Sample Case Study Report: What’s Up with the K-Cup?

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The Keurig beverage maker allows you to insert a small plastic container into the appliance, push a few buttons, and in a matter of minutes you can have a pre-measured cup of your favorite brew, made just the way you like it. The technology has caught on like wildfire and the pod machine has overtaken the somewhat antiquated drip coffee maker in sales by six times.

When you least expect it, a product that you give little thought to becomes both a global sensation and a top environmental hazard simultaneously (Hamblin). That is the story of the K-Cup. This case study, written by one of the best freelance writers from Ultius, dissects the history, use, and effects of K-Cups.   

The Innovative K-Cup

What is the K-Cup? Well, if you’re a coffee aficionado, then you have probably heard of the Keurig brewing system. It is a single-cup coffee maker technology created by the Keurig Green Mountain, Inc., a coffee bean discovery and roasting company located in Waterbury, Vermont. In addition to roasting coffee beans, the company developed smart brewing technology that makes hot beverages in addition to coffee, like tea and hot chocolate.

Further, the hot brewing technology is able to specifically brew over 500 different assortments, and 74 brands, in addition to their own. The Keurig is home to both commercial and home applications (Hamblin). In fact, the company has recently launched the Keurig Kold, which creates cold beverages, and has partnered with major brands to license familiar beverages like Coca-Cola, and their extensive brand portfolio including trendy energy drinks like Red Bull. 

Keurig’s history

Keurig, Inc. was started in 1992, by John Sylvan and partner, Peter Dragone (McGinn). They went through a lot of struggles developing the product and trying to secure investors, including having their original K-Cups burst in the plane’s cargo hold on the way to Minnesota, due to the lack of pressurization. Once the company obtained backers, the investors found Sylvan difficult to content with and forced him out.

Sadly, Sylvan sold his share of the company for $50,000, a tough circumstance to accept, except that he used that money to purchase shares of the now $4.5 billion dollar company. Dragone left a few months later, fortunately under better financial circumstances (McGinn).

Acquisition by Green Mountain Roasters

The company started in the commercial sector, but later introduced home brewers in 2004. Green Mountain Coffee Roasters acquired Keurig in 2006, after providing the company with coffee over the years, and the rapid rise into stratospheric growth began (Hamblin). Keurig’s K-Cup pod patent expired in 2012 (Linshi), and the company began introducing Keurig pod receptacle-only brewers, and additional products, such as competing companies like Starbucks and soup brewers offering Campbell's Soup K-Cups (Snyder).

Green Mountain changed its name to Keurig Green Mountain in 2014, folding what was the Keurig subsidiary into the main brand. JAB Holdings, a private equity firm and investor group, initiated the procurement process in 2015, and acquired Keurig Green Mountain in March 2016 (“JAB Holding”). 

The Keurig Green Mountain paradox

The Green Mountain Coffee Roasters company has historically been known over time as an eco-friendly company (McGinn). In fact, the company engaged in composting grounds, created an eco-friendly hot beverage cup, and sought a level of sustainability by placing a solar array on a facility roof and exploring alternative energy options. Nonetheless was Keurig’s motto, “Brewing a Better World,” which spoke to the company’s conviction that it must be responsible to those who grow their beans.

Keurig Green Mountain appears as #14 on the Newsweek Top Green Companies in the U. S. 2015 (Suarez). Consequently, the following facts makes Keurig’s eco-aspirations so perplexingly paradoxical. Keurig’s rapid growth and billion dollar position is primarily due to sales stemming from its brewing appliances and its nonrecyclable, nonbiodegradable K-Cups (Carpenter).

Growing objection to the K-Cup

Keurig Green Mountain sold 9.8 billion K-Cups in 2015 and is on per with the negative impacts presented by bottled water. Notably, in a YouTube video called Kill the K-Cup, the following statistics and statements are presented:  

"In 2014, enough K-Cups were sold that if placed end-to-end, they would circle the globe 10.5 times. Almost all of them ended up in landfills. They are not recyclable. Using them is extremely wasteful and irresponsible; they are a stupid way to make coffee that simply cannot be sustained. Stop using them, stop using them, stop using them; 'Kill the K-Cup, before it kills our planet.'” (Hamblin)

Hamburg, Germany’s second largest city, is the first metropolitan area to formally object to the use of the plastic pods (“Hamburg Becomes”). The new policy proffered by Hamburg's Department for the Environment and Energy was created in an effort to reduce unnecessary rubbish, energy utilization, and pollution. The prohibition affects business offices, universities and other similar institutions and government controlled facilities. Research indicates Germans consume and dispose of nearly 3 billion pods annually. They acknowledge the benefits of single use brewer pods, but the environmental price being paid is simply far too overarching (“Why This German”). 

