliance with Starbucks Coffee Co. to pump up its Tassimo hot beverage system in the U.S. and Canada by adding select varieties of the latter's popular coffee to its in-store lineup.

    Kraft said it has also moved to replace the current manufacturer of the Tassimo on-demand beverage system machine with Bosch Household Appliances.

    "Kraft recently revamped its business plan for Tassimo to spur stronger, more profitable growth, and we're already seeing results," said Hubert Weber, Tassimo's v.p./g.m. Weber said the move aims to appeal to consumers seeking true coffeehouse quality at home.

    Starting in December, Starbucks varieties including House Blend, Breakfast Blend, Caffe Verona, and Africa Kitamu will be available in a single-cup Tassimo disc capsule format. The discs can be purchased at www.tassimo.com and at retailers in time for the holidays, Kraft said.

    Starbucks' R&D department worked closely with the Kraft Tassimo team to develop a disc that delivers a high-quality brewed cup of Starbucks coffee, noted Gerry Lopez, president of Starbucks global consumer products group.

    "It's another step as we extend the Starbucks experience beyond our stores," said Lopez.

    Kraft's relationship with Starbucks dates back to 1998, when the two companies entered into a supply and distribution agreement. Today, Kraft manages sales, marketing and distribution for Starbucks coffees in the retail grocery, club, and mass channels in the U.S., the UK and Canada.

    In addition to the new Starbucks deal, Kraft also entered a new global brewer alliance with Bosch Household Appliances, which will launch a new Tassimo brewer carrying the well-known Bosch name in mid-2008.

    Though mutually successful, Kraft and Braun, the current distributor of the Tassimo brewer, that fact that Procter & Gamble acquired Gillette/Braun will prompt the relationship's termination, effective June 30, 2008, said Kraft.

    "Since Kraft and P&G are coffee competitors, both our companies have agreed that continued partnership on Tassimo could interfere with the future growth potential of our respective coffee businesses," explained Bracken Darrell, Braun president.

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