Take a look at some of the numbers in the article below (I've put them in bold):
Starbucks’ Keurig exclusivity ends as Keurig signs deal with Peet’s
SEATTLE Starbucks Corp. agreed to give up its right to be the exclusive purveyor of "super premium" coffee to Keurig Green Mountain Inc., as the maker of the Keurig K-cup brewing system devises new strategies to fend off a recent surge in competitors in the burgeoning market for single-serve coffee pods.
Keurig saw important intellectual property licenses protecting the K-cup expire in 2012. Since then, rival coffee producers have been manufacturing pods compatible with the best-selling brewing system without paying license fees to Keurig.
Starbucks has been an important partner for Keurig, launching licensed K-cups in late 2011, and last year signed a five-year agreement that allowed Starbucks to add more brands to its K-cup line. Through the end of last year, Starbucks had shipped more than 2 billion K-cup pods.
The companies announced Friday that the deal was amended to end Starbucks' exclusivity at the top of the line of K-cup's products, in exchange for "improved business terms" and the opportunity to market a wider variety of pods.
Also on Friday, Keurig announced it struck a new deal with Starbucks rival Peet's Coffee & Tea Inc., which broke into the single-cup pod market seven months ago. Financial terms were not disclosed, but Keurig will distribute licensed K-cup packs for coffee and tea.
Sales of coffee made in single-serve brewing systems barely existed five years ago but now account for more than a quarter of every dollar Americans spend on coffee to drink at home. The category, led by Keurig, is growing quickly, even as others challenge its dominance.
Keurig executives have said that unlicensed K-cups have taken 14 per cent of the market. To counter the growth of these often-cheaper rivals, Keurig is launching a new version of its brewing system and also seeking to lure unlicensed K-cup makers into becoming licensed partners.
It's now been 30 years since the first espresso machine was installed in a Starbucks store, and it was obvious to me in short order, simply by observing employee and customer behavior, that once coffee made on the spot, from freshly-roasted and just-ground beans, was "in the air" all other means of brewing coffee would be relegated to, at best, second-class status. The problem was - and is - that the espresso machine even without the uniquely American problem of obscene sizes and far too much milk, is an ill-suited vehicle for brewing coffee that clearly and acccurately reflects country-of-origin flavors, as opposed to those that are the result of extreme concentration of the beverage and degree of roast.
The Clover has come and gone, joining The Coffee Connection in the list of things Starbucks purchased only in order to keep them from flourishing. The Steampunk is no Clover replacement, ditto with the Blossom, and while I love the Aeropress and Clever dripper I don't think there are enough decimals at my disposal to measure how small their current as well as potential future market share might be. We really need someone from outside of coffee to invent the iPhone of single cup brewers, for both commercial and home use (the Trifecta seems to be the only noble failure along these lines, suffering from excess complexity and, sadly, guilt by association with a now-innovative company that historically was one of the worst laggards when it came to addressing specialty coffee needs).
There's room for many approaches, but I hope one of the take-aways is that if those of us who really love and care about great origin coffee don't make it easy, convenient and affordable for the consumer to brew it - and instead work hard at making the simple seem esoteric and what should be inexpensive and easily repeatable into something only the rich can afford - we will be pushed further to the margins of the marketplace. Already (as I pointed out in my previous piece on the Sprudge article) the supposed cutting-edge of specialty coffee is talking only amongst itself, while the roasters mentioned in this article just go on making money hand over fist meeting actual consumer needs.
Now because Starbucks and Peets roast dark and Green Mountain never pursued excellence even in its pre-Keurig days it may be easy to see the current state of affairs as pod-based mediocrity, but how long before someone comes along and puts the best of today's leading Third Wave offerings into K Cup or Nespresso form? These are companies that have already taken on major venture capital money and whose supposed brightest prospects are in ready-to-drink bottled beverages. Put their top 3 blends and seasonal single origins in K Cups and you can probably stop building all those expensive retail stores. The newer Keurig brewers solve the dosage and water temperature issues of the first generation, and as for Nespresso, their technology is at a whole different level, as shown by the (much lamented by some) fact that they are the dominant force in 3 Star restaurants in Europe. And heck, all the coffee really needs to be is better (as judged by the consumer) than a tepid $3-5 cup brewed excruciatingly slowly in a Hario by a barista who wants to educate rather than please them. Not a high bar, I'd say.