We American coffee-drinkers have known the Era of Starbucks and the Epoch of Sanka. It seems, however, we currently live in the Age of the K-Cup.
And we’re about to discover everything that means.
Over the past half-decade, single-serve, instant-brew coffee pods—called K-Cups—have taken over more than a quarter of the U.S. ground coffee business. Last summer, the Wall Street Journal judged the K-Cup’s rise “unstoppable” and reported that product category was worth over $150 million.
K-Cups and Keurig (the best-known brand used to brew them) are both manufactured by Green Mountain Coffee. That company—worth some $16 billion itself—owned the patents for its chalices of disruption, but they expired in 2012, and since then it’s had a problem.
It’s historically operated on a razor blade model: Its Keurig business makes real money not by selling machine brewers but by selling K-Cups. Now cheaper competitors have moved in. They sell inexpensive one-off cups and reusable, extensible cups—threatening the company’s business on both sides.
A lawsuit recently filed by TreeHouse Foods alleges the company has taken anti-competitive action to stop the rise of off-brand K-Cups. It claims “Keurig has been busy striking exclusionary agreements with suppliers and distributors to lock competing products out of the market,” according to Karl Bode of TechDirt.