It was only a year ago that North American consumers were raving that they “couldn’t survive” without their daily hit from a Keurig single-serve coffee machine.
Twelve months on, the buzz that vaulted sales of the Keurig machine and its K-cup pods into the hundreds of millions of dollars just in Canada alone has diminished significantly.
Earlier this month, Keurig Green Mountain, the U.S. company behind the popular brewing machines and pods, quietly filed its latest sales report and the numbers hint at a waning appetite for the single-serve format: Canadian sales have dropped by nearly a quarter, while profits have tumbled nearly 20 per cent (see chart below).
Part of the big decline can be attributed to the exchange rate. Vermont-based Keurig reports in U.S. dollars but collects Canadian dollars on sales made here. It’s taking a hit when it converts that cash into U.S. currency.
“The majority of the transactions conducted by our Canada segment are in the Canadian dollar. As a result, our revenues are adversely affected when the United States dollar strengthens against the Canadian dollar,” the company said.
But filtering out the impact of the exchange rate, pod sales are still down 9 per cent in latest quarter while machine sales have fallen 10 per cent.
Waste concerns
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A slower roll out of Keurig’s next-generation brewer that makes single-serving cold beverages is one reason for the sales pressure, some experts suggest. Another reason perhaps is growing concern among Canadian consumers about the waste generated by the pods.
Canadian sentiment toward the Keurig system seems to have shifted in the wake of a litany of negative press reports on both sides of the border from last spring that highlighted the negative environmental impacts created by pods.
The reports pointed to recent studies that suggest the amount of packaging consumed by the single-serve pods could circle the earth 10 times over. Another report said the waste generated is roughly 10 times that of a “standard” cup of filtered coffee.
MORE: Keurig inventor regrets creating single serve coffee convenience
Keurig agreed in December to a takeover offer and is expected to go private within months.
In what is likely its final quarterly public filing, the coffee-pod giant expressed confidence that its best days are ahead of it.
“Single serve has been the fastest growing segment of the specialty coffee category… Consumers are more frequently seeking to enjoy premium experiences within the comfort and convenience of their own homes, including the consumption of specialty coffee,” Keurig’s U.S. filing made on Feb. 4 said.
“We have benefited from these broad consumer trends and believe we will continue to be a leader in the hot beverage marketplace.”
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