Doughnut duel moves to UK

THE turf war in the US doughnut industry between two of the biggest players, Dunkin' Donuts and Krispy Kreme, is about to spill over into Britain.

Krispy Kreme, maker of such flavours as 'chocolate iced custard', plans to open a franchise at Harrods in September as part of a programme for 25 UK outlets over the next five years.

Each is likely to feature its trademark-of making its products in full view of customers, what it terms 'doughnut-making theatre'.

The US group's arrival here is another example of its ability to punch above its weight in a world market dominated by Dunkin' Donuts, which is owned by British drinks giant Allied Domecq.

Dunkin' has more than 5,000 stores in 40 countries.

Krispy's assault on Britain's sweet tooth, particularly with such a high-profile opening as Harrods, will annoy Allied, whose interests range from Beefeater gin to Baskin Robbins ice-cream.

Despite its worldwide doughnut domination, Dunkin' has only a handful of sites in Britain and Krispy's expansion plans means it could be overtaken here.

The pair have already clashed in the US, where until a few years ago Krispy, founded in North Carolina, was confined to the southern states while Massachusetts-based Dunkin' was predominant in the north. Krispy has been buoyed by a strong share price since it joined the New York Stock Exchange in

2000. Last month it opened its first outlet in Massachusetts and has about 290 stores in America.

While small compared with Dunkin', its strong growth has helped to propel its stock market value from an initial £280 million to £1.6 billion, though that is well below Allied's value of £3.8 billion.

Dunkin' is hitting back with the opening of 342 stores this year and a further 630 in 2004.