Keurig Does About-Face With Return Of My K-Cup To 20 Brewers

WATERBURY, VT -- Keurig Green Mountain chief executive Brian Kelley admitted that it was a mistake to restrict consumers from using their own coffees in reusable My K-Cup capsules in 2.0 brewers. Keurig's reusable capsules are expected to make a comeback in time for the holidays.

Kelley also said during the firm's May 6 second-quarter earnings call that the company will license more outside brands so that the coffeemakers will work with "more than 500 varieties across more than 70 brands."

Kelly's remarks followed a disappointing second-quarter performance report that company attributed to sluggish sales of the 2.0 brewer which, together with sales of accessories for them, plunged 23%. Keurig shares fell 9% on the news to $98.16. | SEE STORY

The 2.0 brewers, which hit the market last fall, were designed to lock out non-Keurig approved K-Cups, using a digital scanner that looks for an ink marker on authorized packs. As part of the transition, the company discontinued its reusable My K-Cup cartridges that customers filled with their own roast ground coffees.

MyCup's appeal to many users extends beyond brewing their preferred roasts and brand to paying substantially less per cup than the prices charged for the Keurig-branded K-Cups, along with concern for the amount of non-recyclable waste generated by the capsules.

"We underestimated the passion that consumers had for this," chief executive Brian Kelley said in the call with analysts. "We shouldn't have taken it away."

Meanwhile, many consumers have found their way around Keurig 2.0's lockout feature by placing a piece of tape over the brewer's scanner. One coffee roaster, Lincoln, CA-based Rogers Family Co., which makes its own single-serve capsules, produced the "Freedom Clip," a free tool designed to do the same thing as the tape.

Rogers Family filed a lawsuit in federal court last April accusing Keurig of violating antitrust and unfair competition laws by locking out competing portion-pack providers with the introduction of its 2.0 brewer. The company's legal action followed Oakbrook, IL-based TreeHouse Foods Inc.'s filing of a similar lawsuit in February. | READ MORE

Amid slipping brewer sales, Keurig is banking on its first cold beverage system, set to hit the market this fall. Keurig Kold will dispense still and sparkling drinks, juices, sports drinks, teas and other beverages. Keurig has signed deals with Coca-Cola Co. and Dr Pepper Snapple Group to integrate the companies' popular soda brands into the new cold brewing system. Coca-Cola bought 10% of Keurig early in 2014 and later increased its stake to 16%.