Keurig CEO Regrets Big Mistake Made with the 2.0 Brewer

keurig ceo

Keurig made a big mistake with its Keurig 2.0 coffee machine. And now the company is admitting it.

The Keurig 2.0 frustrated customers with it’s inability to accept third-party coffee, older K-cups, or reusable pods. Keurig is finally making an effort to fix at least one of these problems by bringing back the refillable My K-Cup.

A recent report of Keurig’s fiscal second quarter this year shows the company took a 23 percent hit in brewer and accessory net sales compared to last year. According to the report, 22 percent of this loss was due to a decline in brewer sales volume. It seems this sharp fall off was a startling realization for Keurig.

The problem with Keurig 2.0 is with the machine’s DRM (Digital Rights Management) system. DRM makes it so Keurig 2.0 machines only accept official, and more expensive, Keurig K-Cups that are one-time use only. The consumer backlash to this decision was more than the company anticipated.

President and CEO, Brian Kelly said in an earnings call:

“We were wrong. We underestimated, is the easiest way to say it. We underestimated the passion the consumer had for [My K-Cup].”

In an effort to bring sales back, the company plans to reintroduce My K-Cup for Keurig 2.0 later this year. However, consumers will still have to buy the new My K-Cup to work in their machine.

Older K-Cups and third party pods will also continue to be unusable. But consumers who are determined to use any pod they chose can try a popular “hack” that works around the DRM system. Basically by cutting the top off of an official K-Cup and securing it to the top of another pod, you can trick the machine into accepting it.

Yahoo Finance Columnist Rich Newman has said Keurig has been using what is known as the “walled garden” business model.

“You get a one-time payment for selling the device and then you get the recurring revenue by selling the stuff you need to operate the device. Everybody would love to have that business model … Usually, it doesn’t work.”

Keurig is attempting to correct its mistake but it could be too little too late for some consumers. The company took away features many consumers loved about Keurig. Despite the announced return of My K-Cup, the company is still keeping things on its own terms.

Time will tell if Keurig can win back the customers it may have lost.

Image: Keurig CEO Brian Kelley 34 Comments ▼

Tabby McFarland Tabby McFarland is a staff writer and web researcher for Small Business Trends. As a staff writer she specializes in social media, technology, special interest features, and e-commerce. A geek at heart, Tabby loves to be online interacting with the blogging community. Tabby is a WAHM (work at home mom) and is also an avid Pinterest enthusiast with a strong sense of style and creativity.

34 Reactions
  1. No matter how you brand it. It has to be flexible. If it’s not, then customers would be more than willing to look for other options.

  2. “We want more money”. So, they came out with a great product by simplifying the coffee maker. Made lots of money. But, the competitive advantage doesn’t last long. One can buy a coffee maker with similar functionality for 1/10th the cost at Family Dollar. Sure, it doesn’t accept the little pre-packaged cups.
    What Keurig SHOULD do is focus on their market. Make some better coffee, tea, and related products. About 1/2 of the junk sold is yucky.
    There really is no room to try to squeeze more profits from their customer base. Their strategy is effectively relegating them to an office machine.

    • Hey, If you think half of there flavours are yucky, have you thought of a Nespresso? The Inissia offers good value at a similar price. To be honest I would lean toward a nespresso for authenticity, but lean towards Keurig for the flexibility of their range, probably better to buy a cheaper Keurig K40 then a 2.0, hence i recommend them, but if your no eau fea with the taste of Keurig Coffee then definitely go Nespresso next time. And you wont have the same problem with the Reusable cups…

  3. This has been a very frustrating experience. I am returning my product for a different brand unless there is an immediate resolution.

    • rogers coffee will give you for free a little snap in item that will let you use ANY K CUP in 2.0 brewers.
      all you do is buy their $1.99 sampler pack and that is it !

