In the first generation of capsule-based home-brewers, Keurig Green Mountain (NASDAQ: GMCR ) clearly won in the United States with its K-Cup system, which has become the dominant single-cup coffeemaker.
Keurig however has struggled with its attempts to create a second hit machine as its follow-ups to the K-Cup system, the Vue and the Rivo, have failed to generate significant sales. Now the company has announced that it plans to offer a machine that brews full carafes of coffee using a variant of its K-Cup pods dubbed K-Carafe.
That brewer, the Keurig 2.0, will eventually replace the existing line of K-Cup machines. However, it will face a new round of competition for U.S. customers from rival Nespresso, a Nestle (NASDAQOTH: NSRGY ) subsidiary. Nespresso has already launched its VertuoLine, which does not make full pots but which does make eight-ounce cups of coffee, instead of the smaller espresso drinks that the company previously focused on.
"Our business in the U.S. is still small because we are focusing on espresso drinkers," Nespresso CEO Jean-Marc Duvoisin told FT.com.
With its new machines Nespresso can take the fight to Keurig, which has certainly established that there is an American market for full-size single cups of coffee.
The size of the single-serve coffee market
Since 2007 the global coffee capsules market has grown at more than five times the rate of the overall coffee industry, according to Euromonitor International. Capsule sales neared $11 billion in 2013 and Nespresso -- not Keurig -- is actually the market leader everywhere except the U.S. and Canada with $3.4 billion in capsule/pod sales outside of North America...
Via Smart And Smooth