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Green Mountain Coffee Roasters: ‘Game-changing’ Keurig 2.0 will tackle unlicensed K-Cup challenge

5 commentsBy Elaine WATSON , 22-Nov-2013
Last updated the 22-Nov-2013 at 20:09 GMT

GMCR CEO: 'We anticipate a large number of current Keurig users choosing to switch into the new system because it's a better one.'
GMCR CEO: 'We anticipate a large number of current Keurig users choosing to switch into the new system because it's a better one.'

The much-anticipated ‘Keurig 2.0’ single-cup brewing system with ‘interactive readability’ (that doesn’t work with unlicensed/copycat pods) will offer such “game-changing functionality” that consumers - and unlicensed players - will want to switch, claims the boss of Keurig-maker Green Mountain Coffee Roasters (GMCR).

Speaking on the firm’s fourth quarter 2013 earnings call, CEO and president Brian Kelley said: “We will be transitioning our lineup of Keurig brewers over fiscal 2014 and early 2015. While we're still not willing to discuss specifics about the platform for competitive reasons, we are confident it delivers game-changing performance.

“To ensure the system delivers on the promise of excellent quality beverages produced simply and consistently every brew every time, we use interactive technology to help us perfectly brew all Keurig brew packs. Because of this the system will not brew unlicensed packs.”

The new Keurig 2.0 system will not brew unlicensed packs

Now that K-Cups are off patent, anyone can make them, and unlicensed versions (which sell for 15-25% less) accounted for a record 12% of sales of single-serve coffee/tea for Keurig machines in the quarter, he said.

But that would change in time, he predicted: “We will continue to convert current unlicensed players into licensed Keurig system partners, so that they can participate in the innovations ahead… GMCR is actively engaged in discussions with a large number of unlicensed players to welcome them into the [new 2.0] system…”

We anticipate a large number of current Keurig users choosing to switch into the new system

Asked why he believed consumers that have already bought a Keurig machine might switch to the new 2.0 platform, he said: “We anticipate a large number of current Keurig users choosing to switch into the new system because it's a better one.

“And any time new technology comes out and it's a better technology and you already love the brand and you offer a better product you generally get consumers to switch… We’re pretty confident as we’ve begun to talk to customers about this.”

Meanwhile, the new commercial grade Keurig BOLT machines and packs (which can brew a 64 oz. pot of coffee in two minutes) have performed well in test markets, while the new Keurig Cold system (that will make freshly prepared carbonated, sparkling and still beverages) would launch in fiscal 2015, he said.

GMCR has had positive feedback from trials of its new BOLT Keurig system, which can brew a 64 oz. pot of coffee in two minutes

“The response [to BOLT] from our offices and from our distributors has been excellent… We expect the BOLT to play a big part in offices and large offices and midsized offices.”

New ‘fresh brewed’ Campbell Soup K-Cup products would also hit shelves next year, he said (click here ). 

GMCR 2013 revenues $4.4bn; Keurig machines in estimated 13% of US households

GMCR posted a 22% rise in revenues to $1bn in the fourth quarter of fiscal 2013 (13 weeks ended Sept 28) with volumes of portion packs up 29% and sales of Keurig machines up 47%.

For the year, net revenues were up 13% to $4.36bn and EBITDA was nearly $1bn, said Kelley, adding: “We estimate our current Keurig Hot system is in approximately 13% of US households.”

Well Fargo: Pods account for more than a third of dollar sales of retail packaged coffee

New 'fresh-brewed' Campbell Soup K-Cup products will start appearing on shelves next year

According to a Wells Fargo analysis of the latest Nielsen expanded all-outlet combined channel (XAOC) data (all stores except c-stores), pods now account for more than a third of dollar sales of retail packaged coffee.

And private label pods accounted for 8.7% of dollar sales of pods in October 2013 compared with 0.4% in October 2012, said senior analyst Bonnie Herzog: "Private label pods’ pricing increased 2.3%, however PL pods continue to capture unit share of the category."

She added: "Investors have been asking us what the availability of private label K-Cups could mean to the category and we feel private label will likely drive growth to the entire pod category and should not meaningfully affect premium/super-premium K-Cup brands’ momentum."

 

5 comments (Comments are now closed)

Forget the 2.0 system!

Why would I want this new system? I refused to purchase a Keurig until I was able to use my own choice of coffee. I refuse to be forced to use stale coffee and therefore any product that is purposely manufactured to force consumers to use only certain products can … well you know what you can do with your arrogance and new system. We use fresh roasted, organic coffee only.

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Posted by Kandi
19 February 2014 | 23h13

Ditch the plastic

I agree with Linda, although I love my Keurig. I just can't handle the plastic waste. I found this coffee company at Costco, San Francisco Bay Gourmet Coffee, 97% Bio-degradable k-cups for the Keurig. But if Keurig is making it so I can't use these environment friendly k-cups I will have to find a new brewer that will.

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Posted by Hunter Nicolaus
29 January 2014 | 20h01

Lousy coffee

As far as I am concerned, the huge space taking machine and the coffee are a big waste of money. the stuff is awful and the cost to the environment is appalling.
It isn't hard to brew a cup or carafe of coffee at home. All that is needed is a funnel a filter and a cup. I buy freshly roasted beans and grind them myself. Green Mountain Coffee should hang their heads in shame for contributing to the landfills.

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Posted by Linda
11 January 2014 | 06h05

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