Recently, I was surprised to discover that Keurig Dr Pepper is headquartered in Massachusetts. I knew from my many business trips to Dallas that Dr Pepper is a long-established Texas company. And Keurig? Must be a European entity, I thought.
The reality is that Keurig was the brainchild of John Sylvan and Peter Dragone who were roommates at Maine’s Colby College in the late 1970s. After a few years in the high-tech industry, Sylvan, a lifelong tinkerer, quit his job to devote his time to solving what he considered an inconvenient problem – stale office coffee.
Sylvan designed a coffee pod system and a machine to brew the pods. Dragone was serving as director of finance at Chiquita Brands when Sylvan called him for help with his business plan. The pair founded Keurig in 1992 in Woburn, Massachusetts. Keurig is the Dutch word for excellence. Realizing that they needed significant capital, the entrepreneurs approached Green Mountain Coffee Roasters for financial backing. Once Green Mountain’s nose was in the tent, Green Mountain brought in hordes of backers and executives to kickstart Keurig (I had always envisioned Green Mountain as a couple of mellow Bernie Bros sitting by a campfire). The new environment frustrated Sylvan, forcing him to quit in 1997. He sold his shares for only $50,000. Dragone departed soon after.
The company experienced explosive growth selling to offices and coffee shops worldwide. In 2004, after much trial and error, the company introduced a home version that was affordable and small enough to fit on kitchen counters. Sales exploded due to pent up demand from workers who loved their office Keurig. Coffee pods became a hot seller in supermarkets worldwide.
In 2006 Green Mountain assumed full ownership of the corporation and began marketing their technology to companies including Dunkin Donuts and Starbucks.
Selected Stats
40% of Americans own single serving machines- up from 10% in 2012.
27% of Americans use Keurigs.
Keurig produces 10 billion K-cups per year – Nespresso produces 14 billion coffee pods annually.
The Downside: 29,000 coffee pods enter landfills every minute (yes, minute). – These containers will take 500 years to decompose. Keurig began working on recyclable materials in 2011 . Their goal is that 90% of the k-cups will be recyclable. Other brands are far ahead of Keurig in the sustainability arena- some allow consumers to reuse their pods.
Enter Dr Pepper
In 2018, Keurig Green Mountain merged with the Dr. Pepper Snapple Group to create a new company generating over $11 Billion in annual sales. Not that you asked but Dr Pepper is a former software client of mine. Employees are fiercely loyal to their brand and even proud of the Dr. Pepper Museum.
Dr. Pepper was originally formulated by Brooklyn-born pharmacist at a Waco, Texas drug store. As with the formula for Coca Cola, the recipe for Dr Pepper is a trade secret. The formula is allegedly secured in two halves in safe deposit boxes in separate Dallas banks. Dr. Pepper was first sold in 1885, one year before the introduction of Coca-Cola. Amazingly almost 140 years later those two brands rank as the top two best-selling carbonated soft drinks in the U.S. The history of the two rivals is filled with failed potential mergers and dozens of lawsuits ranging from trade theft to anti-trust.
Dr Pepper enjoys dubious bragging rights because while the Food and Drug Administration classifies Coke as a cola, the agency does not classify Dr Pepper as such. Nor does the FDA classify the Texas institution as a root beer or a fruit flavored soft drink. Instead, Dr Pepper has been given its own category called “pepper soda”.
Bottom’s Up.
Have a great weekend.
If you liked this blog you will enjoy my new book, “Get Smarter-Be Amazed”. Visit www.tedcurtinstories.com for direct links to Amazon and Barnes and Noble.
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