TreeHouse commits to single-serve coffee

by Eric Schroeder
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BOSTON — When TreeHouse Foods, Inc. enters the single-serve roast coffee private label sector in the fourth quarter of this fiscal year it will be “a marriage of technology, food science and marketing,” said Sam Reed, chairman, president and chief executive officer of TreeHouse, Westchester, Ill. Mr. Reed spoke Sept. 5 at the Barclays Back to School Conference in Boston.

“We’ve committed to a program that is focused on the premium end of private label so that the product that we offer will in blind taste tests of large groups of consumers prove to be across the broad group generally equal to the best products that are available for either at-home consumption or at consumption in food-away-from-home outlets,” Mr. Reed said.

One of the concerns for companies considering entering the single-serve coffee business is the long-term viability of the sector. Currently, companies holding branded patents have been able to control the market, but once the patents expire later this year there are relatively low barriers to entry.

Mr. Reed expressed his optimism that TreeHouse is well-situated to compete in the market.

“My belief is that that there will be easy and cheap ways for people to get into this business on a very small inconsequential way that does not replicate the brand and does not deliver the product quality in terms of taste and aroma,” he said. “But if you are, in fact, trying to establish oneself as the market leader in the private label sector as we have done in nine different major categories that we’ve acquired and built, then I think the barriers to entry here are to be able to get to where we are requires a replication that takes a great deal of time, money, intellectual property, and good food science.

“We have been quite careful to do this — take this investment and bootstrap it, build it up as we, in fact, have solid commitments from existing customers that are prepared to enter into the private label business. It’s important to remember that we’ve got a broad product portfolio. What we want is a very fine coffee business that for years turns out to be an above-average contributor in both growth and in margins and cash flow.”

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