Why has Keurig, Inc., decided to sell the home brewer and K-Cups directly to consumers?
Traditionally, coffee is sold in grocery stores and coffee makers are sold in retail outlets, and virtually any coffee is compatible with any coffee maker. In contrast, Keurig brewers and K-Cups together form a system product–only a Keurig brewer can brew K-Cups and K-Cups can only be brewed in a Keurig brewer. Because retail outlets do not typically carry both appliances and coffee, Keurig feels it is important to offer both parts of the Keurig brewing system for direct sale to consumers via the Internet, phone and fax. What is the potential size of the home market? We believe there’s a tremendous opportunity for Keurig in the home market. Although we can’t provide a specific market size estimate, we do believe the opportunity for Keurig in the home is bigger than for Keurig in offices. According to the National Coffee Association, just over 50% of American adults consume coffee daily, and the typical coffee drinker consumes an average of three cups of coffee each day. Assuming a typ
