Keurig () is a beverage brewing system for home and commercial use. The North American company Keurig Dr Pepper manufactures the machines. The main Keurig products are K-Cup pods, which are single-serve coffee containers; other beverage pods; and the proprietary machines that use these pods to make beverages.
Keurig beverage varieties include hot and cold coffees, teas, cocoas, dairy-based beverages, lemonades, cider, and fruit-based drinks. Keurig has over 400 varieties and over 60 brands of coffee and other beverages through its own and partnership-licensed brands. In addition to K-Cup pods, it includes Vue, K-Carafe, and K-Mug pods.
The original single-serve brewer and coffee-pod manufacturing company, Keurig, Inc., was founded in Massachusetts in 1992. It launched its first brewers and K-Cup pods in 1998, targeting the office market. As the single-cup brewing system gained popularity, brewers for home use were added in 2004. In 2006, the publicly traded Vermont-based specialty coffee company Green Mountain Coffee Roasters acquired Keurig, sparking rapid growth for both companies. In 2012, Keurig's main patent on its K-Cup pods expired, leading to new product launches, including brewer models that only accept pods from Keurig brands.
From 2006 to 2014, Keurig, Inc. was a wholly owned subsidiary of Green Mountain Coffee Roasters. When Green Mountain Coffee Roasters changed its name to Keurig Green Mountain in March 2014, Keurig ceased to be a separate business unit and subsidiary and instead became Keurig Green Mountain's main brand.Associated Press. "New Green Mountain name shows Keurig connection". USA Today. March 10, 2014.FISCAL 2014 ANNUAL REPORT . Keurig Green Mountain. November 2014."Green Mountain Coffee Roasters changes name to Keurig Green Mountain Inc" . Vermont Business Magazine. March 10, 2014. In 2016, Keurig Green Mountain was acquired by an investor group led by private-equity firm JAB Holding Company for nearly $14 billion."JAB Holding Company-Led Investor Group Completes Acquisition of Keurig Green Mountain, Inc.". Business Wire. March 3, 2016.Masunaga, Samantha. "Owner of Peet's to buy coffee pod pioneer Keurig for almost $14 billion". Los Angeles Times. December 7, 2015."JAB completes acquisition of Keurig Green Mountain" . Vermont Business Magazine. March 3, 2016. In July 2018, Keurig Green Mountain merged with Dr Pepper Snapple Group in a deal worth $18.7 billion, creating Keurig Dr Pepper, a publicly traded conglomerate which is the third largest beverage company in North America.
History Inception and development Keurig founders John Sylvan and Peter Dragone had been college roommates at Colby College in Maine in the late 1970s. In the early 1990s, Sylvan, a tinkerer, had quit his tech job in Massachusetts and wanted to avoid the issues of brewed coffee becoming bitter, dense and stale with time by creating a single-serving pod of coffee grounds and a machine that would brew it. Living in Greater Boston, he went through extensive trial and error trying to create a pod and a brewing machine. By 1992, to help create a business plan, he brought in Dragone, then working as director of finance for Chiquita, as a partner. They founded the company in 1992,Keurig, Incorporated – Company Overview at Bloomberg. calling it Keurig; Sylvan later said that the name came from his having "looked up the word excellence in Dutch". Although an individual named Dick Sweeney is sometimes considered the third founder of Keurig, Sylvan does not contend with this claim. Sylvan agrees that Sweeney joined the company, but that this occurred after at least two years into the company's founding.
The prototype brewing machines were also a work in progress and unreliable, and the company needed funds for development. That year, they approached what was then Green Mountain Coffee Roasters, and the specialty coffee company first invested in Keurig at that time.Green Mountain Coffee – History. BrewaBetterDay.com. Archived February 22, 2015.Luna, Taryn. "Green Mountain booming with Coca-Cola partnership for new cold drink system". The Boston Globe. February 7, 2014. Keurig needed sizeable venture capital; and after pitching to numerous potential investors, the partners finally obtained $50,000 from Minneapolis-based investor Food Fund in 1994, and later the Cambridge-based fund MDT Advisers contributed $1,000,000. In 1995, Larry Kernan, a principal at MDT Advisers, became Chairman of Keurig, a position he retained through 2002.Larry Kernan at LinkedIn. Sylvan did not work well with the new investors, and in 1997, he was forced out, selling his stake in the company for $50,000. Dragone left a few months later but decided to retain his stake.
Launch In 1997, Green Mountain Coffee Roasters became the first roaster to offer its coffee in the Keurig "K-Cup" pod for the newly market-ready Keurig Single-Cup Brewing System, and in 1998, Keurig delivered its first brewing system, the B2000, designed for offices.Keurig Canada – Our History . Corp.Keurig.ca. Retrieved March 16, 2015.A brief history of Keurig. TimeToast.com. Retrieved May 1, 2015. Distribution began in New York and New England.Keurig – Corporate Profile. Keurig.com. 2006. Archived from the original on March 7, 2006. The target market at that time was still office use, and Keurig hoped to capture some of Starbucks' market. To satisfy brand loyalty and individual tastes, Keurig found and enlisted a variety of regionally known coffee brands that catered to various flavor preferences.Ackerman, Alliston. "GMCR's Path to Disruptive Innovation" . Consumer Goods Technology. November 16, 2012. The first of these was Green Mountain Coffee Roasters, and additional licensees for the K-Cup line included Tully's Coffee, Timothy's World Coffee, Diedrich Coffee, and Van Houtte, although Green Mountain was the dominant brand. Keurig also partnered with a variety of established national U.S. coffee brands for K-Cup varieties, and in 2000, the company also branched out the beverage offerings in its K-Cup pods to include hot chocolate and a variety of teas. The brewing machines were large and hooked up to an office's water supply; Keurig sold them to local coffee distributors, who installed them in offices for little or no money, relying on the K-Cups for profits.
