Issue link: https://read.dmtmag.com/i/491350
42 STiR tea & coffee industry international invented single-serve in 1986 is making its move from the back of the pack. Handicapping is the art of predicting winners, in this race consider: l Hundreds of roasters and brands like Gevalia and Peet's Coffee & Tea are bringing Kups (non-licensed K-Cups) to market, advancing to 12% market share in the past year and continuing to grow. Grocery chains and brands outside Keurig's circle of 35 partners sell Keurig- compatible capsules for 25-30% less. l That has not kept brands such as Panera from following the lead of big players that include Folgers, Dunkin' Do- nuts, Starbucks and GMCR. Starbucks announced it will triple the number of branded K-Cups, adding Teavana Teas, Seattle's Best Coffee and Torrefazione Italia despite the fact it has a competing Verismo machine in the market. l Two price tiers are emerging. Verismo espresso and some premium blends like Kona sell for $1 per serving or more. Nespresso capsules sell for 65 cents but it is now apparent that customers are not will- ing to pay $1 per serving for mainstream brands. This makes 75-80 cents per cup the ceiling of the price tier for brewed coffee. K-Cups at 55-60 cents per cup are the price point for mainstream brands like Folgers. Non-licensed store brands like Costco's Kirkland coffee sell for 40-45 cents per serving and grocery chains are offering Kups at 35 cents. A tremendous volume of discounted single-serve coffee is purchased online. GMCR The company has asked stockholders to change its name to Keurig Green Mountain in March. The recommendation reinforces the fact GMCR is marketing a system, not just coffee. In the U.S. four of the five best-selling brewers by sales are Keurig. The com- pany counts 35 licensed partners producing 268 different K-Cup varieties from coffee and tea to hot chocolate, cider and soup. GMCR continues to upgrade manufacturing capability. It is closing its Toronto plant Mar. 5 to consolidate Canadian K-Cup and Vue capsule production in Montreal where it has expanded the facility by 40%. GMCR now operates seven manufacturing facilities in the U.S. The company is also heavily investing in research and development of the Keurig 2.0 which brews a single cup or a 28 oz. carafe. It is set to launch in the fall of 2014. Keurig is also venturing into retail with extensive in-store displays in mass market department stores and its first stand-alone retail store which opened in November in the Burlington Mall outside Boston. The 1,900 sq. ft. store "allows us to connect with fans in a new and inventive way," said Mark Wood, GMCR s.v.p. A pick-a-pack wall showcases the entire line from Snapple iced tea to Campbell Soup. Customers are en- couraged to try something new, customizing their selection in 3-, 6- or 12-count boxes. "We will use this direct-to-customer environment as a learning opportunity, where we can gather unique insights to share with our retail customers," said Wood. Coca Cola veteran Brian P. Kelley, GMCR's c.e.o. since November 2012, said this summer that signing non-licensed brands is a priority. The company is negotiat- ing favorable deals for roasters and retailers seeking private label services that include sourcing, cup manufacture, marketing assistance and distribution. Those who prefer non-licensed offerings have several options including: RealCup™ Mother Parkers Tea & Coffee is the fourth largest roaster in North America by vol- ume. The Toronto-based company is privately held with a large private-label business More than 250 million RealCups™ have been manufactured since Mother Parkers Tea & Coffee introduced its Keurig-compatible pods in 2012.