13 ms·

Owner of Peet's to buy Keurig for almost $14B

60 points by mdesq 11y ago

smlacy 11y ago
Yuck. Keurig is a horrible company and this will stain Peet's reputation. Too bad.
jMyles 11y ago
The next time somebody tells you there's no startup capitalization bubble, point them to this frothy cup of craziness. edit: Hmm - downvotes. So I guess people genuinely think that this (pretty shitty) company is worth $14b? For reference, Mariott International, which just opened its 4,000th hotel, has a market cap of around $18b. In January of this year, freaking Nintendo had a market cap of only $12b (though, for reasons that are debated, it is now nearly double that). There's no way on earth that this company is in the same realm as Mariott or Nintendo. Come on now.
- mikeash 11y ago
  What's crazy about it? Given the popularity of Keurig right now, this is practically like buying a printing press from the Bureau of Engraving and Printing.
- mseebach 11y ago
  It's important to keep in mind that Marriott International (with a few exceptions) doesn't actually own the hotel properties themselves -- they're franchises.
- bdcravens 11y ago
  I don't think Keurig qualifies as a startup. Their k-cups have been around since 1998; the company since 1992. Coffee is a consumed by many daily; Keurig is undoubtedly the most popular single-serve brew solution. It's likely that more drink a cup of coffee from a Keurig machine than wake up in a Marriot bed or turn on a Nintendo. Their users are always buying consumables; hospitality and entertainment media is typically purchased far, far less frequently. (and good or bad, Keurig's DRM is designed to help them squeeze out more licensing) Marriot is getting squeezed by the many hospitality options and AirBnB; Nintendo is the #3 console and is getting squeeze by mobile gaming. Keurig however, is by far the most available option for single-serve in most grocery stores and in places where you buy the machines. So yeah, in terms of many business metrics (market share, consumer loyalty and access, etc), they're not in the same realm as Marriot or Nintendo.
- cm2012 11y ago
  Mariott had $214 million net income in 2014. Keurig had $500 million. EDIT: Mariott actually had 753m net income in 2014.
  - adventured 11y ago
    I happen to think that Keurig is worth acquiring at 28 times their trailing four quarter earnings (it might be a bit high, but that's the price of acquiring). However, you're partially mistaken on those numbers. Marriott had $753m in net income in 2014. You're referring to just one quarter. They've done $854m in net income the last four quarters (20.8 pe ratio or so).
    - cm2012 11y ago
      You're totally right - my mistake.
- mwfunk 11y ago
  What you said makes sense if a company's stock price (and market cap) was correlated with the size or stability or profitability of the company. That's usually not the case though. People buy and sell stocks based on their predictions about other people buying and selling the same stocks, which itself is only indirectly based on a company's performance. You are correct that in an ideal world, $14b sounds like a lot for Keurig, but that's pretty mild compared to other valuations (in the tech industry in particular, and among startups in particular) that we all read about every day. Apple reports record profits? The stock tanks. Amazon loses money? Hey everybody, let's double down on Amazon. Facebook's market cap is over $300b right now. $300b for Facebook, let that sink in. Twitter's market cap is currently $17b in spite of having no path to long-term stability or profitability in sight. The one thing a company can do to improve its stock price seems to be to show growth. If there's growth, your stock is likely to go up. If there's not growth, even if you remain insanely successful and profitable, your stock doesn't stay the same- it's likely going to go down (MS in the aughts being a prime example). Investors seem to value growth (and fear the lack of growth) far more than they care about the fundamentals of the companies they invest in, at least in the tech industry. Every market has natural forces acting on it that push it towards efficiency and rationality, but most people learn about those concepts and stop there. IMO, understanding a market means understanding why a given market isn't 100% efficient or rational in spite of those forces, and in the case of the stock market I fear that it's mostly driven by the Greater Fool Theory: https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
coldcode 11y ago
Building terrible DRM technology does seem to pay off in some cases.
- deleted 11y ago
  [deleted]
- hyperliner 11y ago
