Up 25.8% from a year ago, “sales of single cup coffee is propelling all the growth of the coffee category,” sales of which climbed only 4.5% during the same period, Brian Kelley said at the Consumer Analyst Group of New York conference Feb. 19.
He noted that all the other segments declined with sales of instant coffee dropping 2.9%, ground coffee falling 4.3% and whole bean coffee declining 9.5% in the year in the U.S., according to data from IRI.
The market share of single cup coffee also is climbing up to 36% of the $8.73 billion of coffee sales in 2014 from only 12% of the $7.06 billion category in 2011, Kelley added.
He attributed the success to the increased penetration and use of Keurig brewing systems, which has been the No. 1 selling coffee maker in the category for 53 months in a row – earning it the title of Brand of the Year, according to a 2014 Harris Poll.
The brand’s success also is due to it being “spot on trend” with consumers’ desire for premium, personalized, fresh beverages with a simple push of a button, Kelley said, adding that the platform also offers consumers massive variety with 400 different products and more than 60 brands.
Even though the company is gearing up to launch in the fall the KeurigKold platform for cold sparkling and still beverages, Kelley does not intend to lose momentum or focus on the hot platform. Rather, he intends to drive sales and “continue to win” with new technologies, expanded choice and through creative design.
Innovation and expansion
This spring the company will launch and ship the Keurig 2.0 K200, a significantly smaller machine that will take up less counter space and will come in a wide range of bold colors, Kelley said. It also will be priced at the lowest introductory point at $99 to o$119, he added.
Keurig also will offer a wider variety of sizes as well as blends of coffee. In the spring, it will launch online the new K-mug packs, which will brew 16 to 18 ounces of coffee that consumers can brew and take with them in a travel mug. That line will start with five varieties and expand to nine in the fall of 2015, he said.
Nine more varieties of the K-Carafe packs also will be available in the fall, bringing the total to 23. In the regular size pods, Keurig will launch with actor Hugh Jackman a line of global coffees under the Laughing Man brand. In addition, it will roll out two new Green Mountain blends and a new Community Coffee.
Packaging and retail displays also will get a new look as Keurig explores the potential impact of creative design, to which Kelley said the company has not paid much attention, yet. The main line of Green Mountain coffee will be packed in green, while the seasonal blends will be set off in orange and organic in white.
The other brands also will get an update to further “enhance the attachment and appeals of the brands to consumers,” Kelley said.
In retail outlets, Keurig Hot brewers and pods have now secured enough shelf pace that the company room to play with display, Kelley said. It will work with retailers to design a better aisle, which is an area “where we know we can do more,” he said.
Finally, the firm is exploring a new retail format – monthly package programs akin to subscriptions. The monthly price will range from $5.99 to $16.99 and should appeal to younger consumers who are more familiar with subscription-type ordering services, Kelley said.