Question: What would you advise the CEO and board of Keurig what to do next? In 1992, Ian Greenwood an electronic engineer and former college roommate Peter Dragon MBA from Harvard Business School started talking about Greenwood’s new technique of brewing coffee. Thus, they discussed how between their knowledge of engineering and business experience would complement to develop a new coffee brewing method and business venture.
Keurig, Inc. believed in the philosophy that coffee should be brewed one cup at of coffee at time, The idea was to keep the coffee in a sealed package and isolated from oxygen and moisture contamination in order to preserve the freshness of the coffee by a new special packing system. The company was launched in 1990 by Peter Dragone and John Sylvan.
The Keurig system was based on three fundamental elements: A patented and proprietary portion-pack system, specially designed, proprietary high-speed packaging lines that manufactured K-Cups at the coffee roaster’s facilities using fresh-roasted and ground coffee (or tea), and Brewers that precisely controlled the amount, temperature, and pressure of water to provide a consistently superior cup of coffee or tea in less than a minute when used with K-Cups.
In 1998 Keurig,through a licensing agreement, joined forces with Green Mountain Coffee Roasters to package its high-quality Arabica beans in Keurig’s patented container, the K-Cup. After all the changes in management, re-tuning the company’s business model and reassessing what the company should concentrate on going forward. These are some of the advices at that time to Keurig’s CEO and board of directors: Establish Keurig’s market to Office Coffee Systems (OCS, work consumption) and major food retailing distributor (home consumption) the two largest consumers area of coffee, 1 as well as exploring new market territory such as vending machines in hotels, motels, and highway rest stops. [Exhibit 7, P-22] * After gathering the OCS and FRD markets, open the market for outside work industries, coffee shops, restaurants and other. For example gas stations are another marketplace that Keurig needs to stay competitive in. Gas filling stations have expanded their services to include food marts with a wide array of beverages and snacks.
Develop a faster system to brew the coffee to sell it to establishments where time is a major factor * Keurig also needs more marketing and advertising of their product by brand ambassadors such as celebrities, entertainers and athletes that can help gain more brand recognition. A good philosophy that could have helped Keurig’s difficulties was concentrating in improving the brewer which was the major concern compared to the K-cup, making the brewer and the K-cup with glitches was expected, but to improve it to make it work, was their primary worries, where Greenwood failed to deliver. experienced personnel and knowledge of past failure of not providing the brewer on time. Never the less, the fortune of Keurig changed in 2006, Keurig Inc. was purchased by Green Mountain Coffee Roasters,2 becoming a wholly owned subsidiary. In North America, Keurig claims the following market presence as of 2010 4: 2. 5 million beverages dispensed per day, 200,000 office installations, 6% of all coffee brewed in offices in the USA.