McDonald's Corp. MCD +0.42% is partnering with Kraft Foods Group Inc. KRFT -2.96% to sell McCafe packaged coffee in U.S. grocery stores in various test markets, Kraft Chief Executive Tony Vernon said Wednesday.
The coffee will be sold next year in whole-bean, ground and single-cup formats for use in brewers such as Green Mountain Coffee Roasters Inc. GMCR +0.17% 's Keurig machines, Mr. Vernon said on a conference call. Kraft wouldn't name the markets involved in the test.
McDonald's has been selling its McCafe beverages in its restaurants for several years, an effort to compete with big java-selling chains such as Starbucks Corp. SBUX +0.17% andDunkin' Brands Group Inc. DNKN -0.55% The move has been one of McDonald's more successful initiatives in recent years.
The burger giant also has offered packaged coffee in Canadian grocery stores for about a year, and, also a year ago, applied for a trademark for the use of the McDonald's name on packaged coffee in the U.S., hinting that this expansion was in the works.
A spokeswoman for McDonald's said it regularly conducts product tests to gather market feedback. "We are building on the momentum of our McCafe beverages in our restaurants by expanding these options...to grocery stores and other retail locations," she said.
Kraft's coffee business, which took a hit a few years ago when its partnership with Starbucks fell apart, includes national brands Maxwell House and Gevalia.
Mr. Vernon said that he doesn't expect the new McCafe line to steal sales of its current brands, because it will be a step above its Maxwell House line, while falling below its premium Gevalia brand.
The McCafe single-serve coffee pods will likely pose as competition to Dunkin' Donuts, whose K-Cups are made by Green Mountain, and other similarly-priced, well-known brands.