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Single-Serving Products Make Coffee Rich Ground for Licensing

Two decades ago, Keurig Green Mountain introduced the world to its patented K-cup single brewing system. Coffee consumption would never be the same. Soon “K-cup” had become a generic term, and the communal pot of coffee for office or home consumption became an endangered species—at least in wealthy parts of the world like North America and Europe where consumers could afford and didn’t mind spending extra for the convenience of single-cup consumption.

According to reports, in 2014, Americans spent $2.83 billion on single-serving coffee. That’s an increase of 280% since 2011, and sales are expected to exceed $5 billion by 2016. K-cup devices have become an everyday kitchen appliance with more than 1 in 5 American homes containing single-serving coffee systems.

And single-cup coffee consumption in Europe is more than double North American levels.

The Casualties of Single-Serving Coffee

All in all, single-serving coffee is not a bad business to be in. But it’s not all pretty, either. Single-serving coffee products have cut deeply into sales of traditional coffee products— the old staple tin coffee cans from venerable brands that used to occupy entire aisles of the supermarket.

The single-serving coffee has also made life even tougher for local gourmet coffee shops and specialty food stores. Now you can get all the gourmet coffee you’d ever crave from a K-cup.

The Democratization of the Single-Serving Market

As the patent holder, Keurig Green Mountain was the company that made the most money from the K-cup. But in 2012, the patent expired and the door was open to competition. Soon the market was awash with single-serving products.

All of this provided fertile grounds for licensing with brands like Starbuck’s, Dunkin Donuts and Newman’s Own joining the scramble, not to mention “K-cup” product versions from legacy brands such as Folger’s, Taster’s Choice and Maxwell House.

Although Keurig remains the leader, the market for single- serving coffee has been democratized and dominated by licensed brands, including brands licensed by Keurig itself, as illustrated by the following table:

Top 10 Single-Serving Coffee Sales by Brand in 2014
Data: Statista for year ended July 13, 2014.
(Figures in Millions)
Rank Brand 2014 Sales
1 Keurig Green Mountain $545.72
2 Starbucks $348.92
3 Folgers Gourmet Selections (J.M. Smucker) $314.10
4 Private label $274.03
5 Donut House Collection (Keurig Green Mountain) $161.18
6 Keurig Eight O’Clock (Tata Global Beverages) $123.72
7 Gevalia (Kraft Foods) $115.64
8 Keurig Newman’s Own Organics $109.99
9 Maxwell House Café Collections (Kraft Foods) $102.44
10 Donut Shop (Keurig Green Mountain) $85.80

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