Coke, Illy to take it slow in marketing coffee drinks

"This is not going to be a product and brand strategy led by 'let's try to maximize the geographic coverage'," Kapoor said. "That's easy for us to do in the Coke system. But we don't want to do it that way. We're being very careful and choiceful about how we do it."

The joint venture, formed in 2007, pairs Coke with a well-known European coffee brand that has a growing global presence. Illy coffee is sold in 140 countries.

Coke and Illy have three versions of Illy Issimo: caffe, cappuccino and latte macchiato. The drinks come in silver single-serving cans typically priced between $2.49 to $2.69.

The Illy Issimo drinks are now offered in 15 countries. Early this year, the beverages were introduced in New York and Los Angeles, the first U.S. markets. San Francisco was recently added.

By the end of 2010, Coke and Illy expect to have Issimo in 6 to 8 major U.S. markets, Kapoor said. The joint venture also is targeting key national accounts, such as Whole Foods Market, that could broaden distribution, he said.

Most of the marketing will focus on sampling and in-store displays, Kapoor said. Coke and Illy want to build the brand primarily through trial and word-of-mouth, he said. A strong connection will be made to Illy's hot coffee, placing the Issimo canned drinks next to tins of the Illy roasted and ground coffee.

Illy Issimo is significant for Coca-Cola because ready-to-drink coffees are a growing segment. The company estimates the global market to be about $17 billion in annual sales with average growth of 5 percent a year in the past five years.

PepsiCo dominates the U.S. market through a deal with Starbucks. Pepsi-Starbucks products accounted for 91 percent of the volume in the U.S. ready-to-drink coffee segment in 2008, according to Beverage Digest. Caribou, distributed by Coke bottlers, has 2.1 percent market share.

Illy could help Coke grab a bigger part of the premium coffee drinks market, said John Sicher, editor and publisher of Beverage Digest. Coke and Pepsi, though, have yet to tap into what could be a broader market, he said.

"The thing to watch in the U.S. is whether someone is going to crack the code for a more mainstream priced ready-to-drink coffee and transform the category into a very big one," Sicher said.