Tag Archives: Keurig Green Mountain

An utterly predictable failure

Oh dear. Keurig Green Mountain, our hometown manufacturer of environmentally wasteful consumer products, is cutting back. About a hundred workers will lose their jobs in Vermont following a decision I’ve been predicting from the very start.

KGM is killing Keurig Kold, its overpriced, slow, inconvenient carbonated-beverage delivery system. The layoffs are directly related to that business decision — although any minute now, I expect a press release from Phil Scott blaming the Shumlin administration. Because that’s Leadership!

Among the Keurig Kold’s many problems:

— an initial list price of nearly $400

— beverage pods that cost a buck twenty-five apiece — and make EIGHT OUNCES of soda.

— Producing an eight-ounce serving takes a minimum of 90 seconds.

— The machine itself is bulky — larger in all dimensions than any Keurig coffeemaker. It weighs 23 pounds. Takes up a lot of counter space.

— The water chamber needs to be pre-chilled to 39 degrees, which takes at least two hours. You’d have to preplan your soda breaks, or burn electricity to keep the thing running all the time.

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A useless program gets a little better

Raise a glass, boys, to Janet Ancel, hardworking chair of the House Ways and Means Committee. For it was she who ignored the express wishes of the Shumlin administration and added some oversight to a program that sorely needs it.

I’m talking Vermont Employment Growth Incentive (VEGI), the slush fund economic development program that gives public funds to private employers promising to grow their workforce. VEGI was up for renewal this year, and the administration wanted a permanent extension (or at least five years) with no strings attached.

What it got instead, thanks largely to Rep. Ancel, was a three-year extension with legislative oversight added. She also inserted a mandated “cost-benefit analysis” to determine whether VEGI is actually accomplishing what it’s supposed to. And yesterday, the full House approved an omnibus economic-development bill including her VEGI provisions. A noteworthy accomplishment, given the administration’s active resistance.

After the jump: the unprovable merit of VEGI. 

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Fake syrup peddler takes over eco-disastrous beverage maker

That didn’t take long. Keurig Green Mountain, the artist formerly known as Green Mountain Coffee Roasters, was sold to a private equity firm in late December; now, the company’s CEO has been kicked out of the way.

Keurig Green Mountain, Inc. in Waterbury has hired a new chief executive officer, promoting current CEO Brian Kelley to vice chairman of the board.

That’s a hell of a promotion. Kind of like being promoted from Governor to Lieutenant Governor.

And Kelley’s replacement?

Bob Gamgort, currently CEO of Pinnacle Foods Inc. in Parsippany, New Jersey, will take over leadership of Keurig on May 2. Pinnacle owns a number of well-known brands, including Duncan Hines, Vlasic, Mrs. Butterworth’s and Log Cabin, Armour and Birds Eye.

Ruh-roh, Raggy. Mrs. Butterworth’s and Log Cabin?

Them’s fightin’ words around these parts.

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A warning shot across Keurig’s unrecyclable bow

Here’s an interesting tidbit from across the pond. Citing environmental concerns, the city of Hamburg, Germany has banned Keurig-style coffee pods from all government office buildings.

Lest you think, “Oh, isn’t that cute?” bear in mind that Hamburg has a population of 1.7 million people. It’s the second biggest city in Germany, and the eighth largest in the European Union.

As part of a guide to green procurement, the German city of Hamburg last month introduced a ban on buying “certain polluting products or product components” with council money. The ban includes specific terms for “equipment for hot drinks in which portion packaging is used” – specifically singling out the “Kaffeekapselmaschine”, or coffee capsule machine, which accounts for one in eight coffees sold in Germany.

“These portion packs cause unnecessary resource consumption and waste generation, and often contain polluting aluminum,” the report says.

This isn’t a Big Deal, not yet; but it is a Deal, and it ought to be causing a bit of concern at Keurig Green Mountain’s Waterbury headquarters. Because if Hamburg becomes a trendsetter, Keurig could start seeing large markets snap shut.

