Kraft Foods Debuts Tassimo Hot Beverage System in the U.S.; Revolution

    Business Editors

    NORTHFIELD, Ill.--(BUSINESS WIRE)--March 16, 2005--Kraft Foods Inc. (NYSE:KFT), a global leader in branded foods and beverages, today announced plans to launch its proprietary Tassimo Hot Beverage System this fall, in the United States. The new brewing system, which will make its U.S. debut at the International Home and Housewares Show in Chicago this weekend, redefines the "on-demand" coffee category by providing a menu of delicious, coffeehouse quality beverages that can be made at home in less than one minute. Kraft has already successfully launched the new brand in France, followed by more recent introductions in the United Kingdom and Switzerland, making this an innovative growth opportunity with great global potential.
    "Tassimo is a great example of how Kraft continues to transform its product portfolio through innovation," said Roger Deromedi, Kraft's Chief Executive Officer. "We're combining quality brands, new levels of convenience and unparalleled technology to provide consumers with the ultimate in-home hot beverage experience. We anticipate that Tassimo will be a key growth driver for our already strong, $ 4.2 billion global coffee business."
    Much more than a coffeemaker, the Tassimo brewing system uses "smart" technology to enable consumers to make a wide variety of authentic, superior-tasting coffeehouse beverages - from coffee, tea and hot chocolate to cappuccino, espresso and latte - one cup at a time, at the touch of a button. In addition, Tassimo is the only "on-demand" beverage system that uses real liquid milk in drinks such as cappuccino and latte without the use of a complicated steam wand. The system, which is protected by more than 20 filed patent applications, requires little clean up and, with its one-cup preparation, there's no need to waste coffee left over in the pot.
    The Tassimo system has two components: the Tassimo brewing machine and proprietary Tassimo discs (T-DISCS). Each T-DISC contains a precisely measured amount of fresh, high quality coffee, tea, chocolate or concentrated milk. The T-DISC is then sealed to protect the flavors inside until used. When the disc is inserted into the machine, "smart" technology reads the bar code printed on the label and automatically calculates the correct water quantity, brewing time and temperature to prepare the perfect beverage. All of the brewing happens inside the T-DISC, using a unique inverse flow; and most beverages are ready in under a minute. After brewing, the T-DISC is air-purged so it is cool to remove immediately without any messy drips.
    The Tassimo brewing machine is made by Saeco International Group S.p.A., the largest independent manufacturer of espresso makers in the world, and will be distributed and serviced by Braun, a division of The Gillette Company, and a worldwide leader in innovative, high-quality domestic appliances. The T-DISCS are being manufactured and distributed by Kraft.
    Last year, Tassimo was introduced in France, where consumer reaction to the system has been extraordinary. In fact, according to recent Kraft research data, Tassimo received "outstanding satisfaction levels" from consumers with both the system and the drinks; and 99% of consumers reported they "would recommend the system to family or friends." The top reasons given for purchasing Tassimo were the variety, convenience, quality of drinks, and innovative design.
    Tassimo consumers in multiple countries will benefit from the same advanced technology, yet will be able to use the system to brew their favorite regional brands. In the U.S., for example, Kraft will initially launch the Tassimo system with premium brands including Gevalia coffees, Twinings teas and Suchard hot chocolate, with Maxwell House coffees to follow. In other countries, Tassimo is coupled with Kraft's other locally well-known brands, such as Carte Noire in France, Kenco in the U.K. and Mastro Lorenzo in Switzerland.
    The Tassimo machine will be available for purchase this fall in a number of specialty retail locations (such as high-end home goods and housewares stores), and on the Internet at Gevalia.com and Tassimo.com, at a suggested retail price of approximately $189. T-DISCS will be available where the machines are sold, with suggested retail prices ranging from approximately $4.99 - $10.99, depending upon the beverage type, package size and brand. The entire line of T-DISCS also will be offered online at Gevalia.com and Tassimo.com.
    Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 150 countries.

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CONTACT: Kraft Foods Inc. Pat Riso, 914-335-6993 priso@kraft.com

KEYWORD: ILLINOIS INDUSTRY KEYWORD: FOODS/BEVERAGES RETAIL PRODUCT SOURCE: Kraft Foods Inc.

Copyright Business Wire 2005