Jumping on the K Cup Home Coffee Market
Demand for home brewed coffee via Keurig and its K Cup products has grown well beyond anyone’s comprehension. And as this article in the Wall Street Journal points out, you need to know what’s going on in the home to understand how to market your product. Looks like Keurig has done its customer research.
Every once in a while, a very good business opportunity comes along and I think Markcol Coffee Distributors of Bowmanville has jumped on this one in a timely fashion. These excellent business opps usually happen on a wave of new technology, and this is certainly the case. However, competition is growing in this billion dollar sector of food retail.
The more machines, the more single-serve pods get sold, and sales of those are still booming. In the 12 weeks up to March 16, sales in dollar terms of Green Mountain’s own brands rose by 34% over the previous year, and sales of K-Cups as a whole were up 38%, according to data from Nielsen — from article by Wall Street Journal.
Single Cup and the Flavours You Love
I like flavoured coffee and that’s Markcol’s specialty. You’ll find some really tasty K cups flavours too like coconut, caramel, apple spice and more. Believe me, this place is a coffee lover’s paradise. Visit them at all their locations including the big retail location on Bayview Ave in Aurora.
Is a cup of coffee worth 67 cents? The owners of Markcol thought so and have capitalized on the home coffee machine revolution. They just opened their latest of 7 retail stores, here in Aurora. It’s their largest store and serves the Aurora/Newmarket area (about 200,000 population).
Keurig or Tassimo coffee machines are popular and the varieties of coffee flavours and brand available in K-cups or T-cups have grown dramatically. Popular new brands are Guy Fiero’s, Martinsons, and Emerils and Cake Boss.
Is their UVP and Positioning Sustainable?
Markcol’s unique value proposition is: inexpensive, tasty, coffee packs for brewing at home. The quality of the coffee and tea in these single serving cups is high. You can buy online too and they get orders from all over.
Green Mountain Coffee owns Keurig. They recently sold their Van Hautte brand. Green Mountain has the power to make life miserable for retailers like Markcol. They’re playing licensed technology games to try and squeeze out parasite competition of the K Cups. Markcol also sells Tassimo coffee machines and products so that eases their risk to Kurig and Green Mountain somewhat.
There are other retailers in this market too, but none are a threat at this point. The company has excellent potential markets out in Calgary, Edmonton and Vancouver. I wouldn’t doubt the owners get an offer from investors. You can become a Keurig retailer yourself.
San Francisco Bay Coffee has introduced a 97% biodegradable K cup. This is next phase of single cup brewing as there’s concern that the current K cups will never be biodegradable. Timing these product innovations is key.
As you can see, they’re online selling a good variety of pack sizes and even a trial size pack.
Superstore, Walmart, Starbucks, Timothy’s and home product retailers are selling these products too but they can’t carry the huge variety that Markcol does. A lot of shoppers want to sample individual unique flavours and Markcol is a specialist. The larger stores will only carry the packs of 12, 16 or 24 cups. Their price is about 20 cents higher per cup than Markcol’s. So right now, business looks very good for this company which started as coffee beverage supplier in Bowmanville.
Only time will tell if their unique value proposition can withstand attacks from the big retailers and the coffee shops. Markcol sells all the top brands yet I suspect most of the shoppers are brand agnostic. The packaging branding artwork on some of the products convey less value than Timothy’s brand.
Customers want their favourite flavours, and as competitors improve their brand image and packaging graphics, they’ll begin to increase their marketshare. This could work in Markcol’s favour.
And get a load of the tasty, aromatic flavours: Pumpkin Spice, Sugar Bush Maple, Butterscotch Caramel, Mocca Nut Fudge, Caramel Apple Pie, Southern pecan, Island Coconut and Vermont Country Blend.
If you’re an investor or entrepreneur, check the opportunity out and let me know what you find. You might want to ask the owners if they’d like to start up a franchise in your area. The barriers to entry are low and the potential is excellent.