BURLINGTON, MASS. — Keeping its single-serve coffee pod prices close to the price of competitors could keep Keurig Dr Pepper on track to hitting its goal: increasing household penetration of its Keurig brewers by an average of 2 million per year.
A barrier in 2016 was a price differential of 30¢ per serving between Keurig and some of its competitors in the single-serve pod category, said Ozan Dokmecioglu, chief executive officer of Keurig Dr Pepper on Sept. 7 in the virtual Barclays Consumer Staples Conference. Keurig executives decided an optimum gap would be 20¢. The gap now has dropped to 20¢, Mr. Dokmecioglu said.
Keurig, because of inflation, has raised its prices over the past couple of years, but competitors have done the same.
“Now for the 20¢, that's the critical part,” Mr. Dokmecioglu said. “The 20¢ price differential in fact has not changed, which is very important to say.”
Single-serve pod coffee still costs less than coffee bought away from home, he added. Inflation could have consumers cutting back on spending for household appliances like coffee makers, but Keurig brewers range from $49 to $200, Mr. Dokmecioglu said.
“If someone doesn't want to pay $150 or $170 per brewer, no problem,” he said. “They can buy for $75 or even $50 per piece.”
Keurig brewers are in about 36 million households in the United States now with hopes the number one day could reach 50 million households, Mr. Dokmecioglu said.“This provides really a very strong growth opportunity for our coffee systems business in years to come,” he said. “One can argue 10 years and plus.”