McDonald's says McCafe launch off to good start

OAK BROOK, Ill Wed May 27, 2009 2:20pm EDT

A drive-through menu displays McDonald's new coffee products under the ''McCafe'' brand at one of their restaurants in Del Mar, California September 17, 2008. REUTERS/Lisa Baertlein

A drive-through menu displays McDonald's new coffee products under the ''McCafe'' brand at one of their restaurants in Del Mar, California September 17, 2008.

Credit: Reuters/Lisa Baertlein

OAK BROOK, Ill (Reuters) - McDonald's Corp (MCD.N) executives said on Wednesday that the fast-food giant's McCafe coffee roll-out is off to a good start and that data on its market share impact should be available in about six months.

"Things are going very, very well .... Coffee movement has been good. It's exceeded our expectations," Don Thompson, president of McDonald's USA, told reporters in a press conference following its annual shareholders meeting.

McDonald's has said it expects the addition of beverages ranging from coffee and cappuccino to water and sports drinks to eventually add $1 billion to annual sales.

The company said its associated bottled beverages push likely will focus on plain and flavored waters and sports drinks rather than energy drinks and carbonated beverages.

"The jury is still is still out relative to energy-based drinks," said Thompson, who added that frappes and smoothies could be in stores by the latter half of next year.

McDonald's recently announced the formal launch of its McCafe coffee drinks in the United States, where around 11,000 of the fast-food chain's roughly 14,000 U.S. locations will have the McCafe coffee stations.

"We're going to be doing some additional consumer measures and we'll get a chance to see what market share looks like, but that will probably be another six months down the road," Thompson said, referring to the impact of the company's coffee push.

Many analysts view McDonald's McCafe expansion as a direct attack on cafe chain Starbucks Corp (SBUX.O), which has lowered prices in some markets where competition has intensified.

McDonald's is also rolling out McCafe stations in overseas restaurants. For example, it plans to add McCafe to more than 1,100 European outlets.

(Writing by Lisa Baertlein; Additional reporting by Gabriel Dominguez in Berlin; Editing by Richard Chang)

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