  No different than the Starbucks coffee many of us have in our hands as we read your comment: terribly killing small coffee producers in Third World countries does seem to pay off.
  - Relys 11y ago
    Starbucks is leveraging it's economy of scale to out price it's competitors in a free market. Keurig is using it's position in the industry to enforce DRM on it's hardware to stifle free market competition and exert it's power over the customer. Now, you may agree or disagree with Starbucks business practices or Keurigs DRM. However, I stand to argue that a direct comparison between the two is unfair.
    - hyperliner 11y ago
      It's more than leveraging scale. See these: http://businessethicscases.blogspot.com/2013/02/exchange-inc-v_3188.html http://businessethicscases.blogspot.com/2013/02/exchange-inc... http://www.theguardian.com/environment/green-living-blog/2011/feb/28/coffee-chains-ethical http://www.theguardian.com/environment/green-living-blog/201... http://www.economist.com/node/8355026 http://www.economist.com/node/8355026
chollida1 11y ago
A few interesting things about this deal. Keurig is getting a 78% premium over their Friday share price. That's a huge premium. C The company had a lot of short interest( about 8% which puts it above 89% of the companies on the S&P), so today alot of funds(Einorn is particularly upset) are receiving huge margin calls. When you claim to not like a stock and someone else asks why don't you short the stock if you don't like it, this is what you point to. Just because you don't like a stock doesn't mean someone else with deep pockets won't love it. The CEO of Keurig just sold a bunch of shares last week to pay the taxes on his options. Not being able to wait a week cost him close to $1,000,000. see: http://kiddynamitesworld.com/green-mountain-coffee-the-most-non-insider-trade-in-history/ http://kiddynamitesworld.com/green-mountain-coffee-the-most-...
- jacquesm 11y ago
  > The CEO of Keurig just sold a bunch of shares last week to pay the taxes on his options. Not being able to wait a week cost him close to $1,000,000. I highly doubt he's crying.
- will_pseudonym 11y ago
  You should look into put options. They're how you short a stock without a massive downside. If the stock goes down you win, if the stock goes up you lose nothing, and all it costs is a small up front premium.
  - sk5t 11y ago
    To say you "lose nothing" seems a strange way to describe an option you have to pay for and which has no value without clearing the contract cost.
    - jonknee 11y ago
      > To say you "lose nothing" seems a strange way to describe an option you have to pay for and which has no value without clearing the contract cost. Well you can only lose what you put in and the option itself costs a fraction of the share price. Put option owners were certainly feeling a lot better today than short sellers (though call option owners were feeling best--some lucky owners of the Dec 11 65 calls are up 239900%!).
shostack 11y ago
Looks like the investors are trying to cover all the bases on their coffee portfolio... From the article: > "Peet’s recently acquired “super-premium” coffee companies Stumptown Coffee Roasters and Intelligentsia Coffee." > "Keurig said the acquisition was done in partnership with “strategic minority investors” that are already shareholders in Netherlands-based global coffee and tea company Jacobs Douwe Egberts B.V., including Mondelez International and entities affiliated with investment firm BDT Capital Partners. Jacobs Douwe Egberts owns Maxwell House and Keurig rival Tassimo, among other coffee and tea brands."
- pasbesoin 11y ago
  Per my other comment on this thread, all I can say in response to this is, "Argh!" Big outfits continue to acquire and... "beat down" the better shops, in our area. Make money, I guess -- but the product invariably seems to suffer.
  - RogtamBar 11y ago
    >Make money, I guess -- but the product invariably seems to suffer. They have to make up the acquisition costs. Why do people sell though?
    - shostack 11y ago
      > "Why do people sell though?" The simple answer is "to cash out." Think of it this way... you have a small business that has been growing successfully, but the space is incredibly crowded and has giants like Starbucks, Peet's, Keurig, etc. You're still on track for great growth, but there's a big risk you could stagnate and die off. Then on the other hand you have these investors coming who want to throw large sums of money at you. And since the coffee business isn't necessarily like the technology startup space where a lot of your employees have equity, there's a decent chance you're keeping a lot of that. So when you're looking at the possibility of banking 10's or 100's of millions now, vs. a gradual payoff for a business with steep competition that adds a massive amount of stress to your life, for some people the answer is quite simple. Of course some are very passionate about the business to the point where they can't see themselves doing anything else, and they might not sell, or might not sell the entire stake. But you honestly can't fault someone for taking a guaranteed payout after busting their hump on a business that, statistically, should have failed (and still might). Life has other priorities beyond coffee.
