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The Street
The Street
Veronika Bondarenko

Do People Still Use Keurig K-Cups?

Before big players like Starbucks (SBUX) and Dunkin' (DNKN) came onto the scene, Keurig (KDP)'s K-Pods were ubiquitous and almost exclusively associated with single-use pod coffee.

Even though the Switzerland-based Nestlé  (NESAF)  first launched its Nespresso coffee pods in 1986 and would have a regular stream of buyers over the next two decades, the craze would not begin until Keurig first brought its K-Pods to supermarkets in 2008.

Sales of the single-use pods more than tripled between 2011 and 2013. Euromonitor data also found that sales of the machines grew from 1.8 million units in 2008 to 11.6 million in 2013.

"Since their debut in the 1990s coffee pods and capsules have become incredibly popular," reporter Jimmy Stamp wrote for Smithsonian Magazine in 2012. "One company, however, has come to dominate the market so that its brand has become nearly synonymous with the product in the same way that Kleenex has with facial tissue."

Who's Drinking Keurig Now?

As with many cases of market dominance, it wasn't long before some tried to unseat Keurig from its place at the top.

In 2018, Nestle first partnered with Starbucks in a $7.1 billion deal that would allow it to have the Starbucks name on certain pod product. After revamping its design and launching several new lines, the Swiss company was quickly able to benefit from the pod explosion and quickly started to if not unseat then at least rival Keurig in terms of popularity.

While Dunkin Donuts (now Dunkin') launched its own K-Pods in partnership with Keurig in 2015, having such a big name making the same product ultimately brought down Keurig's market share.

In 2021, Starbucks took up 22% of the coffee pod market while Keurig was at 11.2%. Dunkin' and Folgers had a respective 9.3% and 6.1% while collective private labels took up 22%.

That does not exactly mean that Keurig is struggling. For its upcoming June 9 earnings call, analysts predict that Keurig will post sales of between $3.34 billion and $3.44 billion.

In Q1, that number was at $3.01 billion but, as it should be noted, includes not only coffee but soft drink brands like Dr. Pepper, Snapple, and 7Up.

What Is In Store For The K-Pod Business?

"Margins were impacted by accelerating inflation, which outpaced the timing of pricing actions, and the previously discussed coffee supply chain disruption," Keurig Dr Pepper CEO Bob Gamgort said in a statement. "We made significant progress during the quarter on increasing coffee production and rebuilding inventories, and we implemented additional pricing actions across most categories."

In the 14 years since K-Pods first started dominating the scene, Keurig has had to face a number of challenges beyond just competition. 

Growing environmental consciousness on the part of the consumer has pushed almost every single-use coffee pod maker to promise -- and, to varying degrees of advocate satisfaction -- deliver a more eco-friendly version.

While coffee pods are not seeing the same explosion as they did in the over the last decade, it has also become a staple that many rely on to get their daily coffee -- and, as such, it will likely retain a steady buyer base for years to come.

"Rising consumption of coffee along with increasing demand for fast and effortless coffee solution among cafés and restaurants are projected to augment the sales of coffee capsules," reads a 2022 Future Market Insights research report.

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