• The Wall Street Journal, Thursday, January 17, 2008 1:30 PM

Procter & Gamble, which in recent years has focused on fast-growing businesses in areas such as health care and beauty, has decided to spin off its Folgers coffee business to shareholders rather than sell it, says a person familiar with the matter. A P&G spokesman had no comment. Since taking on P&G's top post in 2000, CEO A.G. Lafley has shed most of the company's other food businesses, including Jif, Crisc and Sunny Delight.

Folgers's annual sales, at just under $2 billion, are growing between 2% and 3%. While it is the top-selling ground coffee in the U.S., it has suffered from the popularity of the Starbucks concept and the proliferation of gourmet coffee brands.

The new stand-alone Folgers company likely will be a profitable but low-growth business, which may not wow investors. But a stand-alone company could attract buyers in the future, says Sanford Bernstein analyst Ali Dibadj, given Folgers's leading market share and some recently successful ventures by the business, including an arrangement to distribute Dunkin' Donuts coffee to retailers.

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