Coca-Cola Enters Specialty Coffee Business

Hoping to tap into the market for premium espressos and lattes, Coca-Cola Co. (KO) launched its Far Coast brand of specialty coffees in the heart of Toronto's fashion district Wednesday.

The U.S. beverage giant, which has been hit by sluggish demand for its flagship soft drinks, aims to sell its new line of premium coffees and teas through a range of retailers from fast-food chains and gas stations to upscale restaurants.

"It's a huge new category for the Coca-Cola company," said Udaiyan Jatar, Coke's premium brewed beverage general manager.

The coffee and tea business worldwide is about twice the size of the soft drinks market and Coke sees a niche in the rapidly growing gourmet coffee segment, Jatar said.

"I can tell we're ahead of the game," he said.

Coke, which declined to provide any sales projections for its new brand, will open its first Far Coast concept store in Toronto later this month, followed by similar openings in Oslo and Singapore.

But the company said it has no intention to develop its own network of coffee houses.

"We've created one simple package," Jatar said. "We'll give (retailers) the brand, the equipment, the products, and the service for the equipment."

Toronto will be a test market for the brand and Coke expects to have about 40 points of sale around the city by the end of the year.

The specialty brewed beverages, which will compete with the likes of Starbucks Corp.'s (SBUX)coffees and teas, will sell "in the coffee house price range", the company said.

A gradual roll-out of the brand in the United States could follow within the next 12 months, Jatar said.

"This is a controlled launch, we will be examining everything very closely," he said. "The reach of Coca-Cola's system is so wide that we have to have a solution that is truly scalable before you start doing it."

Jatar said the company doesn't have "concrete plans" at this point to link with major partners such as fast-food giant McDonald's Corp. (MCD).