    • or there is a simple trick that involves cutting the top off of a new style k-cup with the white ring around it (which is what the machine recognizes) and placing it on top of any other cup including refillable my k-cups. been doing this since i bought mine a year ago. i have a lid taped inside the top portion of my machine. there are many youtube vids how to do it

  4. I was once a HUGE Keurig fan and supporter with nothing but great things to say about the product. I not only overlooked the high prices of their coffee pods, I also dismissed the idea of the actual machine being cheaply manufactured. Long story short (due to me leaving for a meeting) I bought the machine back when there were really no other companies making the K-cup alternatives. I went through 3 different machines and models that all eventually failed in one way or another. Now reading this and seeing the CEO of Keurig comment “We underestimated, is the easiest way to say it.” solidifies my belief that the company is way more interested in the consumers money and couldn’t care any less about the consumer experience or loyalty. That one statement alone translates in my head to “we thought everybody was supposed to bow down to King Keurig and not question our demands in what cup/pod to use and what price we decided……” I know that’s a silly interpretation, but you get the gist of what I’m saying, hopefully? LOL
    Anyways, I am off to my meeting and y’all have a great day!

    • I think you pretty much nailed it. This CEO is left with no other option then to simply tell a bold faced lie in a lame attempt at CYA mode. He’s incompetent and a 23% decline in revenue should have the shareholders livid and he should be fired.

  5. Greed goeth before a fall. Or was that pride?

    This was a pure greed move, and had the ONLY purpose of freezing out competitive pods. Any fool could have told them that it would freeze out their customers too. In fact, I bet some poor sap in the company DID warn them this would happen and got fired for his trouble.

  6. The only problem I have with my product is the caraf doesn’t keep the coffee hot and would suggest the R&D dept look into using the sensor at the bottom also incorporate a heating element. If they do that I’m happy and hope I would get a new machine for the suggestion.

  7. Keurig was once a favorite brand of mine, now I go out of my way to let anyone who will listen know how underhanded and GREEDY this company is! I am forgiving however and if they bring back 1.0 admitting they screwed up, then I might reconsider my stance. But they don’t care about their former customers and it’s a good thing too, because most of us have left! I am so glad they don’t like money or want any of mine!

  8. Very frustrated our machine is only 6 months old and not working. The coffee comes out really slow now. It shuts off and then has to be reheated every time. Looking for another brand now.

    • Mine has not brewed the full cup since about six months after I bought it. I called Keurig and instead of offering to replace it, they just offered to take a percentage off me buying a new one.

  9. What a lying worm this CEO is. I’d have more respect for him if he just admitted that they wanted to own this market and force the consumer to pay the price they wanted. There was no other reason to change to the 2.0. Apparently at the outset they did a poor job of patent protection for the concept.

  10. Yes, 100% agree with most comments. Amazing this “New Coke” marketing model never worked, nor did beta tapes, nor has any of the DRM commodity solutions. Create a great machine, make a profit. Work with your existing best of breed partners to create K-Cups everyone want to buy. Support third party efforts, in fact embrace them with a third party boutique coffee catalog– and make a dime on each one.

    Sounds like this Brian Kelley is a product of the Peter principle. He should hire a real marketing person.

  11. I too had problem with reusable k-cup. I purchased mine first at Walmart . Didn’t work properly but I thought, hey I only paid $5.99 for it. Went to Bed, bath and purchased one for $15.99. Same problem occurred. I called keurig and was told I would have to purchase one from them directly. Another $15.99 plus $8 something for shipping! I was told that just because bed bath and beyond stated it was correct one that it was NOT Keurig made and that is why it didn’t work. Imagine that? I did end up ordering one from keurig but did talk them down for them to not charge me for shipping. She agreed but I did have to pay the tax, which was fine. I had already thrown the receipt from bed bath and beyond but had to look up charge card statement to verify charge. They were so nice about this without my receipt. It is such a shame that I had to go through so much trouble.

  12. This is the worst investment I have made. I will be getting rid of my Keurig 2.0 and going with a new machine with a different brand. I now have had 3 replacements by Keurig and all with the same issues. Just yesterday I set the machine for 10oz and received 24oz.

  13. The old machine was so reliable -but the 2.0 is not. It clogs way too often. It is S L O W to brew. It does not brew decent size cups – the 10 oz is really 8 or 9, and that is the largest size. A typical mug will only get filled a max of 3/4. Unacceptable. Attaching a full water tank is a total mess. They need a complete overhaul of this machine.

