Industry News / Retailer News / News

Single-Cup Coffee To Get Private Label Treatment

June 12, 2012
/ Print / Reprints /
/ Text Size+

A spokesman for Cincinnati-based Kroger told Reuters that it planned to launch private label single-serve coffee pods later this year for the Keurig brewers, setting off a firestorm of talk about private label entry into the single-cup coffee market.

Private label coffee sales account for about 10 percent of the market, according to 2011 data from SymphonyIRI Group in Chicago. Single-cup private label sales are nearly non-existent on the market in the U.S., but total single-cup sales account for about 7 percent of the total coffee market, and that total rises to nearly 25 percent of the coffee market in Europe.

So opportunities for entry exist, particularly in September, when many of the patents held by Waterbury, Vt.-based Green Mountain Coffee Roasters Inc., the maker of the Keurig brewers, are set to expire.

The Kroger spokesman told Dow Jones Newswires that the retailer did not plan to manufacture the pods itself, rather deciding to work with a supply partner and offer the product under its Private Selection and banner brand.

Reuters reported that Kroger was one of many companies looking to tap the growth of single-cup coffee, citing Nestle, Kraft, Sara Lee, Starbucks and Green Mountain as others. A week ago, Green Mountain CEO Larry Blanford told an industry conference that his company would consider offering private label K-cups to keep up with new entrants in the market.

“We might consider selectively two or three or four possibly private label brands, store brands, as everybody in the room knows they typically operate with a value to the consumer,” Dow Jones Newswires quoted Blanford as saying.

And Bloomberg News quoted Eden Prairie, Minn.-based Supervalu spokesman Mike Siemienas as saying the company could look to enter the market as well. “We are aware that the patents are expiring, and we are always looking to offer private label brands to our customers,” he told the news service.

“Investors are concerned about any additional competition in the single-serve marketplace,” analyst Marc Riddick of The Williams Capital Group told Reuters. “(Kroger’s plan) just adds to the reality of the situation.”

However, another analyst said the lower cost of private label products could cut into the profitability of a private label strategy in single-cup coffee.

“Even if Green Mountain is doing it, the margins on any private label manufacturing are far inferior to anything that’s branded, or even what would be on the partner brands, because it’s a lower selling price,” Stifel Nicolaus analyst Mark Astrachan told Reuters.

Did you enjoy this article? Click here to subscribe to Private Label Buyer.

You must login or register in order to post a comment.



Image Galleries

November 2014 New Food Products

This month's new food products are Flours, crepes, lollipops, several candy items, pancakes, dip, fish, raisins, pizza, almond milk, peanut butter, and a breakfast bowl.


Coming with a clear, comprehensive plan was the key to success for Longo Brothers Fruit Markets when the grocer decided to roll out a two-tier private label strategy, Jenny Longo and Robert Koss tell PLBuyer editor Chris Freeman in this podcast.

More Podcasts

Private Label Buyer Magazine

PLB November 2014 cover

November 2014

The November 2014 issue of Private Label Buyer - its last issue - includes articles about the retailer as manufacturer and OTC/healthcare items, as well as category insights on pizza and household goods. Check it out today!

Table Of Contents Subscribe

Private Label Segments

Which segment of private label will see the biggest growth over the next year?
View Results Poll Archive

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


facebook_40px twitter_40px  youtube_40pxlinkedin_40pxgoogle+ icon 40px

PLB Marketplace