You could call it a brew-ha-ha. But for small coffee companies fighting Keurig Green Mountain Inc. over the use of its signature K-cup plastic coffee pods, it’s nothing to laugh about. A number of companies have sued the single-cup coffee leader, most recently over its new Keurig 2.0 coffee machine that essentially bars the use of most competitors’ single-serving pods.
One of them is Jim Rogers, vice president of The Rogers Family Co., a Lincoln-based coffee roaster that supplies whole bean coffees to Costco, Raley’s, Safeway and other grocery chains under its San Francisco Bay and private labels. It also sells its own coffee pods, called OneCup.
Last week, we talked about the latest coffee war developments with Rogers, who works with his three siblings and 82-year-old parents in the privately owned company.
Q: What’s the premise of your lawsuit?
A: It’s basically about antitrust and anti-competitive practices. Our position is that the Keurig locks out competitors from competing in the market. … It’s a serious threat, not just to us but the whole industry. Everyone should be able to compete – that’s how we feel.
Q: How important are coffee pods to your overall business?
A: Coffee pods are roughly 40 percent of our business and growing quickly. We started selling K-Cups – what we call OneCup – in late 2011, basically when Keurig’s patent on the cup expired … We were sued by Keurig, but it was tossed out. We turned around and sued them for anti-competitive behavior, for trying to get exclusive agreements (with suppliers, etc.). We filed our lawsuits long before the Keurig 2.0 machine came out. ... They’re a $5 billion company; we do a little over $200 million in revenue a year. So it’s a bit of a David vs. Goliath situation.
Q: Your company sells what it calls a 97 percent biodegradable coffee pod. How’s it different than a traditional K-Cup?
A: We came up with a pod that actually does not have a plastic cup. It’s 97 percent biodegradable. We’re working on that 3 percent. There’s a lid that’s made out of wood pulp; underneath that is a ring made out of corn. The cup is a food-grade plastic mesh stretched to the exact porosity so coffee will brew correctly. That part doesn’t biodegrade. (Because the pods aren’t plastic), the coffee can go stale more quickly, so we (sell them) in a bag that’s compostable as well.
Q: Do you have a patent on your biodegradable pod?
A: There’s no patent. We’re like tree-huggers: We think it’d be nice if everyone did this.
Q: What’s the story behind your Freedom Clip?
A: The Keurig 2.0 has an optical device that looks for a specific ink color. If it doesn’t see that, there’s a message that says, ‘Oops!’ that coffee pod won’t work in this machine. That rankled us and a lot of consumers. They’d plug in their machine and it wouldn’t brew the pods they already had. Our response was that we created a little clip with the colored spot of ink that it’s looking for. So you can brew any coffee the consumer wants, not just ours. It clips onto the machine itself so you don’t have to deal with each individual coffee pod.
Q: Is that going to get you in legal hot water?
A: I guess we’ll see. When we put up (the free Freedom Clip offer) on our website, we expected 10,000 or 15,000 people to respond. We’ve had many, many times than that, more than we expected. After CNN Money, Fox News, Huffington Post picked up stories about the Freedom Clip, our website crashed and we had to hire a beefier Web server … We’d never experienced anything like that before. It was crazy.
Q: There are a number of “K Hack” videos where people try to economize by repacking and reusing their plastic cups; other videos where people cut out the white band around the new Keurig 2.0 cup and slip it onto their old coffee pods, apparently fooling the machine into accepting them. What’s your take on those?
A: It boils down to you shouldn’t tell the American consumer what they can or can’t use. It’s kind of funny that the new (Keurig) machine was hacked within hours of its release. There were YouTube videos up just hours after it landed on store shelves.
Q: There also have been several YouTube parodies mocking the indestructible nature of plastic coffee pods, including one with a pod-encrusted monster stomping through a U.S. city. Was your company behind any of those?
A: (Chuckling.) No, but I thought it was hysterical.
Call The Bee’s Claudia Buck, (916) 321-1968. Read her Personal Finance columns at sacbee.com/claudiabuck.
The Rogers Family Co.
What: A family owned coffee company that imports, roasts, packages and supplies “fairly-traded” whole bean, ground and single-serve coffees from overseas and Hawaii. It sells to customers nationwide under the San Francisco Bay and Organic Coffee Co. brands. Its customers include Costco, Raley’s, Safeway and Sprouts. The company has about $200 million in annual sales.
Coffee beans: From 11 countries, including Costa Rica, Guatemala, Papua New Guinea and Peru.
History: Headquartered in Lincoln, the Rogers Family Co. was founded in 1979 by Jon and Barbara Rogers, who still work full time at the company, along with their four adult children. The couple relocated their operation from San Leandro in 2009, moving into a 500,000-square-foot headquarters and roasting/warehouse operation in Lincoln.
Employs: Roughly 1,183 worldwide, including 265 in Lincoln.
Source: The Rogers Family Co.