Environmental responsibility 

Keurig and others are looking for ways to address the nonbiodegradability K-Cup issue. Keurig has indicated that they will provide a fully recyclable K-Cup pod in 2016. They say that in 2020, 100% of the pods will be recyclable. The plan is to use polypropylene #5 plastic, known for its successful performance in community recycling programs, and has been determined to be a desirable material sought by other companies looking to reuse plastics. The Keurig Vue®, K-Carafe™, and K-Mug™ pods, which supply other Keurig brewing appliances, currently provide recyclable options (“Recyclable K-Cups”).    

Keurig's response

Keurig is not taking this problem sitting down (“Recyclable K-Cups”). The company states that it is being proactive and is working in conjunction with those in the know, including American environmental policies, recyclers and other specialists to guarantee that the K-Cup will be recyclable in curbside receptacles and that the plastic pods will be readily reusable by the plastics market. Currently, there are three major methods to discard of the pods in a responsible manner:

1. Curbside recycling - Keurig states that their current recyclable pods can be absorbed through community recycling programs. The infrastructure that exists is sufficient to address the needs of their recyclables. The company is also trying to strengthen the infrastructure on a national level by providing an investment to the Closed Loop Fund (Fund) of $5 million. The Fund is a social investment fund geared toward having a direct impact on increasing product and packaging recycling, through a $100 million expenditure. The Fund’s main objectives are to eradicate over 50 million tons of gas that is contributing to global warming; redirect over 20 million tons of rubbish and other waste from landfills; and develop jobs (“Closed Loop Fund”).
   
   
2. The take-back program - Here the company transforms old K-Cups into alternative energy for business customers. The program is called the Grounds to Grow On™. Through this program, Keurig converts used pods into two environmentally positive solutions. The company separates the pods into its components, then develops energy with the plastic and the grounds become compost to enrich soil. Keurig states that it has recycled over 27 million pods and created approximately 975 kWh of electricity.
   
   
3. Second life - In conjunction with The Association of Plastics Recyclers, and others, pods are converted into consumer goods that are useful to society (“Recyclable K-Cups”). Steve Alexander, Executive Director of the Association of Plastic Recyclers, stated that he is quite impressed by the Keurig company, and says that their efforts towards time and monetary investment are unprecedented in the industry (“A Recyclable K-Cup”).

Keurig is totally committed to coming up with viable solutions and are working hand-in-hand with the recycling industry to identify solutions to the K-Cup problem. Alexander indicates that people believe that this problem is a quick solve, but it is a process that takes time, and Keurig is all in.

Supply chain sourcing   

Keurig is also attempting to demonstrate environmental and corporate social responsibility through their sourcing and supply chain programs (“Building a Resilient”). The goal is to support their suppliers, through supporting their employees, and the communities they live in, by giving the growers the skills and tools necessary to become resilient suppliers. The company views improved business practices and improved employee livelihoods as the foundation for creating a sustainable supply of superior coffee for years to come.

Through building relationships with the growers, the company believes it allows them to ensure that their suppliers are living up to their stringent standards of product quality and employee conditions. When suppliers fail to meet objectives, the goal is not to discard, but to strengthen, train, teach and develop.

Employee engagement   

In addition to specific sustainability objectives, Keurig is encouraging its employees to live the change the company aspires to accomplish. Part of the company mission is to achieve workforce engagement through inspiring employees to connect to the issues they are passionate about in their own communities. The company’s core belief is that they:

“brew a better world, using the power of business to make the world a better place. When our people thrive, our business thrives. And so do our communities” (“Engaging Our People”).   

For example, in 2014, over 400 Keurig employees were engaged in the removal of tires, rubbish and debris from waterways, successfully contributing to the removal of 17,100 pounds of matter contributing to marine pollution. The company’s Community Action for Employees program, pays employees to participate in volunteer programs of their choice. Each full-time employee can get paid up to 52 hours towards volunteering. In 2014, employees spent 57,000 hours volunteering. 

