- Coffee pods were on a seemingly non-deviating path skyward for the several years leading up to 2014. But their convenience did not outweigh other factors for long, leaving coffee pods and pod machines now on the decline.
- Keurig reported that it sold 7% fewer coffee machines over the holiday season as compared to the prior year, the sixth consecutive quarter of unit sales declines. K-Cups have also taken a downward turn for the past two straight quarters.
- Consumers turned to coffee pods as an alternative during the recession, but now that the economy is bouncing back, they're returning to their previous spending at coffee shops instead of brewing on their own at home.
With the introduction of the Keurig 2.0, the company aimed to weed out competing K-Cup makers by making those coffee pods incompatible. That move only served to enrage consumers, who took to the Internet with their complaints. In the first three months of last year, coffee machine sales plunged 22%. This demonstrates the need for manufacturers to devise more strategic ways to silence the competition without silencing consumers along with it.
Another issue is the packaging waste coffee pods create, with an estimation that K-Cup trash could now encircle the planet more than 10 times. Companies are introducing recyclable coffee pods, and even Keurig has committed to make 100% of K-Cups recyclable by 2020.
Coffee pod maker Nespresso announced production expansion in the U.S. in September. About one in four Americans owns a coffee pod machine, so the household penetration is still there. The key is reviving sales by taking care of the environmental issues and promoting single-serve products' convenience, which is crucial to consumer preferences.
Despite these slumping sales, JAB Holding Co. offered a price of $13.9 billion for Keurig Green Mountain in December. This and other deals in the coffee industry show JAB making moves to overtake Nestle's leading spot over the industry, which could lead to further consolidation.