How Much Did It Cost Keurig to Develop Its Coffee Maker?

Development of K-Cup Coffee Makers by Keurig

Keurig is a global coffee company that introduced a K-cup single-serve coffee maker in 1998. In 1993 before introducing the K-cup, Keurig produced approximately 15 million pounds of ground coffee in a year. Since then, the product had undergone only minor changes and was not seen as attractive to consumers.

The New Keurig Designs

Concerned over declining sales, company executives talked to customers and learned that people had preferred high-quality, fresh ground coffee produced in automated roasting plants over Keurig. They decided that the company needed a new product that can be as good as the other competitors.

Keurig introduced three designs for a brewing system that could create a perfect coffee. Although the first design of Keurig used pods with ground coffee, the company soon realized that this design would not be suitable for mass production. The second design used pods with coffee concentrate, from which hot water would be added to produce a beverage. The third model involved grinding up the coffee into minuscule particles that were brewed with water. 

The third model was chosen from among the three models. Keurig went to InnoPack, a trade fair in Dusseldorf, Germany, where the sample of the brewing system gave a taste of fresh coffee in less than two minutes. This design was hailed as one with potential, and interest in the product was at the highest level since Keurig had begun to market it. 

• First Design: The Pod

In the first layout, Keurig designed a pod, which was inserted in a receptacle. The pod contained ground coffee, which was heated and brewed simultaneously to produce a beverage. 

Initial results from tests showed that not many people purchased the product because they did not think it was comparative enough. 

• Second design: Pods with concentrated coffee and hot water 

The second design used pods with coffee concentrate. The pod was filled to the brim with ground coffee to brew the beverage, then hot water was added and in approximately two minutes, the beverage was ready for consumption. 

• Third Design: Grounded Coffee with water 

This model of Keurig utilized ground coffee in which most of the mass was suspended in the blend. Water was added and coffee was brewed using a heating process. The experience of the first test corresponded with Keurig’s plans. The third layout produced a beverage that was not inferior in taste to a cup of coffee produced from pods. 

Is the Keurig Coffee Pod System Expensive to Use?

Keurig always has room for improvement and over five years; they have upgraded the system’s design to keep in line with new and innovative ideas. In addition, the company wanted to have a fresh product and thus, invested more money into its development. 

After conducting some market research, they found out that many coffee drinkers were willing to spend around $20 on a single cup of coffee, which is much more than the price of a Keurig pod. Keurig’s unique design makes it possible for them to attain huge profits.

However, getting coffee from a pot is five times cheaper than using a K-cup brewer as it is used for single servings. Due to this reason, people who have a Keurig brewer at home still buy coffee from other sources. This is one of the main drawbacks of the Keurig system that propels them to keep developing new features and designs for their products. 

The increasing cost of the coffee pods is not favorable for the company and consumers in the long run as the consumption will not increase exponentially over time. These coffee pods, on the other hand, cost much more than a normal coffee cup. 

The other cost-effective options can deliberately kick Keurig out of the market in the upcoming years as people choose cheaper and effective coffee makers. Keurig needs to work on its cost reduction; otherwise, it could be fatal.

The Cost of Using a Keurig K-Cup Coffee System

On average, a home coffee drinker needs 3 to 4 cups of coffee a day. Thus, it would cost a person around $1,000 per year just to brew at home. In comparison, if they were to purchase a premium-brand coffee K-cup pack every month, they would spend around $60, which is almost half the amount spent buying regular ground coffee beans.

The initial buying cost is low but its daily expenses make the brewer an expensive buy. The purchasing cost of a Keurig brewer is around $100, but it would add up sharply as coffee pods would also be required, costing around $0.60 per cup. 

The average American drinks about 2 cups of coffee per day. Thus, it would cost around $1,200 per year just to buy one coffee pod pack. They can get around 168 cups of coffee for that price, which is more than enough to last them for a whole year. 

It is also important to note that other factors also influence the total cost of using a Keurig brewer. For example, the amount of coffee pods you will need to purchase per month depends on how many cups you make each day or week. If it’s more than that, the cost rises drastically. 

Five years after the initial purchase of the Keurig brewer, the cost would turn out to be a total of $2200 which is almost double than that of the other coffee brewing methods and machines.

Adding to this, each coffee pod contains ground coffee which would lose its freshness over time and become unusable. In this regard, the cost of using the K-cup system is quite expensive. 

Is the Keurig System Worth Purchasing?

After conducting comprehensive research and comparing it to other coffee brewing systems, Keurig seemed to have been on the right track. The company has constantly updated its products and created new features to meet the expectations of its customers. 