schwarzrules 11y ago
I hope this isn't an acquihire. Would be a shame if they shut down the k-cup business.
- jhall1468 11y ago
  No company is going to spend $14B to acquire talent.
- tcfunk 11y ago
  Not sure if sarcasm, but shutting down the k-cup business would be a great step toward a better world.
pasbesoin 11y ago
Peet's bought up a bunch of Caribou locations in our area. My father has been holding his breath, waiting to perhaps finally be able to get a decent espresso (or coffee). Instead, the location sat empty for more than a year. Now, the wraps just came off -- and it's a Dunkin Donuts. So... Not too fond of Peet's, now. And acquiring Keurig doesn't help. It's looking like Peet's is primarily a money game, now. Fortunately, a good local independent has finally opened -- near to me, but something of a drive for Dad.
- darkstar999 11y ago
  > It's looking like Peet's is primarily a money game, now. And they weren't before?
  - pasbesoin 11y ago
    There was a time when Starbucks in our area had pretty much gone to the dogs (years earlier, some of their shops were actually run pretty well and could serve a good espresso, particularly when they still had the manual bars). There were a couple of Peet's, significantly farther away but still within occasional range, and they were then significantly better than Starbucks at that time. At that time, Peet's seemed to be proceeding more slowly and setting a certain quality level ahead of rampant expansion. If they are moving into Keurig / Green Mountain, and selling properties to DD, then they are just another corporate customer. Mars (yeah, that Mars) came in and bought another local outfit in a nearby city. Fortunately, the deal I guess left the actual shops out of it, or they reverted a year or two later to independent ownership. They rebranded and are still / once again busy serving up a good product to loyal customers. The original brand name appears now to have moved into a stable of similar names and products that I expect to see floating around corporate settings -- hollow, genericized echos of what they once represented. I suppose all this is getting more than a bit OT for HN. But I'm older, "lives on coffee" kind of guy. And I've found that big and/or public money just does not produce an exceptional product, in that market. A bit frustrating, when those same forces force out the local operators. Fortunately, the one that has opened near me is in a town that can afford it and is surprising me with more of a population that is embracing the shop than I would have expected to be present. And yeah, there is "make it yourself." But there is also something social -- and simply "getting out of the house" -- to heading over to the local joint and maybe striking up a conversation.
atourgates 11y ago
I hope this encourages them to kill off the horribly conceived Keurig Kold project, or at least wait until it's ready for prime-time before releasing it. Some highlights: * A single-serve soda maker. * The machine costs $369 * Each 6oz flavor pod costs between $1 and $1.50 * It takes 90-seconds to make a single 6oz drink * It takes 2-hours to come on and cool down enough to be ready to make a drink. Even without the cost of the machine itself, you're paying about $0.20/oz of soda (which people say tastes slightly worse than the canned variety), compared to $0.12/oz just buying it by the can. Add the nearly $400 purchase price, the fact that it'd take 6-minutes to "brew" 4-cups for, say, a family, and the gigantic machine on your kitchen counter, and it's hard to imagine why anyone would buy this thing. Keurig's coffee machines make sense. But at some point during the $200M 6-year development cycle for the Kold, someone should have stepped back and said, "Wait, this is a horrible idea and we should stop." EDIT: I should add that Coke has invested a total of $2.4 Billion in Keurig (specifically to support the Kold) thus far. They should be doing a dance in the street, since an acquisition is the only way I can imagine them getting that money back.
- Johnny555 11y ago
