The coffee break has undergone a major shift. Before the COVID-19 pandemic, office workers might leave their workplaces — perhaps asking their colleagues on the way out, “ does anyone want a coffee?” — to go to a nearby coffee shop for a hot cup. But with many Americans out of their offices and working from home, the traditional coffee break is, at least temporarily, no longer. While this is bad news for smaller coffee shops, it’s good news for the coffee system and K-Cup brand, Keurig.
Keurig’s coffee system sales were already growing before 2020, but the pandemic accelerated their growth as more consumers began brewing coffee at home. About three million new US households became Keurig users in 2020, marking a ten percent increase and bringing the total number of households to 33 million. With coffee system sales increasing, single-serve pod sales have shot up, too. Retail consumption of Keurig-produced coffee pods grew nearly ten percent as well, according to Chicago-based market research firm IRI.
With more people investing in their work-from-home offices, Keurig also saw a record number of upgrade sales. Robert J. Gamgort, chief executive officer of Keurig Dr Pepper (KDP), explained in an earnings call last month that Keurig owners sought to upgrade their brewers rather than purchasing new ones. KDP’s overall net sales increased 4.5 percent to $11.62 billion, and the company spent $150 million on total operating costs related to COVID-19, Gamgort said.
Of course, it hasn’t just been Keurig taking advantage of the new work-from-home coffee consumer. Since 40 percent of coffee drinkers owned a single-cup brewing machine in 2020, prominent coffee chains including Starbucks and Dunkin’ Donuts have tapped into the coffee pod market to compete with Keurig and others. Among brands producing coffee pods, Starbucks holds 17.1 percent of the single-cup coffee market share, followed by Keurig Green Mountain at 11.7 percent, Dunkin’ at 8.3 percent and Folgers at 5.9 percent.
The growing popularity of at-home coffee brewing systems and single-serve pods is curious considering the cost of the daily habit. A unit of K-Cups, Keurig’s capsules containing a single-serving of coffee grounds, cost nearly $20 more than a unit of traditional roast-and-ground coffee, according to Statista’s price comparison.
Those that have been allowed to return to their workplaces, or never worked from home, may still be having their morning cup of coffee at their offices. To tap into that market, Keurig’s commercial sector recently introduced a touchless brewing upgrade on its office coffee makers. Once the Bluetooth kit is installed, users can control the machine via the Keurig Remote Brew app ad customize their desired beverage. Touchless brewing was introduced to give office workers a sense of normalcy during the pandemic, while also providing safe and hygienic coffee solutions.
The global coffee pod market is projected to grow at a CAGR of 7.72 percent over the next five years, with Keurig playing a large role. Since more consumers are willing to purchase coffee systems to recreate the café-style experience at home, this growth is likely to continue as the pandemic endures.