We American coffee-drinkers have known the Era of Starbucks and the Epoch of Sanka. It seems, however, we currently live in the Age of the K-Cup.
And we’re about to discover everything that means.
Over the past half-decade, single-serve, instant-brew coffee pods—called K-Cups—have taken over more than a quarter of the U.S. ground coffee business. Last summer, the Wall Street Journal judged the K-Cup’s rise “unstoppable” and reported that product category was worth over $150 million.
K-Cups and Keurig (the best-known brand used to brew them) are both manufactured by Green Mountain Coffee. That company—worth some $16 billion itself—owned the patents for its chalices of disruption, but they expired in 2012, and since then it’s had a problem.
It’s historically operated on a razor blade model: Its Keurig business makes real money not by selling machine brewers but by selling K-Cups. Now cheaper competitors have moved in. They sell inexpensive one-off cups and reusable, extensible cups—threatening the company’s business on both sides.
A lawsuit recently filed by TreeHouse Foods alleges the company has taken anti-competitive action to stop the rise of off-brand K-Cups. It claims “Keurig has been busy striking exclusionary agreements with suppliers and distributors to lock competing products out of the market,” according to Karl Bode of TechDirt.
That’s all background, though, to the technology Green Mountain Coffee is preparing to implement. Later this year, the company will release its “Keurig 2.0” product. It will use a whole new type of K-Cup that affords customers “game-changing functionality” and “excellent quality beverages.” To achieve all this quality and game-changery, the company will also stop supporting “unlicensed pods.”
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