It just dawned on me the other day: the Keurig coffee system is everywhere. In my home, in my office, in my clients’ offices, at the gas station, in the convenience store, at the mall – everywhere! It seems that wherever I am, I can look up and see a Keurig single-cup brewing station beckoning me to brew a cup.
Perhaps you’ve experienced this phenomenon. Maybe you could even look up from your computer right this second to glance at a Keurig coffee maker (it wouldn’t surprise me).
But what I want to know is: When did all this happen? When did a seemingly niche-market coffee maker become ubiquitous?
Sometimes in the business world, an idea is so well-anticipated that it’s an instant smash (most anything by Apple, for instance). Other times, you have a product that’s more of a “stealth hit.” The Keurig is just such a stealth hit – slowly creeping its way into our lives and suddenly ruling the coffee world. That’s not hyperbole, either. I truly believe that the Keurig is redefining how we consume coffee, and this is something to pay attention to (especially if you’re selling coffee).
Think about it. Surveys tells us that 73% of coffee in the US is made at home. That’s not news. And Starbucks has thrived in spite of this. However, consumers want what they want, the way they want it, inexpensively – and they want their coffee fast! In hard economic times, superfluous trips to Starbucks are the first to go. Keurig couldn’t have stealthily cornered the market at a better time.
Still not convinced? While in-home coffee maker sales have grown only 1% annually over the last 7-10 years, 2010 total revenue for Keurig brewers hit $330.8 million – a 67% gain over 2009. Developed in 1998, these single-cup coffee systems are now in 7% of households (and this doesn’t include all those offices with these coffee makers – 200,000 office installations in 2010 alone). This is incredible growth for a product introduced 15 years ago!
In fact, Keurig (which, it should be noted, was bought out by Green Mountain Coffee Company in 2006) is staking such a claim on the coffee industry that even Dunkin Donuts and Starbucks are producing K-cups for the brewers. That’s right – the coffee giants 
are teaming up with the little guy – who, by all accounts, doesn’t appear to be so little any more.
This type of success begs the obvious question:
What did Keurig do right?
That’s actually easier to answer than you might think. You see, Keurig is a near-perfect example of an I3 Value Proposition in action (see related post), and therein lies its success:
- The Keurig is Innovative: The Keurig entrepreneurs took a few simple ideas – that every cup of coffee should be fresh, and that everyone should choose what type of coffee they want, whenever they want – and made it happen in a clearly innovative way. The innovation was in the engineering to make these objectives easily attainable.
- The Keurig is Indispensable: With 2.5 million Keurig beverages made each day, I think we can safely conclude that the K-cup is indispensable to its owners – a part of their everyday lives.
- The Keurig is Inspirational: Keurig has come up with the type of product that consumers (and business professionals) are consistently interested in – even after using it day in and day out. I can easily marvel out loud at a Keurig in action, in any office – and have those around me join in. This is after we’ve all seen it do its thing hundreds of times. It’s still a “wow!”
So what’s next? We know they’ve made a great product, as well as countless great cups of coffee – but what will this niche coffee giant come up with next? Also – isn’t there an environmental concern with all those K-cups?
More thoughts on that next time…
Meanwhile:
- Is Keurig just dominating in-home coffee maker sales – or will it begin to impact Starbucks and other destination shops?
- How else do you think Keurig has changed the coffee business in the last ten years?
- Do you use a single-cup brewing system at home or at the office?
- What other “I3” ideas do you see cornering their markets?
