STiR coffee and tea magazine

Volume 4, Number 3

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36 STiR tea & coffee industry international / Issue 3, 2015 (June/July) E By Dan Bolton Tea in capsules continues to ascend but single serve's meteoric rise is showing signs it's beginning to slow Single Serve Ceiling New capsule design... Smaller tea blenders... Greater tea variety... verything that rises eventually descends and for Keurig Green Mountain that old saying applied to falling sales for their entire line of capsules, brewers and accessories this spring. It may also chill sales of Keurig Kold, the new home soda dispenser that holds great promise for cold tea drinks. The Coca-Cola backed Kold goes on sale this fall. Revenue from portion packs was growing at 22% last fall and Keurig Green Mountain (KGM) was still clocking a respectable 9% growth at the beginning of this year but KGM reported only 2% sales growth in the last quarter. More ominous is the 22% decline in year-over-year brewer sales. Lessons from the gold rush When the ambitions and resources of the California gold rush of 1849 were spent it was companies like Folger Bros. Coffee and Levi Strauss and the Union Pacific Railroad that profited. Early prospectors made it big with easy pickings but the real money was in supplying prospectors. There were 370 tons of gold recovered in the first five years after the strike, a sum worth $16 billion in today's dollars. That is roughly the same amount that Keurig has earned since 2010 leading the rush to single-serve in the US There are now single-serve brewers in 32 million US homes, the majority made by Keurig, but in- creasingly the K-Cup brewers and capsules that heralded a brewing revolution are supplied by Keurig's competitors. Hamilton Beach, Breville, BUNN, Cuisinart, and Remington are among nine manufacturers marketing Keurig-compatible brewers that are less expensive to make and therefore less dependent on licensed brands that generate royalties from capsules. Sales of the Keurig 2.0 brewer introduced last fall are sluggish despite discounting while retailer's report brisk sales of brewers under $100. Capsule sales rose from $132 million in 2008 to $5 billion last year but US household penetration of the $150 to $250 brewers, now at 27% according to the National Coffee Association, appear to have plateaued as new users favor less expensive models. Globally 29 million home brewers were sold in 2014, up 11% according to Euromonitor Interna- tional, suggesting the rush for single serve riches has just begun.

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