Several years ago, coffee pods seemed invincible. Sales of the single-serve cups were skyrocketing, more than tripling in the United States between 2011 and 2013 alone. Sales of coffee pod machines, meanwhile, were soaring too, growing from 1.8 million units to 11.6 million between 2008 and 2013, according to data from market research firm Euromonitor.
Today, however, things aren't looking quite so rosy for coffee in its most convenient form.
This week, Keurig, which dominates the U.S. market for both coffee pods and coffee pod machines, announced that it sold 7 percent fewer machines during the holidays than it had the year before, the sixth straight quarter in which unit sales fell. It also said unit sales of its pods fell for a second straight quarter, an ominous sign considering the little guys are responsible for roughly 80 percent of Keurig's sales.
The decline is partly a problem of Keurig's making. The company, concerned that copycats — which emerged after a slew of patents expired in recent years — were eating into its business, launched the Keurig 2.0 in late 2014, a pricey new machine that only works with company-approved pods. The move backfired, leading to a 22 percent drop in machine sales in the first three months of 2015. Customers weren't thrilled, which they have communicated, sometimes angrily, in reviews on Amazon.
Thus far, that has led to a more than 40 percent drop in Keurig's stock price since its peak in late 2014.