Keurig Green Mountain, Inc. is a leading manufacturer of coffee machines. Its machines use a pod called a “K-Cup” to brew a single cup of coffee at a time. Keurig offers an expansive variety of products, including coffees, teas, and hot cocoa. Keurig has many strategic alliances, including one with Walmart to distribute its products. Keurig relies heavily on the American market for its products. Also, it relies on just a few major retailers for most of its earnings. Environmental concerns have emerged recently, as the pods are made out of plastic. On the other hand, there is nearly endless possibilities when it comes to new products. A major threat to Keurig is the heavy competition in the beverage industry. There are a number of things Keurig could do to improve, including expanding alliances with retailers for distribution purposes.
Anyone who enjoys coffee has most likely heard of Keurig Green Mountain, Inc. Keurig’s machines make it easy to brew just a single cup of coffee, using a small pod called a “K-Cup”. Keurig’s machines can also make hot or iced tea, as well as hot chocolate. Keurig also sells machines that brew cold beverages such as cold brew coffee. The company is a leading manufacturer of coffee machines. Keurig Green Mountain is headquartered in Waterbury, Vermont, and is privately owned by an investment group named JAB Holding Company (“MarketLine Company Profile: Keurig Green Mountain, Inc.”, 2016). In 2019, Keurig merged with Dr. Pepper Snapple group, and is now known as Keurig Dr. Pepper. This paper will first discuss Keurig’s history, and then provide an in-depth SWOT analysis along with some recommendations for improvement. Although Keurig Green Mountain has various products and is affiliated with Dr. Pepper, this paper will focus on Keurig, coffee, and K-Cups.
First established in Vermont in 1981 as a small café named Green Mountain Coffee Roasters, Inc., Keurig quickly grew and established a mail-order service in 1986. By 2009, Keurig had licensing and distribution agreements with several other companies, including Caribou Coffee Company, Newman’s Own Organics and Walmart. Also, in 2007, the company began manufacturing coffee for McDonald’s to use in its restaurants. This agreement was extended in 2008. In 2014, the company changed its name from Green Mountain Coffee Roasters, Inc. to Keurig Green Mountain, Inc. In the press release revealing the name change, CEO Brian Kelley said that the name combines their two most popular brands, Keurig and Green Mountain Coffee into one dominant entity (“Press Release: Green Mountain Coffee Roasters, Inc. Changes its Name to Keurig Green Mountain, Inc.”, 2014). In 2019, Keurig Green Mountain announced that they would be merging with Dr. Pepper Snapple Group. The companies and their various subsidiary brands now operate under the parent company Keurig Dr. Pepper (“Dr Pepper Snapple Is Merging With Keurig”, 2018).
1. Variety of Products
2. Multiple Strategic Alliances
1. Heavy Reliance on US market
2. Customer base is very concentrated
3. Pods made of nonbiodegradable materials
1. Social Media
2. Endless Possibilities for new products
1. Heavy Competition
2. Government Regulations (FDA)
One of Keurig Green Mountain’s major strengths is that they offer an expansive variety of products, which allows them to serve a wide customer base with varying preferences. Keurig offers multiple roasts of coffee, as well as various types of tea and even hot cocoa. This is advantageous because everyone has different preferences on how they like their coffee. Another strength of Keurig is that they have formed many strategic alliances throughout the years. For example, as mentioned above, Keurig has an agreement with Walmart to distribute its coffee, coffee machines, and other products. Another advantage of Keurig is that its machines are very compact and fit in small spaces. This is especially beneficial for college students who enjoy coffee but have limited space in a dorm room.
A major weakness of Keurig is that it relies heavily on the United States market. Its competitors, for instance Starbucks and Nestle, have markets on nearly every continent (“Keurig Green Mountain, Inc. SWOT Analysis”, 2016). Also, its customer base is very concentrated, relying heavily on a select few retailers, for example Walmart and Costco, for a large portion of its revenues. Another emerging weakness for Keurig is that its K-Cup pods are made of plastic, which is not biodegradable and builds up quickly in landfills. This is a problem because each K-Cup is simply thrown away after use. A growing portion of the population is more concerned than ever about recycling and protecting the environment.
