Dunkin' Takes Battle Against Starbucks to Grocery Stores

Dunkin' Donuts isn't just fighting Starbucks on the coffee-house front. Now, it's taking the battle to grocery stores.

Dunkin' has been running a marketing campaign that goes after Starbucks stores on taste, boasting that it beat the java giant in an "independent taste test." Now, J.M. Smucker Co., which owns Dunkin's supermarket-distributed coffee brand, is mounting an online sampling program for the brew-at-home version, DunkinAtHome.com. The site offers samples of Dunkin's original blend, as well as Dunkin' Dark.

Starbucks, meanwhile, has also mounted sampling efforts for its grocery business. The java giant partners with Kraft to get its beans to supermarkets.

Jam-maker Smucker Co., which bought Dunkin's at-home coffee, along with Folgers and Millstone coffee earlier this year for $3.3 billion, declined to comment for this article.

Sales taking off
After years of dwindling grocery sales among staid brands such as Folgers and Maxwell House (although both have rebounded during the economic downturn), Starbucks and Dunkin' coffee have taken off like wildfire. Starbucks was a particular boon for Kraft, which built coffee-aisle share as the package-food company reformulated and repackaged Maxwell House.

According to IRI, which compiles grocery sales excluding Walmart and club stores, Starbucks is now the No. 4 ground-coffee brand behind Folgers, Maxwell House and private labels, with $179 million in sales during the last 52 weeks. That figure is down 4% from a year ago but may be misleading, as sales in warehouse stores, which are not measured by IRI, are particularly important for the brand. Dunkin's coffee, after just over a year in sales, is No. 6, with $75 million in ground-coffee sales, up nearly threefold over the last 52 weeks.