Keurig Canada president defends restricted K-Cup use in new brewing machine

TORONTO – Frustrated coffee drinkers who have “hacked” their way around restrictions built into the new Keurig brewers may just be looking for a hurdle to overcome, says the president of Keurig Canada Inc.

“There are some, when you give them a challenge, they’ll really get at it,” Stephane Glorieux said in an interview Monday.

“Whatever you throw at them, they’ll find some way of doing it.”

Keurig is facing criticism over the latest version of its popular coffee machine, which uses technology that restricts it to brewing pods from its licensed partners.

Pods made by companies independent of Keurig are rejected by the new machines, leaving some coffee drinkers with a stock of unofficial pods they can’t use, even though they worked in older models.

Their frustrations have sparked a backlash from some customers and competitors in the coffee industry who say they’ve been shut out of the market.

Reviews on websites for various online retailers pan the Keurig 2.0, calling for a boycott, while numerous videos have appeared on YouTube explaining how to circumvent the technology through either installing a magnet into a part of the machine or making modifications to its hardware.

“You can’t stop creativity,” Glorieux said when asked about customers who are taking matters into their own hands.

“We are absolutely aware of these inefficient ways and we certainly don’t recommend them.”

However, Keurig may face a bigger challenge after some of its competitors filed a complaint with the Competition Bureau last week alleging the company is using anti-competitive measures to keep their unlicensed products from being used in the new machines.

The complaint comes after Ontario-based Club Coffee filed a $600-million lawsuit last month alleging Keurig has attempted to reduce competition, even though the patent on its pod design expired more than two years ago.

Coffee pods are a booming business for Keurig and others, like Nespresso, which appeal to coffee fans searching for a faster and more convenient way to brew a cup.

To capitalize on the move to the single-serving brewers other companies launched their own compatible pods when the patents expired, putting a crimp on the growth trajectory of Keurig.

However, Glorieux said the new Keurig machines have numerous new patents that protect its latest technology, though he declined to specify whether the K-Cup model is protected under a new patent.

“We’re a disruptive innovator, and we push the envelope,” he said. “Disruptive technology pushes you to create new patents.”

“We have 460 engineers that are actively looking at the future, so the patent is a way of life for us,” he added.

Club Coffee chief executive John Pigott said he believes the K-Cup design is free from anything that would keep outsiders from making their own variations.

“Keurig has not demonstrated that a single patent exists that legitimately prevents Club Coffee from producing pods that will work in the Keurig 2.0 brewers,” Pigott said in an emailed statement.

“The packaging for Keurig’s new K-Cup Packs that are compatible with Keurig 2.0 brewers lists two patent numbers, but both expired in September 2012.”

A fight between Keurig and some of its competitors could have widespread implications for the industry, some industry players have suggested.

If Keurig maintains a stronghold on the coffee market, it’ll give the company greater control over already soaring coffee prices, and lock outsiders from making a lower priced pod.

Beyond coffee, Keurig plans to get a grip on the soft drink industry under a deal with Coca-Cola that will see various cold drinks hit shelves next year, mostly through a separate machine being referred to as Keurig Cold.

The soft drink platform will compete directly with Sodastream, a machine that has made it easier to mix carbonated drinks at home but is largely shunned by major cola companies.

Unlike his competitor, Glorieux said Keurig Cold simplifies the process by cooling down the water as it pumps it through the machine, while it combines the syrup and carbonation that pour into the glass.

The concept has the blessing of Coca-Cola, which paid US$1.25 billion to purchase a 10 per cent interest in Keurig Green Mountain earlier this year, a deal which increased the likelihood that brands its owns will have their own K-Cup version, including Minute Maid and Sprite.

“One thing that was very key for us when we launched this platform was to say we’ll have a wide variety,” Glorieux said, noting that Coke and various sports drinks are already in the works.

“We’ll have other partners joining the experience,” he added.

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