Competitors Can’t Keep Up with the K-Cup

The Keurig coffee maker is a product that launched the Green Mountain Coffee Company from a relatively unknown state to a household name in the coffee market. Unlike single-cup brewers that existed before, the Keurig offers a wide range of coffee and tea varieties and the K-Cups used in the machines are very neat- no loose grounds or spills. Partnering with other coffee brands, Keurig gets a royalty of about 4 cents per K cup sold. This enables the company to generate revenue from licensing agreements and no COGS. Additionally, unlike the Tassimo or Nespresso brewers, K-Cups for Keurig machines are available in a vast array in almost every grocery store and mass retailer.

The company touts a high level of devotion to customer service and my experiences with them confirm their claims for me.  After having my own machine stop working, the person I called at Keurig was extremely nice and helpful at guiding me through how to unclog it. The product has clearly been successful for the company. Their revenues have more than tripled in the last few years and they have been able to dominate the single-cup brewing market.


3 responses to “Competitors Can’t Keep Up with the K-Cup

  1. The Keurig 4 cent approach to royalties is a highly innovative strategy when you think about it. Encouraging product development in this way reminds me of how Apple made it easy for programmers to develop apps for iPhones. The recent market domination is very noticeable across many customer bases ranging from professional to personal use after using K-cups daily at my internship and now having one at my house on campus. With continuing development I think it is safe to say that Keurig is on the right track.

  2. I’ve never been a huge coffee person. Not because of the taste though, in fact I really like the taste of coffee. It’s more of the fact that I don’t like feeling extremely wired which is what it does to me and I don’t like decaf.

    Regardless, my point is I have never really had a need or desire for owning a coffee machine. That’s until I discovered the Keurig. Two of the guys that live in my house own one and therefore we have two Keurigs in the house. I had no idea what they were until one of them showed me and I was amazed. The coffee and tea that it made was delicious.

    I would agree that this is an extremely successful product. It took me, a consumer with no intention of ever getting a coffee maker, and transformed me into someone who wants one and will probably use it almost every day or so.

  3. I am glad that your Keurig continues to work! I think they have a great product, I find it interesting that they receive a royalty on each K cup sold. I never thought about how so many brands use K cups. It is very smart of them to patent their technology and then put it in the hands of brands and companies with the recipes people love. I wish I had thought of that!

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