Keurig is credited with creating a new category with their cup-at-a-time pod-style brewing, a novel product and business model at the time.
In 2002, Keurig sold 10,000 commercial brewers. Consumer demand for a home-use brewer version increased,Lerner, Jill. "Keurig has some ideas brewing about consumer market". Boston Business Journal. June 9, 2003. but manufacturing a model small enough to fit on a kitchen counter and making them inexpensively enough to be affordable to consumers, took time. Office models were profitable because the profits came from the high-margin K-Cups, and one office might go through up to hundreds of those a day.Leder, Michelle. "Taking a Niche Player Big-Time". Inc. January 1, 2004.
By 2004, Keurig had a prototype ready for home use, but so did large corporate competitors like Salton, Sara Lee, and Procter & Gamble, which introduced their single-serve brewers and pods. Keurig capitalized on the increased awareness of the concept and sent representatives into stores to do live demonstrations of its B100 home brewer and give out free samples. Keurig and K-Cups quickly became the dominant brand of home brewers and single-serve pods.
Acquisition by Green Mountain Coffee Roasters In 2006, the publicly traded Vermont-based specialty-coffee company Green Mountain Coffee Roasters (GMCR) – which had successively invested in and acquired increasing percentage ownership of Keurig in 1993, 1996, and 2003, by which time it had a 43% ownership – completed its full acquisition of Keurig."Green Mountain Coffee's purchase of Keurig Inc. completed". Boston Business Journal. June 16, 2006. Green Mountain also acquired the four additional Keurig licensees, Tully's Coffee, Timothy's World Coffee, Diedrich Coffee, and Van Houtte, in 2009 and 2010.Rogers, Jim. "The story of the Keurig K-Cup and the 2.0 Brewer" . The Inside Scoop. RogersFamilyCo.com. December 16, 2014.Morgan, Brian. "Starbucks Alliance With Green Mountain Puts Spotlight on Coffee Pods" . Euromonitor International. March 21, 2011."Premier Employers of Food Processing: Green Mountain Coffee Roasters" . The Hitachi Foundation, and Northwest Food Processors Education & Research Institute. Retrieved March 16, 2015.*"Green Mountain (GMCR) Makes Key Strategic Acquisition of Canada’s Van Houtte". StreetInsider.com. September 14, 2010. "Green Mountain Coffee Roasters, Inc. Completes Acquisition of Tully's Brand and Wholesale Business" . Investor.KeurigGreenMountain.com (press release). March 30, 2009. "Green Mountain Coffee Roasters, Inc. Acquires Timothy’s Coffees of the World, Inc." . Investor.KeurigGreenMountain.com. November 13, 2009. "Green Mountain Coffee to buy Diedrich for $290 Million". Los Angeles Times. December 8, 2009. LaSalle, LuAnn. "Green Mountain Coffee buys Van Houtte for $915M". The Canadian Press. September 14, 2010.
The joining of Keurig and Green Mountain combined a highly technological brewing-machine manufacturer and a nationwide high-end coffee provider into one company and created an effective "razor/razorblade" model that allowed for explosive growth and high profits. By 2008, K-Cup pods became available for sale in supermarkets across the U.S. Coffee pod machine sales overall multiplied more than six-fold over the six years from 2008 to 2014.Ferdman, Roberto A. "The world’s growing love affair with the most wasteful form of coffee there is". Quartz. March 31, 2014. In 2010, Keurig and K-Cup sales topped $1.2billion. The high-margin profits from K-Cup pods are the bulk of the company's income; for the fiscal year 2014, Keurig generated $822.3 million in sales from brewers and accessories, while the pods had $3.6 billion in sales.Kell, John. "Keurig's too-hot coffee machines stung by recall". Fortune. December 23, 2014.
In February 2011, Green Mountain announced an agreement with Dunkin' Donuts to make Dunkin’ Donuts coffee available in single-serve K-Cup pods for use with Keurig Single-Cup Brewers. In addition, participating Dunkin’ Donuts restaurants occasionally offer Keurig Single-Cup Brewers for sale."Green Mountain Coffee Roasters, Inc. and Dunkin' Donuts to Make America's Favorite Coffee Available in K-Cup Portion Packs for Keurig Single-Cup Brewers". Business Wire. February 22, 2011. In March 2011, Green Mountain Coffee and Starbucks announced a similar deal whereby Starbucks would sell its coffee and tea in Keurig single-serve pods and would, in return sell Keurig machines in their stores as part of the deal.Allison, Melissa. "Starbucks, Green Mountain ink deal, but it's not an acquisition". The Seattle Times. March 10, 2010.
Additional products and developments The company introduced the Keurig Vue brewer, paired with new Vue pods, in February 2012,"Green Mountain Coffee Roasters Unveils New Keurig Brewing Platform" . Investor.KeurigGreenMountain.com (press release). February 15, 2012. seven months before the key patent on the K-Cup expired in September 2012.Gara, Tom. "The K-Cup Patent Is Dead, Long Live The K-Cup". The Wall Street Journal. November 28, 2012.Keurig's patent on the original K-Cup () The Vue system was announced as having customizable features so consumers had control over the strength, size, and temperature of their beverages, and the Vue pod is made of recyclable #5 plastic. The Vue brewer was discontinued in 2014,Golden, Seth. "Keurig Green Mountain's Keurig 2.0 Has Opportunities And Downside Risk". Seeking Alpha. March 25, 2014. although Keurig still sells the Vue pods.