How Keurig is innovating with new products to maintain market share

robot coffee capsule machine
  • Keurig Dr. Pepper just released a new coffee pod that promises convenience, quality, sustainability, and customisation 
  • Research shows that the convenience home brewing market share is steadily increasing, but consumers now want more and better options
  • Innovating to lock in market share is a popular strategy across sectors, and one that coffee brands could increasingly be testing to beat increased competition

KEURIG DR PEPPER has unveiled its latest innovation: the K-Round sustainable coffee pod. Collaborating with Swiss brand Delica, Keurig aims to leverage innovation in the convenience sector – not only for sustainability but also for customisation, reflecting current consumer trends.

The decision to launch the K-Round product comes at a pivotal moment for Keurig, as it seeks to maintain its foothold in the competitive single-serve coffee capsule market. With the convenience home brewing market share steadily increasing, the brand recognises the importance of staying ahead of the curve and offering consumers products that align with their preferences.

According to the National Coffee Association, 83% of American past-day coffee drinkers in 2023 had coffee at home – in stark contrast with 35% drinking coffee away from home. The report places single-cup brewers as their second favourite preparation method, holding steady with performance over the last few years.

Keurig already dominates the global coffee pod market, especially in the US, so releasing a sustainable, innovative product in the convenience space seems like a natural next step for the brand as they can tap into their existing customer base. The partnership with Delica allows them to do that.

“With the launch of Coffee B in Switzerland and expansion into neighbouring countries, Delica launched in a market where Nespresso original line capsules dominate,” says Samo Smrke, Head of Coffee Transformation at Coffee Excellence Center, Zurich University of Applied Sciences

“Initially, people weren’t that interested in switching from widely accessible Nespresso (and compatible) products to Delica’s exclusive Coffee B. Keurig has the power to use their leading market position in the US, and bring this innovative pod to a larger base of consumers. With the K-Round, Keurig will likely strengthen their market position in the US, a good move to compete with the increasing popularity of Nespresso’s Vertuo.”

Give the people what they want to stay relevant    

Keurig has cornered a large part of the single-serve market, and already knows it’s good at convenience. But with shifting consumer preferences and a coffee product landscape that is more competitive than ever, it needs to lock in its audience, and fast. 

Convenience is definitely still driving sales growth. But with new consumer expectations on better quality and sustainability, and a strong push from Gen Z towards customisation, brands need to up their game.

At the heart of the K-Round’s appeal is its focus on high-level customisation. Each pod is equipped with a unique code that the brewing machine can read, allowing for precise brewing tailored to the specific characteristics of the coffee blend. 

“Coming from an analytical technology and industrial process automation background, I’m surprised such technologies weren’t implemented earlier in the coffee sector,” says Samo. “A machine feature that can recognise the optimal recipe intended by the capsule manufacturer is incredibly user-friendly.”

Keurig’s decision to prioritise sustainability with the K-Round is a response to another clearly growing consumer demand for eco-friendly products. With no wrapping and a promise of environmental sustainability, the product aims to address concerns about the environmental impact of single-use coffee pods. 

However, critics argue that the sustainability claims may be overstated, as the K-Round pods require a new machine or switching machines to use them, potentially offsetting any environmental benefits.

With strategic innovation, the aim is to become irreplaceable 

Innovating or patenting to lock in market share is a strategy that has proven successful in the past, as demonstrated by Apple’s Lightning connector, or Nespresso’s introduction of the Vertuo system. 

By patenting their technology and requiring a barcode to brew, Nespresso effectively locked out non-approved third-party manufacturers, preserving its market dominance for years to come. 

With the integrated code system in the K-Round pods, Keurig could possibly be following a similar playbook, aiming to secure its position in the market and fend off potential competitors.

“This comes up in all industry fields,” says Samo. “Producers want to protect themselves, but third parties find ways around it.”

“If the machine is designed to use the code to tell the machine how it needs to brew, then this can likely be retro-engineered. If the machine has pre-stored brew profiles for each pod product, then it’s a bit more complicated. Existing profiles might be used, but I’m not certain whether the new ones could be developed without Keurig’s approval.”

As consumers continue to demand products that align with their values and preferences, companies like Keurig must adapt and innovate to stay relevant in an increasingly competitive market landscape. 

The success of the K-Round and its impact on the industry at large could offer insights into the future direction of home brewing and consumer preferences in the years to come.

Coffee Intelligence

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