Kraft Unveils New Growth Alliances for Tassimo



    Kraft, Starbucks Agree to Launch Starbucks Branded Beverages for Tassimo

    Kraft, Bosch to Partner on New Brewer

    NORTHFIELD, IL, Sept. 4 /CNW/ - Kraft Foods Inc. (NYSE:   KFT), a global
leader in branded foods and beverages, today launched several new initiatives
to further fuel the growth trajectory of its proprietary Tassimo hot beverage
system. The first is a new alliance with Starbucks Coffee Company to add
select varieties of its popular Starbucks(R) coffee to the Tassimo beverage
lineup in the U.S. and Canada. Kraft also announced a new global brewer
alliance with Bosch Household Appliances and more rapid geographic expansion
of popular beverages.
    Tassimo is Kraft's on-demand beverage system that freshly brews a wide
variety of hot beverages, including coffees, cappuccinos/lattes, teas and hot
chocolate, at the touch of a button. Since its launch in France in 2004, more
than two million Tassimo brewers have been sold in seven countries. With the
global on-demand coffee category currently experiencing double-digit growth,
Tassimo is on track to become a $200 million brand by year's end.
    "Kraft recently revamped its business plan for Tassimo to spur stronger,
more profitable growth, and we're already seeing results," said Hubert Weber,
Vice President and General Manager, Tassimo. "We're appealing to consumers
seeking true coffeehouse quality in the comfort of their own home. Our
alliance with Starbucks(R)(*) - the brand that's synonymous with coffeehouse
quality - gives coffee lovers even more reasons to turn to Tassimo."

    Starbucks joins Tassimo lineup
    ------------------------------
    Starting in December, select Starbucks varieties will be available in a
single-cup Tassimo DISC (T DISC) capsule format. Tassimo brewer owners in the
U.S. and Canada will be able to enjoy these four Starbucks(R) coffees at home:
House Blend, Breakfast Blend, Caffé Verona(R) and Africa Kitamu(TM). They can
be purchased at www.tassimo.com and at select retailers in time for the
holidays. Other products already available in the U.S. in T DISC form include
Seattle's Best Coffee(R) and Tazo(R) tea.
    "We are always looking for ways to provide an authentic Starbucks coffee
experience to our customers, and to do so anywhere and anytime they prefer,"
said Gerry Lspez, president of Starbucks Global Consumer Products Group.
"Starbucks Research and Development department worked closely with the Kraft
Tassimo team to develop a T DISC that delivers a high-quality brewed cup of
Starbucks(R) coffee. The result will delight our customers, as they will be
able to continue to enjoy their Starbucks(R) coffee while using the highly
convenient Tassimo brewing system. It's another step as we extend the
Starbucks experience beyond our stores."
    Kraft's relationship with Starbucks dates back to 1998, when the two
companies entered into a supply and distribution agreement. Today, Kraft
manages sales, marketing and distribution for Starbucks(R) coffees in the
retail grocery, club and mass channels in the U.S., the UK and Canada.
Starbucks is the best selling super-premium coffee in U.S. supermarkets. All
Starbucks(R) coffee distributed by Kraft is sourced, roasted, blended and
packaged by Starbucks Coffee Company.
    The pairing of the Tassimo and Starbucks brands is a significant
milestone. "By pushing just one button, coffee lovers now can enjoy several
Starbucks(R) coffees, all perfectly brewed thanks to the patented Tassimo
technology," said Kraft's Weber. "This brings our total Tassimo beverage
offerings to more than 60 worldwide, with the selections customized for each
country."

    New brewer alliance with Bosch in mid-2008
    ------------------------------------------
    Furthermore, Kraft is announcing a new global brewer alliance. In
mid-2008, Bosch Household Appliances will launch a new Tassimo brewer carrying
the well-known Bosch name. The Bosch consumer-centric approach to innovation,
quality and sophisticated product development ensures the Tassimo system will
continue to be made to exacting performance standards.
    "We're excited about this new alliance. Both the company and the Bosch
brand are an excellent fit and perfectly complement our plans to continue
expanding the Tassimo system's benefits for consumers," said Kraft's Weber.
    Though mutually successful, Kraft and Braun, the current distributor of
the Tassimo brewer, together decided to end their partnership effective
June 30, 2008. "The Tassimo contract was signed before Procter & Gamble (P&G)
acquired Gillette/Braun," said Bracken Darrell, Braun President. "Since Kraft
and P&G are coffee competitors, both our companies have agreed that continued
partnership on Tassimo could interfere with the future growth potential of our
respective coffee businesses."
    Both companies are fully committed to continued strong support and
results for the holiday 2007 sales period and through mid-2008, when Braun
will stop distributing Tassimo brewers. "With their expertise in
manufacturing, distribution and retail sales, Braun has been a valued key
partner in establishing the quality Tassimo brand globally. As such, we know
they'll work closely with us and with Bosch to ensure a seamless transition to
the Bosch brewer next year," said Kraft's Weber.
    The patented T DISC will not change and will be compatible with both the
current Braun and future Bosch brewers. Braun will continue to provide full
after-sales service to Tassimo consumers who own a Braun brewer.

    Contemporary new beverages
    --------------------------
    Tassimo is the only system to use liquid milk technology to make
coffeehouse beverages, such as cappuccino and latte, from the comfort of home.
Tapping into consumer trends on both sides of the Atlantic, Kraft is expanding
its milk-based offerings to include specialty drinks like Latte Macchiato and
Twinings(xx) Chai Tea Latte.
    "When we see a beverage skyrocket in one geography, we're moving quickly
to expand its availability to other countries," said Weber. "In Germany,
Austria, Switzerland and the UK, we've seen our Latte Macchiato take off in
less than six months and become one of our best selling Tassimo products.
We're bringing this indulgent, layered espresso and milk beverage now into
France and in the U.S. via the Tassimo website."
    "Overall, we're excited about the momentum and continued sales growth of
Tassimo," said Weber. "Our consumers are happy; more than 90 percent of them
state they would recommend Tassimo to friends and family. We'll continue to
work closely with our business partners to bring further innovation and
profitable growth to the on-demand hot beverage category Tassimo helped
establish."

    
    (*)  Starbucks is a registered trademark of the Starbucks U.S Brands,
         LLC.
    (xx) Twinings is a trademark of Twinings of London.
    

    Kraft Foods (NYSE:   KFT) is one of the world's largest food and beverage
companies, with annual revenues of more than $34 billion. For over 100 years,
Kraft has offered consumers delicious and wholesome foods that fit the way
they live. Kraft markets a broad portfolio of iconic brands in 155 countries,
including seven brands with revenue of more than $1 billion, such as Kraft
cheeses, dinners and dressings; Oscar Mayer meats; Philadelphia cream cheese;
Post cereals; Nabisco cookies and crackers; Jacobs coffees and Milka
chocolates. Kraft became a fully independent company on March 30, 2007, and is
listed in the Standard & Poor's 100 and 500 indexes. The company is a member
of the Dow Jones Sustainability Index and the Ethibel Sustainability Index.
For more information, visit the company's website at http://www.kraft.com.





For further information:

For further information: Media/Canada, David Weinstein, Strategic
Objectives, (416) 366-7735 ext 231, davidw@strategicobjectives.com;
Media/North America, Renee Zahery, (847) 646-4422, Rzahery@kraft.com;
Media/Europe, Brita Westelius (Europe), 41 58 440 40 40,
Bwestelius@krafteurope.com; Investors, Chris Jakubik, (847) 646-5494,
Chris.Jakubik@kraft.com

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