However, Keurig has also raised the prices by nine percent. This spike causes a corresponding increase in the equipment’s price. As such, a consumer who wants to save money will have to choose between paying more for a product that doesn’t work very well or buying something less expensive that may not fulfill their needs. In addition, consumers on a budget may have to spend more time getting the right amount of coffee than others.

Keurig vs. Drip Brewers

If you are on a budget, drip coffee is the best option for you. Keurig K-Cup brewers, on the other hand, are three times more expensive than drip brewers. They brew one cup at a time, which is not suitable for families. 

When it comes to taste, Keurig coffee makers are better than drip brewers. You will get a consistent taste since each filter or K-cup is already measured and filled with ground coffee beans. On the other hand, drip coffee brewers use ground coffee beans that can be measured by the users. 

However, you can buy K-Cup filters for drip brewers as they work relatively well as Keurig filters. Yet, this may seem as a more costly purchase in the long run. 

Keurig vs. Single-Cup Brewers

Keurig K-Cup brewers are less effective when it comes to brewing methods. The brew systems are less expensive at first, but they require more investment as time passes by. The main advantage of a single-cup brewer is its space efficiency. These appliances require less space, energy and are easier to maintain.

Keurig’s single-cup brewing systems cost more than $1,500 each, which is almost half the amount that you would pay for a similar system if it were made from plastic. So, in the near future, Keurig may not compete with other similar products at a lower price.

Keurig vs. Homebrew Coffee Machines

If you have an old coffee pot or coffee maker, you can try making your coffee at home. The process is straightforward and anybody who has been drinking instant coffee for quite some time can do it. You will be able to make great-tasting home-brewed coffee at all times. It will take a short while for the coffee to be ready, albeit not as quick as any Keurig model. 

However, the cost of buying a machine will be significantly higher. Even when making coffee, it is advisable to use a good quality coffee ground and fresh beans. This way, you can make a high-quality beverage that would be cost-effective as well.

Sustainability of the Keurig System

The main sustainability concern of Keurig is the waste that their K-Cups produce. The coffee grounds and the filters used to pack each K-Cup are not biodegradable. The short-term solution for Keurig is to recycle the coffee pods, which would be a better option than dumping all the coffee grounds in landfills. 

The Cost of Developing the Keurig K-Cup System

Keurig spent over $200 million developing this system, which is a lot of money that could be used to design new innovative products. The most expensive part of the development is the machinery itself which costs $100 million and will have an average lifespan of around 11 years. However, for consumers, the price of having a Keurig will keep rising every year.

The increase in the cost of Keurig has grabbed the attention of reputable sources, and they also wrote articles about the negative effects of high prices on consumers.

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Conclusion

The Keurig system was successful in its early times, but as other cost-effective products came into perspective, they gave serious competition to the K-Cup System. Many consumers and critics may be happy with the convenience that Keurig’s machines offer. Still, several individuals may disagree due to the negative environmental effects caused by its use. Apart from that, the cost of K-cups is much higher for an average coffee drinker.

Frequently Asked Questions

Q. Is Keurig K-cups recyclable? 

A. Although the K-cups are made from recyclable plastic, they are extremely difficult to recycle. This is because of the foil lid at the top that even a recycling facility can’t remove. It is also difficult to separate the rest of the cup from the coffee grounds as they get stuck together conveniently. 

Q. Can Keurig coffee machines make Espresso?

A. No, Keurig coffee makers are only designed to create hot coffee. However, if you want to make Espresso using a K-cup, you can buy a reusable filter, which will be quite costly.

Q. Are Keurig machines cheaper than other coffee brewers?

A. Keurig machines are not affordable by many people. They are expensive than drip machines and cost more time and money than single-cup brewers. This also means that the initial investment made to buy a Keurig machine will have to be coupled with the cost of buying some K-cups every day.

Q. What’s cheaper than using a Keurig? 

A. The main alternative that Keurig was competing against was the drip coffee maker. Due to its high price and low functionality, comparing it with drip machines is not a good idea. However, drip coffee makers are way cheaper than Keurig’s. 

Q. Why shouldn’t you use a Keurig?

A. Using a Keurig machine daily will end up wasting and paying more for a cup of coffee than usual. The environmental cost is considerable, with each K-cup being non-biodegradable. Furthermore, Keurig’s machines are not as durable as others, and the company can discontinue its production at any time. Not all coffees can be used in the Keurig brewer, so you will not get all the variety you require from other inexpensive drip machines.

Q. How quickly does my favorite coffee brew in a Keurig?

A. The speed, duration and usage of the machine depend on how much coffee will be present in the cup. If one fills a large cup with the ground coffee, Keurig will take almost twice as long to brew (about 30 minutes) as when only one canister (8 oz.) is used.