A major opportunity for Keurig Green Mountain, and for almost any company, is to market their products via social media pages. Keurig has official pages on Facebook, Instagram, Twitter, and more than likely on other platforms. Another large opportunity is that in the beverage industry, there are nearly endless possibilities for new products. For example, coffee has many variations, including light roasts, medium roasts, dark roasts, decaf and espresso. Also, coffee can be brewed hot or cold, and various flavors, like chocolate or vanilla, can be added. Keurig could also get into the business of manufacturing its own milk frothers. These devices heat and foam milk for making lattes and other espresso drinks.
There is heavy competition in the beverage industry, which could affect Keurig’s market share in a negative way. Keurig’s products essentially compete against every other coffee brand for shelf space in stores, some of which sell similar products under their own brands (“Keurig Green Mountain, Inc. SWOT Analysis”, 2016). In addition to the coffee itself, Keurig also has to compete against standard coffee makers and other single-serve brewers manufactured by larger companies such as Nestle. Another threat to Keurig Green Mountain is, of course, government regulation. As with every food and drink related industry, Keurig’s business is regulated by the US Food and Drug Administration (FDA), as well as other government entities, including those in other countries.
To overcome its concentrated customer base, Keurig Green Mountain could form and expand strategic alliances with more retailers to sell more of their products. For example, United Supermarkets, including the location here in Canyon, Texas, offers a limited selection of Keurig products, but the selection could be expanded to include more options. To combat the weakness of K-Cups being made of plastic, NEXE Innovations, Inc. has invented a pod that is made of plant-based materials. These pods are completely biodegradable and will break down within 35 days (“NEXE’s Patented Compostable Capsule for Keurig® Brewing Systems is Finally Here”, 2021). Also, Keurig has transitioned to only manufacturing plastic K-Cups out of recyclable plastic (“Environment”, keurigdrpepper.com, n.d.). Consequently, the pods are now widely recycled, thus reducing waste dumped in landfills. Finally, to ensure compliance with government regulation, such as those from the FDA, top management should be sure they have a complete understanding of the laws. To do this, the company needs to be sure their legal department is efficient and up to date on the latest laws and regulations.
In conclusion, Keurig Green Mountain, Inc. has its strengths and weaknesses like any other business or organization. Keurig’s major strengths include its ability to serve a broad customer base with varying preferences and the numerous strategic alliances it has formed through the years. An important opportunity for Keurig is that in the beverage industry, there is nearly endless potential for new products. This is particularly relevant for Keurig because coffee, tea, and hot cocoa, all of which are sold by Keurig, each have many variations and flavors. A key weakness of Keurig that is especially important in the modern world is the fact that Keurig’s K-Cups are made of plastic, which does not naturally break down at all. To resist this weakness, NEXE Innovations, inc. invented a biodegradable plant-based pod. Keurig’s main threats are competition and government regulations. Overall, if Keurig can manage and minimize its threats and weaknesses, it can continue to be successful for years to come. To conclude, Keurig is a fixture in the coffee industry and will likely remain so for the foreseeable future.
- Dr Pepper Snapple Is Merging with Keurig. (2018). MMR, 35(3), 16.
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- Keurig Dr Pepper. (n.d.). Keurig Dr. Pepper. Retrieved February 3, 2022, from https://www.keurigdrpepper.com/en/our-company/overview
- Keurig Green Mountain, Inc. SWOT Analysis. (2016). Keurig Green Mountain, Inc. SWOT Analysis, 1–7.
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- NEXE’s Patented Compostable Capsule for Keurig® Brewing Systems is Finally Here. (2021, Nov 01). PR Newswire
- Press Release: Green Mountain Coffee Roasters, Inc. Changes its Name to Keurig Green Mountain, Inc. (2014, Mar 10). Dow Jones Institutional News
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