McDonald’s is taking its coffee war with Starbucks straight to your kitchen

A drive-thru isn’t the ideal staging ground for fancy milk froth.
A drive-thru isn’t the ideal staging ground for fancy milk froth.
Image: Reuters/Sue Ogrocki
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McDonald’s has high hopes that the coffee it farms out at drive-thru windows can thrive in your home.

McDonald’s and Kraft Foods are planning to test McCafe-branded coffee at grocery and retail stores across the US starting in 2014, Reuters reports. The companies intend to sell three coffee products in stores next year: packages of whole coffee beans, packages of ground coffee beans, and McCafe “single-cups,” much like the K-cups made popular by Green Mountain Coffee Roasters. Kraft will be in charge of marketing and distributing McDonald’s new coffee offerings.

The company has been working tirelessly to popularize its budding McCafe brand. It recently moved to use the logo on hot drinks and small carry-out bags for baked items as a means of boosting awareness of the brand. Its in-store coffee sales have already been risen sharply in recent years. Some analysts think the company’s coffee play masks slowdowns in its core business of burgers and fries. With coffee consumption soaring in the US, it’s a fairly intuitive move.

The move into packaged coffee in grocery stores, however, is slightly riskier. The packaged coffee market has bloomed into a near $6 billion dollar business in the US. But home-brewed coffee is a departure from the fast food playbook of competitors like Burger King and Wendy’s, which have yet to branch into branded home products. The move puts McDonald’s more in line with the strategies of coffee mavens like Dunkin’ Donuts and Starbucks—presumably at a more competitive price.

That said, this isn’t the first challenge to Starbucks and Dunkin’ Donuts by McDonald’s, which has long been battling the food chains for breakfast supremacy. Starbucks, which once exclusively sold coffee, has moved into all kinds of food and drink, including breakfast sandwiches, oatmeal and ready-made snacks. For its part, McDonald’s, which once sold coffee as an afterthought, has transitioned into the market for fancier coffee offerings like mochas and lattes. McDonald’s has gone so far as to announce plans for a coffee-focused chain with as many as 150 outlets called McCafe in India, a thriving market for Starbucks.

McDonald’s has a decent shot at luring away stalwart Starbucks customers; coffee drinkers are reputed to be rather fickle about their allegiances.