Keurig Case Study Solution

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KGM sells many different beverage-related products, from Arabica coffees to beverage systems. They attribute most of their increased revenues to the popularity of their Keurig brewers. Their beverage systems are sold to consumers at cost or at a loss. However, most of their profits are made through the selling of accessories and Keurig beverage related products, such as the portion-packed coffee cartridges known as K-Cups, which can only be used in the Keurig brewing systems. With the increased popularity of the Keurig system, KGM has increased their investments into research and development (R&D) which consists of salary, consulting expenses. However, their increased revenues have stayed well ahead of their costs. For the fiscal year …show more content…

In addition to refinements to their existing product line, they are also seeking to introduce a new cold-brewing system, which will allow for expansion into a new beverage market. The project has been in development for over five years, and the company continued its commercialization of the product during 2014, with an anticipated introduction to the market in fiscal year 2015.
While the company has been hugely successful with its current model and offerings, there remains a risk of stagnation, as the competitors grow and develop their own new technologies. The intended product line will allow for easy home production of carbonated beverages, enhanced waters, sport drinks, and other cold beverages using the same portion-pack technology as the hot-brew system. It is also intended to address limitations that exist in their competitors’ cold-beverage systems, with improvements that include:
 delivering the beverage at cold temperatures, instead of ambient/room temperature;
 offering consistent and simple (single-button) carbonation processes;
 enabling consistent and exact dosing of different flavors and carbonation levels;
 Similar size to the current hot-brewing system (ideal for countertop), and similar

In this essay, the author

  • Describes d.e. master blenders 1753 n.v., controlled by jab holding co. (including its senseo brewing system).
  • Explains that kgm faces competition from private label and generic products, which are typically offered at a lower price point.
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