Dunkin’ Donuts expands to grocery store shelves

BOSTON – Starting this month, packaged Dunkin’ Donuts coffee will be sold by the likes of Wal-Mart, Kroger and CVS in a bid to get customers to brew the brand at home, not just pick it up at Dunkin’ outlets.

For Dunkin’, the retail distribution deal with Procter & Gamble Co. is about more than just getting existing restaurant customers to buy the packaged version while grocery shopping.

It’s about introducing the New England-bred brand to new customers in the West and South, where Dunkin’ is expanding, with plans to triple U.S. stores to 15,000 by 2020.

To support that growth, Dunkin’ and P&G say they’ve lined up 40,000 grocery and other retail stores nationwide to launch packaged coffee.

Although some industry experts say the market for packaged coffee sipped at home isn’t as robust as it is for java sold at restaurants and kiosks, Dunkin’ and P&G believe there’s plenty of demand.

“If you’re going to be accessible, you have to be in both places,” Robert Rodriguez, Dunkin’s brand president, said in an interview. “If our numbers are correct, this is the logical extension for us and our brand.”

Canton, Mass.-based Dunkin’ Brands Inc. and Cincinnati-based P&G planned to announce details of their packaged coffee rollout Monday after initially disclosing their joint venture in February.

The deal pairs Dunkin’, a 57-year-old chain with 5,400 U.S. stores and 1,800 overseas locations, with P&G, the world’s largest consumer products company. Some of its products include Folgers and Millstone coffee – already mainstays in grocery aisles – as well as Pampers diapers and Tide detergent.

P&G will roast the Dunkin’s packaged coffee according to Dunkin’s specifications and be responsible for distribution as well as a national marketing campaign based on the coffee shop chain’s current “American runs on Dunkin'” theme.

“For P&G, it gives them an entry into a premium coffee brand with a company that has a lot of loyalists,” said Malcolm Knapp, president of the New York-based restaurant industry consulting company Malcolm M. Knapp Inc. “Dunkin’ Donuts gets P&G’s distribution expertise and a new source of income – more than they would have on their own.”

Dunkin’ packaged coffee sales begin this week in selected stores, and will expand more broadly next month. The stores will carry at least five Dunkin’ ground coffee varieties, with Dunkin’s original medium-roast blend also available in whole beans. Twelve-ounce packages will be offered at a suggested price of $7.99, with 40-ounce bags going for about $16 each in retail warehouse clubs.