  When I read this, I thought you were mistaken on the cost of the pods, but sure enough, they cost from $1.00 to over $3.00 per pod (on Amazon). I can buy Coke cans at Costco for around 35 cents/can or close to 3 cents an ounce. Why would Keurig think that I'd want to pay 5+ times more for the "convenience" of buying a big expensive machine to let me "make" coke at home!? And those capsules look big (which is probably because there's so much sugar in soda, they can't make them tiny. Probably about 1/4 the size of a 8 ounce can of coke.
  - beau26 11y ago
    The pods are awful. My friend, who buys lots of useless stuff, has described the Kold as "the most useless thing I've ever bought." A mini-fridge + 20 cases of Coke is cheaper upfront and in the long run.
    - profmonocle 11y ago
silentplummet 11y ago
A stain on the history of human civilization. A few men will become rich beyond imagination by a skillful appeal to base laziness and apathy. It's the renaissance of the disposable generation. Just toss the cup away. Toss the whole maker away when it breaks, too. Make no attempt to contemplate where all of this trash ends up. What's wrong with taking a few minutes to make the coffee and clean up after yourself? Did you know coffee grinds make a great nutritious supplement to household plants and gardens?
- brandonmenc 11y ago
  > Toss the whole maker away when it breaks, too. Just like a laptop.
  - Someone1234 11y ago
    Indeed. Just like every electrical item. Integrated circuits aren't easy to repair, or cost effective for that matter. I don't think Keurig machines are well made as an aside, so more of them get thrown away than there should be. But that's an issue with Keurig, I don't really expect your average consumer to be popping open electronics and repairing things (regardless of what the item is).
- cm2012 11y ago
  Eh - there is actually plenty of room for pretty much all the trash humanity could possibly create. A hole ten miles square and couple of hundred feet deep could hold all of the U.S.'s trash for the next 100 years (this is not a controversial statement). And recycling is energy inefficient for pretty much everything but aluminum and steel. Keurig solved a huge problem in offices - how to always have coffee available when people en masse are pretty bad at refilling the coffee. No amount of hand wringing will make people better at things like refilling coffee.
  - dahart 11y ago
    Like space, energy is also a non-argument, there's plenty of it. The thing we don't have is infinite petroleum resources to make single use plastic cups. The other thing we don't need is unnecessary amounts of toxic production polluting the air, water, and land far and wide outside the hole in the ground where the waste goes.
JustSomeNobody 11y ago
I hope Peet's doesn't get so big now that their coffee suffers. That would be a horrible shame.
arturadib 11y ago
Few know that Green Mountain Coffee (now Keurig Green Mountain) was started is still headquartered in Vermont. (GMC slowly acquired Keurig in the 90s, based in Massachusetts). I have been living in VT for the last several years, and I'm pleasantly surprised by the sheer scale of unicorns this state has produced over the last 10 years: IDX (sold to GE Health for $1B+), Dealer.com (sold to Dealertrack for $1B+), and Keurig ($10B+). Let this be an inspiration for entrepreneurs outside of Silicon Valley and other innovation hubs!
smlacy 11y ago
Yuck. Keurig is a horrible company and this will stain Peet's reputation. Too bad.
EvanKelly 11y ago
K-Cups are a really interesting product to me as someone who loves coffee. We have almost every different way of making coffee at our office (normal machine, chemex, french press, aeropress, big machine that grinds beans fresh and makes cup in ~40 sec) and people still use the K-cup machine. I know that most of those methods are a bit more time intensive and daunting, but we have a big machine that makes a cup from fresh beans with one button push. I've talked to my co-workers and a lot of them simply like the K-cup coffee better. To me, it's almost objectively worse coffee, but people still love it. I'm not sure whether it's branding or just what they're used to, but if you give people the option of coffee from a pot or from a k-cup, it seems they'll almost invariably choose the k-cup.
- atourgates 11y ago
  It blows my mind too. I'm a coffee nerd, but not a snob. I can enjoy a cup of Starbucks, gas-station coffee, and even be fine with a cup of instant. I would choose any of those over the best Keurig I've tried. To me, the taste goes far beyond "not good" into "awful" territory. But like you say, people genuinely like it. We added one to the waiting room of my wife's medical office, and from her patient's reactions you'd think we were giving them world-class coffee for free. I wonder if Keurig coffee is one of those weird foods like cilantro where only some people can taste the "awful".

