Published in January of 2018
Since writing about K-Cups back in 2013, I’ve been curious to understand how this coffee system became so dominant.
KJ Fallon has obliged my curiosity by writing Coffee for One.
Coffee from K-Cups is different in two crucial ways from traditionally brewed coffee. First, single serve coffee is super expensive compared to brewed coffee, with each cup costing the equivalent of around $50 per pound. Second, single serve coffee, or at least the coffee that comes out of the Keurig machines at my work and my house, is of lower quality and tastes worse than a freshly ground specialty coffee.
So how did a product that is both more expensive and of worse quality become so dominant?
If you are of a mind to connect every damn unrelated thing (and every book) to higher ed, then what does the dominance of the single serve coffee system say about the future of higher education?
Coffee for One does an excellent job of answering the first question - the coffee question. For some strange reason, Fallon is stubbornly silent on the meaning of K-Cups to higher ed.
The reason that so many of getting our coffee hit from single serve coffee pods is that we are a nation of caffeine addicts. A Keurig machine is an efficient drug delivery system.
Keurig started life as a scrappy startup in 1992, before being acquired by Green Mountain and then swallowed up for $14 billion in 2016 by JAB holdings in 2016. As late as 2000 only a negligible percentage of all US coffee sales came from single-serve pods. By 2015, about a third of coffee sales for single-serve pods, and the vast majority of those were K-Cups.
The way that Keurig came to dominate the US market was to first focus on office (including campus) sales. Companies were willing to pay for the Keurig machines, as the single serve coffee kept workers from leaving the office in search of a Starbucks. Employees liked the K-Cups, as nobody had to make the coffee or clean up after anyone else.
Keurig then moved into the home market by producing a relatively inexpensive machine, making its profits not on the coffee makers but through licensing established coffee brands, such as Green Mountain and Tully’s and Dunkin' Donuts to sell K-Cups.
The genius of Keurig was to give the consumer the feeling of choice about which coffee they wanted to drink. The only cost, besides the high price of the pods, was to the environment - as millions (and then billions) of K-Cups ended up in landfills.
Coffee for One does an excellent job of setting the K-Cup story in the overall history and economics of coffee. It is helpful to understand how coffee is grown, picked, processed, shipped, and marketed.
There are gaps in Fallon’s research. Most egregiously, Coffee for One perpetuates the myth that “...after crude oil, coffee is the most sought commodity in the world.” The truth is that the global market for coffee is about $20 billion. This is not even in the same ballpark as the global energy industry, which totaled $1.8 trillion in 2017.
To put this all these dollar figures in an InsideHigherEd perspective, degree-granting postsecondary institutions in the United States took in $564 billion in 2015-2016. Of that figure, public institutions had revenues of $364 billion, of which a fifth comes from tuition, four-tenth from public funding, and the rest from everything else. In contrast, private nonprofit colleges and universities had revenues of $183 billion, with over ninety percent coming from tuition and fees.
So what can we learn from Coffee for One about higher ed?
As is always the case when drawing higher ed lessons from industries that have nothing to do with education or credentialing or public purpose, we should be cautious in making our connections. My higher ed mind went immediately to the idea that Keurig succeeded where other single serving coffee systems failed in the US because of the powering of branding. I like Dunkin’ Donuts coffee (having worked at the Needham, MA Dunkin’ store during the summer of 1988), and Keurig lets me drink Dunkin’.
Will brand name postsecondary institutions succeed in getting their brands attached to fast, convenient, and inferior quality educational enterprises?
Are globally branded schools already doing this with the proliferation of non-degree online education options?
Are alternative credential online programs the single serve coffee of higher education?
A more relevant comparison may be between K-Cups and books, coffee and publishing.
One big reason that I read Coffee for One was that I was able to purchase the book in Amazon’s Audible/Kindle Whispersync format. The book was a fast read, as I was able to switch back-and-forth between the e-book (including on the Kindle app on my iPhone) and the audiobook version.
Instead of buying the e-book/audiobook versions of Coffee for One from Amazon (total cost $17.48), I could have borrowed the paper version from my academic or town library for free. Retention from reading paper books is likely superior to reading with a combination of our eyes and ears. When I listen to audiobooks, I’m multitasking, which no doubt impedes retention.
So the paper Coffee for One is cheaper (when borrowed) and better (retention). Yet, I spent my own money to buy the digital e-books and audiobooks.
The lesson is that format matters, and what matters most in format is how the medium aligns with the ability to meet other objectives. K-Cups are quick and fast. Digital/audio books are also fast to download and can be consumed while doing other things.
Thanks to the e-book/audiobook combination, I now know lots of things about the history of single serve coffee and the larger coffee industry. Without the availability of Coffee for One in a digital/audio format, I would never have read the book.
Are you a K-Cup coffee drinker?
What can you tell us about those super automatic espresso machines?
Can you recommend other books on food (or beverages), technology, and business?
What are you reading?