Keurig has learned a hard lesson about what happens when you try to get between people and their coffee. The sales of the company’s coffee machines since the announcement of the Keurig 2.0 have tanked, and now Keurig plans to do some course correction.
After seeing sales of Keurig machines drop for the second straight quarter—due in no small part to the controversial DRM (digital rights management) software installed in the Keurig 2.0 machines that prevent unapproved cups from being used—company CEO Brian Kelley addressed the issue head on. “Quite honestly, we were wrong,” he said. “We underestimated the passion the consumer had for this.”
To rectify the plummeting sales, which have now begun to drag the stock price down with them, Keurig announced plans to reintroduce K-Cups, the refillable pod that can be used with any type of loose coffee. “We missed it. We shouldn’t have taken it away. We’re bringing it back,” Kelley said.
Keurig will also address the issue of DRM, but in perception only. The system that prevents unapproved cups from being brewed will remain in place, but Kelley said his company will deal with the “misperception the system only brews Green Mountain- or Keurig-owned brands” by relabeling the Keurig 2.0 packaging to state the machine works with over 500 varieties of coffee from over 70 brands.
Beating Keurig’s DRM has become a mission for coffee lovers who still swear by the machine. There are dozens of hacks to beat the system that circulate online. Coffee maker and regular Keurig agitator Rogers Family Coffee has even made a free workaround called the Freedom Clip that opens the Keurig 2.0 system back up for any type of coffee.
While sales on Keurig machines and accessories are down—23 percent in the most recent quarter, following a 12 percent drop in the previous one—the company actually saw revenue increase by 2 percent last year. That wasn’t enough to save the stock price, which dropped 10 percent when the market opened on Thursday. On the year, shares in the company are down 25 percent.