60 points by mdesq 11y ago

Yuck. Keurig is a horrible company and this will stain Peet's reputation. Too bad.

The next time somebody tells you there's no startup capitalization bubble, point them to this frothy cup of craziness. edit: Hmm - downvotes. So I guess people genuinely think that this (pretty shitty) company is worth $14b? For reference, Mariott International, which just opened its 4,000th hotel, has a market cap of around $18b. In January of this year, freaking Nintendo had a market cap of only $12b (though, for reasons that are debated, it is now nearly double that). There's no way on earth that this company is in the same realm as Mariott or Nintendo. Come on now.

mikeash 11y ago
What's crazy about it? Given the popularity of Keurig right now, this is practically like buying a printing press from the Bureau of Engraving and Printing.
mseebach 11y ago
It's important to keep in mind that Marriott International (with a few exceptions) doesn't actually own the hotel properties themselves -- they're franchises.
bdcravens 11y ago
I don't think Keurig qualifies as a startup. Their k-cups have been around since 1998; the company since 1992. Coffee is a consumed by many daily; Keurig is undoubtedly the most popular single-serve brew solution. It's likely that more drink a cup of coffee from a Keurig machine than wake up in a Marriot bed or turn on a Nintendo. Their users are always buying consumables; hospitality and entertainment media is typically purchased far, far less frequently. (and good or bad, Keurig's DRM is designed to help them squeeze out more licensing) Marriot is getting squeezed by the many hospitality options and AirBnB; Nintendo is the #3 console and is getting squeeze by mobile gaming. Keurig however, is by far the most available option for single-serve in most grocery stores and in places where you buy the machines. So yeah, in terms of many business metrics (market share, consumer loyalty and access, etc), they're not in the same realm as Marriot or Nintendo.
cm2012 11y ago
Mariott had $214 million net income in 2014. Keurig had $500 million. EDIT: Mariott actually had 753m net income in 2014.
- adventured 11y ago
  I happen to think that Keurig is worth acquiring at 28 times their trailing four quarter earnings (it might be a bit high, but that's the price of acquiring). However, you're partially mistaken on those numbers. Marriott had $753m in net income in 2014. You're referring to just one quarter. They've done $854m in net income the last four quarters (20.8 pe ratio or so).
  - cm2012 11y ago
    You're totally right - my mistake.
mwfunk 11y ago
What you said makes sense if a company's stock price (and market cap) was correlated with the size or stability or profitability of the company. That's usually not the case though. People buy and sell stocks based on their predictions about other people buying and selling the same stocks, which itself is only indirectly based on a company's performance. You are correct that in an ideal world, $14b sounds like a lot for Keurig, but that's pretty mild compared to other valuations (in the tech industry in particular, and among startups in particular) that we all read about every day. Apple reports record profits? The stock tanks. Amazon loses money? Hey everybody, let's double down on Amazon. Facebook's market cap is over $300b right now. $300b for Facebook, let that sink in. Twitter's market cap is currently $17b in spite of having no path to long-term stability or profitability in sight. The one thing a company can do to improve its stock price seems to be to show growth. If there's growth, your stock is likely to go up. If there's not growth, even if you remain insanely successful and profitable, your stock doesn't stay the same- it's likely going to go down (MS in the aughts being a prime example). Investors seem to value growth (and fear the lack of growth) far more than they care about the fundamentals of the companies they invest in, at least in the tech industry. Every market has natural forces acting on it that push it towards efficiency and rationality, but most people learn about those concepts and stop there. IMO, understanding a market means understanding why a given market isn't 100% efficient or rational in spite of those forces, and in the case of the stock market I fear that it's mostly driven by the Greater Fool Theory: https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory

coldcode 11y ago

Building terrible DRM technology does seem to pay off in some cases.

