Kraft selling K-cups for Keurig?

by chee leng-Oncoffeemakers
(Singapore)

When I first hear the news that Kraft is selling K-cups for Keurig, I was shocked! Why is Kraft not promoting Tassimo but making Maxwell house and Gevalia for Keurig?

Well, it turns out that I missed out the word "compatible". Kraft food is launching coffee pods that is compatible with Keurig for Maxwell hours and Gevalia and they are not paying any licensing fees to Keurig.

This is bad news for Green Mountain Coffee Roasters (GMCR) because they will be losing sales of the k-cups which I believe is making them a lot of money.

And they are not able to do anything about it, because some of their patents expired in September 2012, and this expiry allows others to use the technology to make compatible pods.

Some time before that, I wrote about Upshot solution, a company that package single serve coffee that is compatible with keurig and now Kraft.

Moving forward, I think more players will come into the market. The reason: millions of ready customers that have or already own the keurig coffee machine.

And coffee companies know that these owners are always looking for compatible products despite the fact that Keurig has more than 100 different varieties of beverages.

And the problem doesn't stop here for Keurig. Starbucks, which partnered them last year and begin selling keurig in all their outlets launched their single serve coffee machine, Verismo recently.

Many companies launched their own single serve coffee machine, but when Starbucks do something, you have to take note.

Especially after they have partnered and probably Keurig strategy inside out.

What I am surprised is, the apparent non reaction by GMCR. They are not making much noise about Verismo, and they did not say much about Kraft compatible pods.

Are they losing it? Did they not see all these coming? Or, are they mustering their resources and make another great product launch.

This is October. One month to black Friday and the start of seasonal shopping. Companies that wants to grab some consumers dollars will be doing their launch now, maybe there will be an announcement from GMCR soon.

My $0.02

On Kraft

Launching the compatible coffee pods with Keurig will definitely drive up its overall sales with the huge keurig owners base.

This is probably akin to what Sara Lee did in Europe with the L'Oro capsules for Nespresso.

They make a lot of money at the expense of Nespresso then went back to develop Senseo.

Unfortunately, Senseo did not seems to be taking off (or could I be missing some action?).

The drawback for Kraft is, they will further push up the popularity of Keurig. Now that there are more brands, more flavor, more people will likely get the machines for Christmas.

So, if this is the case, Tassimo coffee machine might be seeing a very low take up rate this season.

On GMCR

I do not know why they are not making much reactions on the latest move by Starbucks and Kraft.

But, I hope it is not a case of "nothing much they can do". Their patent has expired, so they do not have much to argue about.

They can do it the way Nespresso is doing, and waste a lot of money and time on lawsuit, but yet ECC, Sara Lee and Nexpod are still doing their business.

Or, they can move on to develop a bigger base. They can get more consumers to buy their machine. It need not be a ink that is making the money.

Now that there are more flavor, more ways to enjoy coffee on a Keurig, you are giving people more reasons to buy Keurig, and probably make some money out of it!

In addition, they should actively go out and get more brands on their K-cups. The more partnership they established, the lesser competitors they will have.

I am looking forward to the development and the action or execution taken by GMCR.