McDonald's selling bagged coffee in Canada
The company isn't saying whether it will expand the sales to the US, but it sure looks that way.
The coffee, sold under the McCafe name, will cost about $7 for a 12-ounce bag, reports the Calgary Herald. We knew this was coming, since McDonald's recently filed a trademark registration related to selling ground and whole-bean coffee. The company has 1,100 locations in Canada.
The move was a head scratcher for the Herald, which noted that Starbucks (SBUX) is everywhere in the country and Tim Hortons (THI) "borders on a national symbol." But that's exactly why Canada is a good place to test bagged coffee. If McDonald's can make it there, it can make it anywhere.
So far, though, the company is staying quiet about any plans to expand bagged coffee beyond Canada.
McDonald's took this route before launching its McCafe specialty coffee drinks, The Associated Press reports. The company started McCafe in Australia in 1993 and expanded it to Europe before bringing it to the U.S. in 2009.
"If you want to be a credible player in the restaurant industry, you have to have a great cup of coffee," John Betts, the president of McDonald's Canada, told AP.
So far, it looks like McDonald's will sell the bagged coffee in only some of its Canadian restaurants and not in grocery stores. If it decided to expand to groceries, it would run up against some of the biggest names in the food business. JM Smucker (SJM) owns the Folgers brand, Kraft (KRFT) owns Maxwell House, and Nestle (NSRGY) owns Nescafe.
Those three giants, along with Starbucks and Green Mountain Coffee Roasters, are the five biggest players in the market for packaged coffee, according to an IBISWorld report mentioned in The Huffington Post.
McDonald's shares have disappointed investors recently. Shares have fallen from the $100 mark at the beginning of the year to trade Friday at $86.73.
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The company is scrambling to protect its equities arm, which could face declining volume and revenue as competitors close the gap.
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