deleted 11y ago
[deleted]
hyperliner 11y ago
No different than the Starbucks coffee many of us have in our hands as we read your comment: terribly killing small coffee producers in Third World countries does seem to pay off.
- Relys 11y ago
  Starbucks is leveraging it's economy of scale to out price it's competitors in a free market. Keurig is using it's position in the industry to enforce DRM on it's hardware to stifle free market competition and exert it's power over the customer. Now, you may agree or disagree with Starbucks business practices or Keurigs DRM. However, I stand to argue that a direct comparison between the two is unfair.
  - hyperliner 11y ago
    It's more than leveraging scale. See these: http://businessethicscases.blogspot.com/2013/02/exchange-inc-v_3188.html http://businessethicscases.blogspot.com/2013/02/exchange-inc... http://www.theguardian.com/environment/green-living-blog/2011/feb/28/coffee-chains-ethical http://www.theguardian.com/environment/green-living-blog/201... http://www.economist.com/node/8355026 http://www.economist.com/node/8355026

chollida1 11y ago

A few interesting things about this deal. Keurig is getting a 78% premium over their Friday share price. That's a huge premium. C The company had a lot of short interest( about 8% which puts it above 89% of the companies on the S&P), so today alot of funds(Einorn is particularly upset) are receiving huge margin calls. When you claim to not like a stock and someone else asks why don't you short the stock if you don't like it, this is what you point to. Just because you don't like a stock doesn't mean someone else with deep pockets won't love it. The CEO of Keurig just sold a bunch of shares last week to pay the taxes on his options. Not being able to wait a week cost him close to $1,000,000. see: http://kiddynamitesworld.com/green-mountain-coffee-the-most-non-insider-trade-in-history/ http://kiddynamitesworld.com/green-mountain-coffee-the-most-...

jacquesm 11y ago
> The CEO of Keurig just sold a bunch of shares last week to pay the taxes on his options. Not being able to wait a week cost him close to $1,000,000. I highly doubt he's crying.
will_pseudonym 11y ago
You should look into put options. They're how you short a stock without a massive downside. If the stock goes down you win, if the stock goes up you lose nothing, and all it costs is a small up front premium.
- sk5t 11y ago
  To say you "lose nothing" seems a strange way to describe an option you have to pay for and which has no value without clearing the contract cost.
  - jonknee 11y ago
    > To say you "lose nothing" seems a strange way to describe an option you have to pay for and which has no value without clearing the contract cost. Well you can only lose what you put in and the option itself costs a fraction of the share price. Put option owners were certainly feeling a lot better today than short sellers (though call option owners were feeling best--some lucky owners of the Dec 11 65 calls are up 239900%!).

shostack 11y ago

Looks like the investors are trying to cover all the bases on their coffee portfolio... From the article: > "Peet’s recently acquired “super-premium” coffee companies Stumptown Coffee Roasters and Intelligentsia Coffee." > "Keurig said the acquisition was done in partnership with “strategic minority investors” that are already shareholders in Netherlands-based global coffee and tea company Jacobs Douwe Egberts B.V., including Mondelez International and entities affiliated with investment firm BDT Capital Partners. Jacobs Douwe Egberts owns Maxwell House and Keurig rival Tassimo, among other coffee and tea brands."

pasbesoin 11y ago
Per my other comment on this thread, all I can say in response to this is, "Argh!" Big outfits continue to acquire and... "beat down" the better shops, in our area. Make money, I guess -- but the product invariably seems to suffer.
- RogtamBar 11y ago
  >Make money, I guess -- but the product invariably seems to suffer. They have to make up the acquisition costs. Why do people sell though?
  - shostack 11y ago
    > "Why do people sell though?" The simple answer is "to cash out." Think of it this way... you have a small business that has been growing successfully, but the space is incredibly crowded and has giants like Starbucks, Peet's, Keurig, etc. You're still on track for great growth, but there's a big risk you could stagnate and die off. Then on the other hand you have these investors coming who want to throw large sums of money at you. And since the coffee business isn't necessarily like the technology startup space where a lot of your employees have equity, there's a decent chance you're keeping a lot of that. So when you're looking at the possibility of banking 10's or 100's of millions now, vs. a gradual payoff for a business with steep competition that adds a massive amount of stress to your life, for some people the answer is quite simple. Of course some are very passionate about the business to the point where they can't see themselves doing anything else, and they might not sell, or might not sell the entire stake. But you honestly can't fault someone for taking a guaranteed payout after busting their hump on a business that, statistically, should have failed (and still might). Life has other priorities beyond coffee.

