Several years ago, coffee pods seemed invincible. Sales of the single-serve cups were skyrocketing, more than tripling in the United States between 2011 and 2013. Sales of coffee pod machines were soaring, too, growing from 1.8 million units to 11.6 million between 2008 and 2013, according to data from market research firm Euromonitor.
Today, however, things aren't looking quite so rosy for coffee in its most convenient form....
...Machines weren't the only thing hurting Keurig's bottom line, though: Its K-cup coffee pods aren't selling like they used to, either. The company said unit sales of its pods fell for a second straight quarter, an ominous sign considering the little guys are responsible for roughly 80 percent of Keurig's sales.
The decline is partly a problem of Keurig's making. The company, concerned that copycats — which emerged after a slew of patents expired in recent years — were eating into its business, launched the Keurig 2.0 in late 2014, a pricey new machine that only works with company-approved pods. The bet was that by controlling the market, it could better defend its territory. But the move backfired, leading to a 22 percent drop in machine sales in the first three months of 2015. Customers weren't thrilled, which they have communicated, sometimes angrily, in reviews on Amazon.
But Keurig's problems are probably also emblematic of a bigger trend. Coffee pod sales grew quickly during the recession, as Americans shifted to single-serve as a cheaper alternative to buying coffee out at restaurants and other food-service establishments. It also didn't hurt that coffee pods are efficient (they are associated with less coffee waste) and convenient (press a button, and voila!).
...But the circumstances that allowed for such impressive growth are changing.
“With the improved economy we are experiencing today we believe the window of opportunity for pods is closing and the growth will stall in the next five years,” Eric Penicka, an industry analyst with Euromonitor, told Food Navigator USA last year....