Conclusion

Although the K-Cup is clearly creating an environmental problem, it appears that Keurig is deeply committed to resolving the problem through a series of integrated efforts geared toward eliminating the nonrecyclable and nonbiodegradable issues associated with their K-Cups.

The problem became clear once their brewing appliances exploded on the global beverage scene. Creating customized beverages has become a fixture both in national and international business and residential settings. They are taking their environmental responsibilities seriously, and it appears the end is in sight. 

Works Cited

"A Recyclable K-Cup Pod - Product Design." Keurig Green Mountain. Keurig Green Mountain, Inc. 15 April 2016. Web. 22 April 2016. <http://www.keuriggreenmountain.com/en/OurStories/InnovationStories/rKCupDesign.aspx>.

"Building a Resilient Supply Chain." Keurig Green Mountain. Keurig Green Mountain, Inc. n. d. Web. 22 April 2016. <http://www.keuriggreenmountain.com/Sustainability/ResilientSupplyChain/Overview.aspx>.

Carpenter, Murray. "A Coffee Conundrum." The New York Times. The New York Times Company. 3 August 2010. Web. 22 22 April 2016. <http://www.nytimes.com/2010/08/04/business/energy-environment/04coffee.html?_r=0>.

"Closed Loop Fund." Closed Loop Fund. n. d. Web. 22 April 2016. <http://www.closedloopfund.com/>.

"Engaging Our People and Communities." Keurig Green Mountain. Keurig Green Mountain, Inc. n. d. Web. 22 April 2016. <http://www.keuriggreenmountain.com/Sustainability/ThrivingPeopleandCommunities/Overview.aspx>.

Hamblin, James. "A Brewing Problem." The Atlantic. The Atlantic Monthly Group. 2 March 2016. Web. 22 April 2016. <http://www.theatlantic.com/technology/archive/2015/03/the-abominable-k-cup-coffee-pod-environment-problem/386501/>.

"Hamburg becomes the first city to reject single-use coffee pods." Kill the Kcup. Social Bean Gourmet Coffee Co Ltd. 22 February 2016. Web. 22 April 2016. <http://www.killthekcup.org/#!Hamburg-becomes-the-first-city-to-reject-singleuse-coffee-pods/c1kod/56ce28700cf24bcda473b772>.

"JAB Holding Company-Led Investor Group Completes Acquisition of Keurig Green Mountain, Inc." Keurig Green Mountain. Acquire Media. 3 March 2016. Web. 22 April 2016. <http://investor.keuriggreenmountain.com/releasedetail.cfm?releaseid=958682>.

Linshi, Jack. "Here’s What You Need to Know About the War on K-Cups." Time.com. Time, Inc. 23 June  2014. Web. 22 April 2016. <http://time.com/2913062/k-cups-war/>.

McGinn, Daniel. "The Buzz Machine." Boston.com. The New York Times Company. 7 August 2011. Web. 22 April 2016. <http://archive.boston.com/yourtown/needham/articles/2011/08/07/the_inside_story_of_keurigs_rise_to_a_billion_dollar_coffee_empire/?camp=pm>.

"Recyclable K-Cup Pods." Keurig Green Mountain. Keurig Green Mountain, Inc. n. d. Web. 22 April 2016. <http://www.keuriggreenmountain.com/Sustainability/SustainableProducts/OurProducts/ReducingProductWaste.aspx>.

Snyder, Benjamin. "You can finally make Campbell soup from a Keurig." Fortune. Time, Inc. 10 September 2015. Web. 22 April 2016. <http://fortune.com/2015/09/10/keurig-campbell-soup/>.

Suarez, Essdras, M. "Top Green Companies in the U.S. 2015." Newsweek. Newsweek, LLC. n. d. Web. 22 April 2016. <http://www.newsweek.com/green-2015/top-green-companies-u.s.-2015>.

"Thriving Communities." Keurig Green Mountain. Keurig Green Mountain, Inc. n. d. Web. 22 April 2016. <http://www.keuriggreenmountain.com/Sustainability/ThrivingPeopleandCommunities/ThrivingCommunities/ThrivingCommunities.aspx>.

"Why This German City Has Banned Coffee Pods In Government Buildings." NPR. 1 March 2016. Web. 22 April 2016. <http://www.npr.org/sections/thesalt/2016/03/01/468631065/why-this-german-city-has-banned-coffee-pods-in-government-buildings>.