schwarzrules 11y ago

I hope this isn't an acquihire. Would be a shame if they shut down the k-cup business.

jhall1468 11y ago
No company is going to spend $14B to acquire talent.
tcfunk 11y ago
Not sure if sarcasm, but shutting down the k-cup business would be a great step toward a better world.

pasbesoin 11y ago

Peet's bought up a bunch of Caribou locations in our area. My father has been holding his breath, waiting to perhaps finally be able to get a decent espresso (or coffee). Instead, the location sat empty for more than a year. Now, the wraps just came off -- and it's a Dunkin Donuts. So... Not too fond of Peet's, now. And acquiring Keurig doesn't help. It's looking like Peet's is primarily a money game, now. Fortunately, a good local independent has finally opened -- near to me, but something of a drive for Dad.

darkstar999 11y ago
> It's looking like Peet's is primarily a money game, now. And they weren't before?
- pasbesoin 11y ago
  There was a time when Starbucks in our area had pretty much gone to the dogs (years earlier, some of their shops were actually run pretty well and could serve a good espresso, particularly when they still had the manual bars). There were a couple of Peet's, significantly farther away but still within occasional range, and they were then significantly better than Starbucks at that time. At that time, Peet's seemed to be proceeding more slowly and setting a certain quality level ahead of rampant expansion. If they are moving into Keurig / Green Mountain, and selling properties to DD, then they are just another corporate customer. Mars (yeah, that Mars) came in and bought another local outfit in a nearby city. Fortunately, the deal I guess left the actual shops out of it, or they reverted a year or two later to independent ownership. They rebranded and are still / once again busy serving up a good product to loyal customers. The original brand name appears now to have moved into a stable of similar names and products that I expect to see floating around corporate settings -- hollow, genericized echos of what they once represented. I suppose all this is getting more than a bit OT for HN. But I'm older, "lives on coffee" kind of guy. And I've found that big and/or public money just does not produce an exceptional product, in that market. A bit frustrating, when those same forces force out the local operators. Fortunately, the one that has opened near me is in a town that can afford it and is surprising me with more of a population that is embracing the shop than I would have expected to be present. And yeah, there is "make it yourself." But there is also something social -- and simply "getting out of the house" -- to heading over to the local joint and maybe striking up a conversation.

atourgates 11y ago

I hope this encourages them to kill off the horribly conceived Keurig Kold project, or at least wait until it's ready for prime-time before releasing it. Some highlights: * A single-serve soda maker. * The machine costs $369 * Each 6oz flavor pod costs between $1 and $1.50 * It takes 90-seconds to make a single 6oz drink * It takes 2-hours to come on and cool down enough to be ready to make a drink. Even without the cost of the machine itself, you're paying about $0.20/oz of soda (which people say tastes slightly worse than the canned variety), compared to $0.12/oz just buying it by the can. Add the nearly $400 purchase price, the fact that it'd take 6-minutes to "brew" 4-cups for, say, a family, and the gigantic machine on your kitchen counter, and it's hard to imagine why anyone would buy this thing. Keurig's coffee machines make sense. But at some point during the $200M 6-year development cycle for the Kold, someone should have stepped back and said, "Wait, this is a horrible idea and we should stop." EDIT: I should add that Coke has invested a total of $2.4 Billion in Keurig (specifically to support the Kold) thus far. They should be doing a dance in the street, since an acquisition is the only way I can imagine them getting that money back.

