Keurig falters over lack of choices
Popular brands like Apple have learned over the years to keep the proper balance between exclusivity in some accessories and openness with others. As big as they are, they realize that they cannot keep everything closed off to innovation and must allow their users to have choices outside of their own ecosystem. Keurig is learning that lesson the hard way.
The popular machines that sit in many offices and kitchens around the country are still being used, but the latest variation, 2.0, is having big troubles selling at a good pace. The biggest reason: choice. They eliminated the ability of users to brew whatever coffee they want by not producing a “K-cup” accessory for the newest model. This accessory allowed users to add other coffees to a capsule and brew it with their original Keurig.
Without that option, the machine is getting blasted on user review sites and failing to leave the shelves at retailers.
“Quite honestly, we were wrong. We underestimated the passion the consumer had for this,” said CEO Brian Kelley on a call with investors and analysts this week.
It was the right business move at the wrong time and done in the wrong way. It makes sense for a popular brand to push their more lucrative product long-term onto their customers. They make a single burst of profits every time a machine is sold, but when they can get those users to buy the actual coffee packets, the profits go up considerably.
To correct the issue, Keurig plans on creating a K-cup for the 2.0 models, but the damage is already done. Stocks fell 10% in after hours trading following the call. Investors are running. The company is reevaluating their estimates for the year and humbling themselves before investors.
It will probably work. The company still holds the lion’s share of the personal brewing machine market, but competitors are popping up. This revolution is starting to look like a fad and may fade away if Keurig can’t make right by its customers soon.