TreeHouse cracks the Keurig 2.0 code

by Keith Nunes
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Keurig 2.0 features proprietary technology that renders unlicensed single-serve coffee pods incompatible with the brewer.

OAK BROOK, ILL. — Sam Reed, chairman, chief executive officer and president of TreeHouse Foods, declared Aug. 7 that his company has developed an unlicensed single-serve coffee pod that is compatible with Keurig Green Mountain’s 2.0 system that is slated to be introduced later this year. Earlier this year TreeHouse filed a lawsuit against Keurig Green Mountain that claimed the 2.0 system is anticompetitive.

“Five weeks ago, shortly after the Fourth of July holiday, we declared our coffee independence to our customers in successfully developing prototype single-serve cups that are 2.0 compatible,” Mr. Reed said, during a conference call to discuss TreeHouse’s second-quarter earnings. “This is only the latest in a series of advances that mark our consistent private label leadership in this burgeoning category.

“We have now initiated commercialization of our prototypes and will convert them to scale production for retail distribution before year’s end. This massive undertaking involving more than 300 s.k.u.s. (stock-keeping units) is yet another example of the close cooperation between our grocery customers, their custom products and our unmatched commitment to their private labels.”

In a conference call with financial analysts on Aug. 6, Brian Kelley, the president and c.e.o. of Keurig Green Mountain, said he would not comment on unlicensed manufacturers developing single-serve pods that work with the 2.0 system.

“The 2.0 interactive technology, we're confident in the proprietary nature,” he said. “We're confident in its performance, and we are confident that the Keurig designed and produced beverages will be the ones that work in the Keurig 2.0 brewer.

“It's the Keurig 2.0 brewer that will allow us to perform consistently. We're not going to comment on the rumors. We've seen them and heard them as well. We know the market is competitive. But we're very, very confident in the interactive technology we have and we'll stick with that.”

An obvious question is if Keurig Green Mountain will take any legal action to prevent TreeHouse from selling unlicensed 2.0 compatible pods, but Dennis Riordan, the chief financial officer of TreeHouse Foods, said the company has past experience with such issues.

“I think we've got a great history here of having introduced products that are compatible, national brand equivalent products that don't overstep the line of – the legal lines,” he said. “We did that with our original coffee products, and we will do that with this as well. So that is not something that is going to change our strategy because we do we think an excellent job of making sure we run clearly within the right legal framework to introduce these products and that will be the same with this one.”
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