Johnny555 11y ago
When I read this, I thought you were mistaken on the cost of the pods, but sure enough, they cost from $1.00 to over $3.00 per pod (on Amazon). I can buy Coke cans at Costco for around 35 cents/can or close to 3 cents an ounce. Why would Keurig think that I'd want to pay 5+ times more for the "convenience" of buying a big expensive machine to let me "make" coke at home!? And those capsules look big (which is probably because there's so much sugar in soda, they can't make them tiny. Probably about 1/4 the size of a 8 ounce can of coke.
- beau26 11y ago
  The pods are awful. My friend, who buys lots of useless stuff, has described the Kold as "the most useless thing I've ever bought." A mini-fridge + 20 cases of Coke is cheaper upfront and in the long run.
  - profmonocle 11y ago

silentplummet 11y ago

A stain on the history of human civilization. A few men will become rich beyond imagination by a skillful appeal to base laziness and apathy. It's the renaissance of the disposable generation. Just toss the cup away. Toss the whole maker away when it breaks, too. Make no attempt to contemplate where all of this trash ends up. What's wrong with taking a few minutes to make the coffee and clean up after yourself? Did you know coffee grinds make a great nutritious supplement to household plants and gardens?

brandonmenc 11y ago
> Toss the whole maker away when it breaks, too. Just like a laptop.
- Someone1234 11y ago
  Indeed. Just like every electrical item. Integrated circuits aren't easy to repair, or cost effective for that matter. I don't think Keurig machines are well made as an aside, so more of them get thrown away than there should be. But that's an issue with Keurig, I don't really expect your average consumer to be popping open electronics and repairing things (regardless of what the item is).
cm2012 11y ago
Eh - there is actually plenty of room for pretty much all the trash humanity could possibly create. A hole ten miles square and couple of hundred feet deep could hold all of the U.S.'s trash for the next 100 years (this is not a controversial statement). And recycling is energy inefficient for pretty much everything but aluminum and steel. Keurig solved a huge problem in offices - how to always have coffee available when people en masse are pretty bad at refilling the coffee. No amount of hand wringing will make people better at things like refilling coffee.
- dahart 11y ago
  Like space, energy is also a non-argument, there's plenty of it. The thing we don't have is infinite petroleum resources to make single use plastic cups. The other thing we don't need is unnecessary amounts of toxic production polluting the air, water, and land far and wide outside the hole in the ground where the waste goes.

JustSomeNobody 11y ago

I hope Peet's doesn't get so big now that their coffee suffers. That would be a horrible shame.

arturadib 11y ago

Few know that Green Mountain Coffee (now Keurig Green Mountain) was started is still headquartered in Vermont. (GMC slowly acquired Keurig in the 90s, based in Massachusetts). I have been living in VT for the last several years, and I'm pleasantly surprised by the sheer scale of unicorns this state has produced over the last 10 years: IDX (sold to GE Health for $1B+), Dealer.com (sold to Dealertrack for $1B+), and Keurig ($10B+). Let this be an inspiration for entrepreneurs outside of Silicon Valley and other innovation hubs!

smlacy 11y ago

Yuck. Keurig is a horrible company and this will stain Peet's reputation. Too bad.

EvanKelly 11y ago

K-Cups are a really interesting product to me as someone who loves coffee. We have almost every different way of making coffee at our office (normal machine, chemex, french press, aeropress, big machine that grinds beans fresh and makes cup in ~40 sec) and people still use the K-cup machine. I know that most of those methods are a bit more time intensive and daunting, but we have a big machine that makes a cup from fresh beans with one button push. I've talked to my co-workers and a lot of them simply like the K-cup coffee better. To me, it's almost objectively worse coffee, but people still love it. I'm not sure whether it's branding or just what they're used to, but if you give people the option of coffee from a pot or from a k-cup, it seems they'll almost invariably choose the k-cup.

atourgates 11y ago
It blows my mind too. I'm a coffee nerd, but not a snob. I can enjoy a cup of Starbucks, gas-station coffee, and even be fine with a cup of instant. I would choose any of those over the best Keurig I've tried. To me, the taste goes far beyond "not good" into "awful" territory. But like you say, people genuinely like it. We added one to the waiting room of my wife's medical office, and from her patient's reactions you'd think we were giving them world-class coffee for free. I wonder if Keurig coffee is one of those weird foods like cilantro where only some people can taste the "awful".