Keurig Green Mountain has announced a partnership with Kraft Foods to make the latter's branded coffees—including Maxwell House and Gevalia—for Keurig's single-serve brewing systems. The deal is the latest in a string of moves by Keurig, which previously partnered with Coca-Cola to allow people to make various Coke beverages at home. Keurig also previously announced an agreement to distribute packaged McDonald's coffee to retailers, thus allowing consumers to make McCafé drinks at home with their Keurig machines.
Keurig Green Mountain had coffee sales of almost $1.4 billion in 2013, increasing 25%. Single cup accounts for 97% of company sales with the remaining share coming from ground/whole bean sales as well as a small contribution from RTD/iced coffee. Keurig Green Mountain's 15% share of the U.S. retail coffee market is second only to J.M. Smucker, according to Coffee and Ready-to-Drink Coffee in the U.S.: Retail and Foodservice, 8th Edition from Packaged Facts (packagedfacts.com).
Keurig's growth is driven by 1) penetrating at-home and away-from home locations with its brewing systems and 2) driving usage frequency of its single-cup beverages in those brewing systems. And the company is still growing thanks in part to its shrewd partnerships.
"The company is successful at leveraging licensed partnerships with brands and retailers to increase awareness of its proprietary brewing system," says Packaged Facts research director David Sprinkle. "This latest partnership with Kraft only further underscores the brand's ability to both pair itself with major coffee players, and underscores how much American coffee drinkers appreciate the ability to replicate their favorite chain restaurant or coffeehouse products at home."
In terms of brand performance, the diversity of Keurig Green Mountain's single cup portfolio is evident. Its proprietary brand captures the largest share (38%) of single-cup sales, worth $522 million in 2013, followed distantly by Donut House Collection. Keurig Starbucks and Keurig Eight O'Clock have provided the biggest single-year gains for the company, as both were up more than 500%.
Another of Keurig's strong points concerns the variety of channels through which it interacts with customers, ranging from supermarkets, department stores, mass merchandisers, club stores, and convenience stores; to restaurants, hospitality accounts, office coffee distributors, and partner brand owners; and to the internet via its websites. However, it has penetrated far more households than workplaces and foodservice locations, which (along with colleges/universities) it has targeted for growth.
