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Krispy Kreme Moves Into Coffee as Others Move on

Thursday, 22 Mar 2012 | 12:52 PM ET

Krispy Kreme wants to expand coffee sales at a time when its competitors are branching into other categories.

Krispy Kreme donuts
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Krispy Kreme donuts

Speaking to CNBC Thursday after the company reported a fourth-quarter profit, CEO Jim Morgan sees coffee and donuts as a natural pairing. Coffee currently makes up 4 percent of sales and Morgan wants to double that.

"We’ve got to promote it. We’ve got to get [customers] thinking coffee when they walk into our shops," he said.

The first step is to get current donut customers to buy more coffee, then draw in new customers with promotions. For instance, Morgan said Krispy Kreme is currently pushing a promotion of a coffee of any size for 99 cents with a dozen of its sweet confections.

Krispy Kreme is not alone in wanting to get customers in for a cup.

Dunkin' Donuts used to be known for its donuts but now when "America runs on Dunkin'," it's talking about coffee.

McDonalds is now selling specialty coffees, but it is also offering healthier fare. Starbucks, meanwhile, is expanding into juices and energy drinks.

Krispy Kreme CEO on Earnings
A breakdown of the doughnut maker's earnings and forecast, with Jim Morgan, Krispy Kreme CEO, who discusses the company's launch of a new coffee.

CEO Howard Schulz told CNBC Wednesday the health and wellness category is "a massive market," and Starbucks will be selling Evolution juices in its ubiquitous coffee stores as well as in a new chain of juice bars, the first of which opened Monday in Bellevue, Wash.

Morgan said the company has discussed taking the Krispy Kreme brand beyond donuts and coffee but that's not in the immediate future.

"There’s plenty of demand for what we consider to be affordable indulgences," he said. "As long as we maintain the number one product in our class...and a brand that is as beloved worldwide as we are, we will get to that expanded product line and there's no question that it's part of our future."

Questions? Comments? Email us at consumernation@cnbc.com.

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