  14. What I want to know is when will they issue a RECALL on ALL the 2.0 brewers!! I am on my 4th brewer!! I have tried all the “fixes” and NOTHING works!! I literally have a line of brewers on my front porch waiting to go to recycling. I have been a Keurig fan since 2005! I have only had the best of luck with all of my brewers until I tried to upgrade to the 2.0. If they don’t figure out how to fix this issue, I will no longer be a fan!! STOP WAISTING YOUR BREATH WITH HALF-ASSED APOLOGIES & GET THIS ISSSUE FIXED!!!

    • I totally agree. I was going to buy the 2.0 for my daughter & her husband for a Christmas present this year but reading all the bad reviews… forget it. I have had 3 Keurigs in the past since 2007 & really haven’t had any major problems. My first came from my now ex-fiance’s parents, 2nd I bought just to update the first & 3rd was because the 2nd wore out. The 3rd was purchased from QVC & came with a lot of extra coffee which was great but the unit started to tell me it needed to be primed. I called Keurig & they sent me out a brand new unit & no problems. I was looking forward to the 2.0 but now I feel this company has been taking us all for a hard ride. They definitely need to fix these problems or they won’t be selling anything because no one will want to buy their product anymore.

  15. I hate the fact I was lured into buying a new Vue machine a few years back at a low price under the guise it was the latest and greatest improvement over the K-Cup with temperature control and the ability to brew up to 16oz at a time without watering down the coffee flavor. They promised beverage selections on par with the old K-cup. That never materialized. The product was soon abandoned for the “even better” K-Cup 2.0. Vue cups were in short supply at major retailers. The only place to find the limited selection of Vue cups was on Keurig’s website at top dollar. No more. I refuse to pay these prices for their limited selection and I absolutely refuse to buy a new machine due to DRM technology. Nope. It’s back to a traditional drip coffee maker.

  16. I was not aware of this issue and,I thought I had allowed enough time for Keurig to fix the problem with its current brewers, so I bought one. When I couldn’t get it to work, I called customer support. After about 20 minutes, I learned that the distilled water I had placed in the reservoir couldn’t be used because it was necessary for ions to be present in the water in order for amount of water that passed through the K-cup in the brewing process to be determined. I like top use distilled water in systems like this in order to keep my salt intake low and in order to prevent calcium deposit in the machine as water evaporates from the mechanism. Keurig doesn’t say anything about avoiding distilled water. I wonder what the reason is. Do they want to sell the equipment and solution to clean the machine? Do they want to sell new machines as soon as calcium accumulates? Whatever the reason, I believe the manufacture’s chief concern is for earning money, not for their costumers Correcting an issue with one of their machines probably won’t ever be cure the problem with this company. They just aren’t properly motivated.

  17. Candice DeJournett

    I also purchased Keuric 2.0
    I spend more time cleaning it trying to get it to work. I’ve wasted K Cups trying to make a single cup of coffee. I’ve purchased the K Cups from Keuric and still no luck.
    The older models work better.
    I spent 159.00 for the 2.0…
    No replacement in store.
    It’s junk.

  18. “President and CEO, Brian Kelly said in an earnings call:

    “We were wrong. We underestimated, is the easiest way to say it. We underestimated the passion the consumer had for [My K-Cup].””

    This guy is being dishonest. It’s not because of the stupid empty brown plastic “My-KCup” that Keurig sold for us to stuff ground coffee in. It’s because of all the comparable and better k-cups prefilled with other brands of coffee available for purchase at grocery stores and Amazon that are much cheaper.

  19. The CEO is dissembling. It’s not because it doesn’t work with their silly little plastic my-kcup that you stuff ground coffee in. It’s because people want to use and enjoy the cheaper and equal or better quality non-Keurig kcups sold in grocery stores and on Amazon and he tried to prevent them from doing so!

  20. Purchased the 2.0 in August 2016 and had nothing but problems. First I had the problem with older Keurig branded pods not working. I spent some time doing the research and hacking the DRM so it would accept all cups. Then it started with the error messages about dirty needles. I tried to clean, did resets, etc. but still have problems. It will start a brew then stop. It blows grounds into the cup. It’s become a real waste of time, money and effort. The older machines worked fine for years. This is what trying to be a loyal customer looks like. I’d like them to issue recalls and refunds.

  21. Had to throw my keurig 2.0 in the trash today due to it leaking water on my counter and ruining it!! Went out and bought a mr coffee machine instead! Never buying a keurig again only had it less than a year!

