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UPDATE 2-Dunkin' partners with Coca-Cola on bottled coffee

(Adds CEO comment, value of Starbucks' packaged goods business)

Sept 29 Dunkin' Brands Group Inc said on Thursday its doughnut chain will partner with Coca-Cola Co to launch a line of bottled coffee beverages in the United States, its first foray into the ready-to-drink coffee market dominated by rival Starbucks Corp.

The Dunkin' Donuts chain operator said the beverages, set to launch in early 2017, will be manufactured, distributed and sold by Coca-Cola. The bottled iced coffees, which will include milk and sugar in a variety of flavors, will be sold at supermarkets, convenience stores and in Dunkin' Donuts shops.

Terms of the deal were not disclosed.

Dunkin' Brands Chief Executive Nigel Travis told Reuters that the new venture will appeal to existing customers and also build brand recognition.

"Some of our Dunkin' consumers were drinking other people's products because we weren't there," Travis said.

The cold beverages, like the packaged coffees Dunkin' Donuts already sells through various retail channels, also are expected to introduce consumers to the chain's flavor profile. That can help build interest in the brand as it expands into new U.S. markets, Travis said.

Dunkin' will split net profits from the sales of ready-to-drink coffee sold outside its shops with U.S. Dunkin' Donuts franchisees, with the highest revenue-producing operators receiving the largest percentage of that share.

Starbucks, which has sold canned and bottled coffee drinks in North America since 1994, controls about 97 percent of the U.S. ready-to-drink coffee market in a 50-50 partnership with PepsiCo Inc. (bit.ly/2dcRuvU)

Starbucks reaped more than $2.1 billion from its division that includes packaged drink and coffee sales during the fiscal year ended Sept. 27, 2015.

Travis declined to forecast sales for Dunkin's ready-to-drink products.

Dunkin' has partnered with Coca-Cola since 2012 to serve Coke beverages at its coffee chains in the United States and certain other countries. (Reporting by Jessica Kuruthukulangara in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Shounak Dasgupta and Meredith Mazzilli)

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