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Hamburg bans coffee pods, is Canada next?

Andrew Seale

It’s official, single serve coffee pods are no longer welcome in Hamburg, Germany.

The second largest city in Germany recently announced eco-conscientious purchasing regulations called “Guide to Sustainable Procurement” which bans state-run buildings from purchasing bottled water, plastic cutlery and specifically “equipment for hot drinks in which portion packaging is used” including the “Kaffeekapselmaschine” or coffee capsule machine.

But Niraj Dawar, professor of marketing at Western University’s Ivey Business School and author of Tilt: Shifting Your Strategy from Products to Customers, says he doesn’t see the move rippling across the pond to Canada.

In his book, Dawar looked at Nespresso’s single-use pods, exploring why people would pay around a dollar a cup compared to 10 to 15 cents for a cup of loose coffee made at home.

“First of all its very good coffee, it’s espresso you can make at home – you don’t have to wake up on a Saturday morning, roll out of bed with a hangover, get dressed to go out into the cold, stand in line and have your change ready to order a coffee,” he says. “People value that convenience.”

Enough so that it has become a multi-million dollar industry. According to research from Mintel, nearly half of Canadian coffee drinkers say they have a single-serve coffee machine at home and an additional 21 per cent say that while they don’t currently own one, they are interested in buying one.

In North America, Vermont-based Keurig Green Mountain leads the pack with a market value of US$11.4 billion and sales of almost US$5 billion.

“Our Keurig brewers and K-Cup pods are not currently sold in Germany and are therefore not impacted by the city of Hamburg’s recent ban on coffee capsules,” Cynthia Shanks, senior manager of communciaitons and sustainability at Kuerig Canada told Yahoo Canada Finance. “That being said, the recyclability of our K-Cup pods, predominantly sold today in North America, is an issue we take very seriously.”

And rightfully so.

In Toronto alone, residents and businesses toss 10 million of the cups into recycling bins despite the fact they’re not recyclable, according to the City of Toronto. Data from Mintel showed that the 37 per cent of Canadians without a single serve coffee machine don’t own one because of the waste it creates.

“For a mass market manufacturer like Kuerig they’re trying to reach as many consumers as possible and so they need to have a cheaper plastic,” says Dawar. At the same time, if Kuerig ignores the portion of potential customers that see it as wasteful, they open it up to niche competitors.  

Enter companies like US-based Massimo Zanetti Beverage Group and Canadian roasters Club Coffee which teamed up with researchers at University of Guelph to develop a compostable single-use coffee pod that is 100 per cent compostable.

“I think single serve coffee has proven itself and it doesn’t look as if it’s going anywhere,” says Brian Kubicki, vice president of marketing at MZB. “We’ve developed a new solution for people interested in the convenience of single serve but not interested in the waste at the back end of it – we’re trying to make it the same cost as before.”

The pods work with Kuerig’s machines but the coffee giant itself isn’t going to let the market go that easily.

“We have a stated goal to have 100% of our K-Cup pods be recyclable by 2020, with an increasing number of K-Cup pods converted to a recyclable format each year between now and 2020,” says Kuerig’s spokesperson Shanks. “To achieve our goal we are working on the design of the pods as with recycling and plastics industry experts.”

As for Hamburg’s ban of single-use pods, Kubicki says it sends a strong message.

“I think it continues to reinforce a point of view that many people feel enough is enough – isn’t there a better way?” he says.