  22. Add me to the mighty list of dissed loyal customers. I even sold keurigs commercially back when it was new concept. My wonderful B66 model is slow & half fill brewing and we tried everything found on You Tube. It’s sitting in he garage and I am reading product reviews trying to make a buy decision. The 2.0 is a turnoff –cheap plastic toy feel is first impression and all the issues listed in reviews confirms this once keurig loyal is looking at other brands. Will gift my kcups to a friend who owns an older model that still works.

  23. We just bought the Keurig 2.0 model not long ago. Wasn’t aware of all the issues. Have had to call Keurig the last 2 months 2x because they wouldn’t use the Dunkin’ Donuts kcups. So of all the spending on coffee and have to toss the box I’m ready for a new different brand coffee pot. I wouldn’t recommend Keurig to anyone

  24. I love my Keurig 2.0 brewer. Just love it. I enjoy the coffee made from the pods from Costco as well as brewing with the new My Keurig reusable pods, when I can grind my own coffee grounds again. That is, until I got a hot water dispenser.

    With always-available hot water. It is actually easier to hand pour a cup of coffee. With a burr grinder set to a fixed amount and the right grind, it takes the extra guess work out of the grind. With water readily available, coffee and grind ready to go, The entire coffee brewing process takes about a minute or 2, which is actually shorter than filling up the reusable pod and the brewing time from the machine.

    Some people will lead you to believe that you need a scale and all that to make a perfect cup of coffee. My experience is that when you know what you want out of a cup of joe, you can adjust the coffee grind to compensate for the slight variations of the amount of coffee beans and the water ratio. For my morning cup to get me out of the door it was good enough. My Keurig sat unpowered for 4 months until today when I decide I want use it again, now that I have a little time this morning. So I would say if you are exclusively a drip coffee drinker, not craving for a home-made espresso, hand-pouring can be a quick and easy option after a little bit of trial to get the right setting on your systems:

    A good hot water dispenser with some temperature setting can be found here:

  25. Now what they really need to do, is take their head out of their a**. For one, it’s not a hat, and secondly, are they completely oblivious to the existence of travel mugs? Not a single one of the Brewers in their latest lineup of s***, makes larger than a 12oz brew. I find it stupid and inconvenient to have to brew two 8oz servings to fill my mug in the morning. The vue was the perfect machine, as with the adapter, you could use k-cups, obviously the vue cups, and also the k-carafe cups. After they stopped making the vue cups in my favorite roast, I went back to a grind and brew coffee maker.

  26. I have had a Keurig Vue for years. It was replaced once for a bad pump but the replacement has worked perfectly for about 4 years making so many cups a day I can’t count. However, I bought the K-cup adapter from bed Bath and Beyond for $14.99 and use regular K cups of any kind and also have an adapter that allows me to use ground coffee and I also place a piece of “Mellita” filter paper inside it( cut to fit) to insure no grounds in a perfect cup of Joe. There is always a way around the Keurig demands of $$ and demands that we use only their K cups. I stopped using their expensive Vue branded cups almost immediately even before I learned they were being discontinued.

  27. James A Grimaldi

    I am on my second Keurig 1.0 machine. We have had it for years. It is starting to have the occasional hiccup. I have started to investigate what DRM free K-CUP machines. I am glad to hear that Keurig regrets this ill conceived (stupid) experiment of thiers. Regret is not good enough, they need to walk this idea back fully. They need to start selling machines that do not have DRM capability, and clearly identify which machines no longer have this.
    They may be apologizing in the press, but they extremely coy about the issue on their web site. They look like someone waiting for the storm to pass. If they are going to fix the damage they have inflicted on their brand they need to lean into this with more than apologies and workarounds. I wont be buying another Keurig manufactured coffee maker until I see one with a big “DRM FREE” sticker on the box.

  28. Lora B. Summerwill

    i purchased a mini Keurig and was really disappointed that the electrical cord was so short that it had to be immediately behind the electrical outlet in order to plug in. This would have been my second mini Keurig but I had to return it. The electrical cord had been reduced by 50 % in the new model. This is not my first rodeo and I know that this was done just to cut corners and save money. Shame on you .. I am not longer a customer.