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Outsiders trolling for dirt on KGM sale

A very strange half-page advertisement graced page 3 of Your Monday Times Argus. It was a solicitation for inside information on the operations of Keurig Green Mountain and/or its would-be purchaser, JAB Holding Company. And, oddly, it was littered with typos and lousy grammar.

The ad was placed by something called ACTION Group, whose name is too generic to yield anything useful via Google search. At the top of the ad, ACTION Group claims to consist of “Americans Concerned To Improve Our Nation.”

Two people are named in the ad: William T. Juliano and Deborah Dickinson. You might expect them to be ambulance-chasing lawyers, but no — Juliano is a real estate developer and financier based in New Jersey and Boca Raton, Florida, and Dickinson is a longtime employee in his various enterprises.

The ad claims that ACTION Group is “very concerned” with the announced sale of KGM to JAB, described as “a huge German conglomerate whose intentions are to dominate the global coffee industry.”

You know, like the Third Reich only caffeinated. Hm, that doesn’t sound good.

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You’re as Kold as ice

Keurig Green Mountain, the local startup made good and then assimilated by Coca-Cola, has formally unveiled its new Keurig Kold system online. To me, it still looks like an Edsel in the making. What’s worse, the troubled company is clearly betting the farm on this overpriced gizmo.

The cost alone is a deal-breaker. Add to that the machine’s clunky performance, and you have a product fated for the dustbin of history.

Cost? The list price of a KK is $369 — by far the most expensive of any Keurig device. But that’s just the entry fee. Your $369 buys you the opportunity to make little tiny eight-ounce servings of cold beverages at a per-cup cost of more than a dollar.

And each serving takes more than a minute to produce.

Which begs the question: why in hell would anyone buy this piece of junk?

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Tales of perfidy from the business pages

Hey, working folks, hope you enjoyed Labor Day. Yep, you got your one day; the other 364 belong to the employers.

We’ve got two examples of capitalism at work in Vermont: another shifty move from the formerly conscience-ridden Keurig Green Mountain, and a T-shirt factory meets its inevitable demise.

First up, from the Reuters news service:

When Keurig Green Mountain Inc said last December it was shifting its coffee buying operation to Lausanne in Switzerland from its headquarters in Waterbury, Vermont, it said the move would establish the company as a “global beverage player.”

The seller of brewing machines and single-serve coffee pods said nothing about a little-known exemption in the U.S. tax code…

Ah yes, the tax code: refuge of capitalist scoundrels.

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Keurig Green Mountain and the limits of tax incentives

Photo from killthekcup.org.

Photo from killthekcup.org.

Last week, Keurig Green Mountain announced 330 layoffs, including 200 in Vermont. The move came after sales and profit shortfalls hammered the company’s stock price. (Last November, KGM traded at more than $150/share. Now it’s barely over $50.) One analyst told MarketWatch.com that KGM shows “‘telling’ signs of a company struggling to turn around its business.”

The layoffs were widely reported in the Vermont media. What wasn’t mentioned is that since 2007, KGM has received approval for a whopping $7 million in job creation tax incentives through the state’s Vermont Economic Growth Initiative (VEGI). What does KGM’s contraction (and uncertain prospects) mean for its generous tax incentives?

I sought answers from Fred Kenney, Executive Director of the Vermont Economic Progress Council and head honcho of VEGI. He offered a fair bit of reassurance on the VEGI mechanism and state oversight of KGM grants, but I remain dubious on the fundamental concept of tax incentives as a means to economic growth.

In short, while VEGI is a well-designed program of its kind, the KGM experience rings some very real alarm bells about it.

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Keurig Kold: If there’s a market for this, my faith in humanity takes another hit

Been an interesting week for homegrown planet-bespoiler Keurig Green Mountain. First, the maker of costly coffee pods had to do an embarrassing about-face on its decision to DRM-up its new coffee maker. It was a capitalistically noble effort to derail competition for its profitable (and planet-bespoiling) K-cups, but consumers rebelled.

Understandable. It’s kinda like if oil companies made cars, and DRM’d the tank so you could only buy their brand of gas. Consumers would naturally rebel. Or, here’s an even more insane one: it’s as if you could buy a printer dirt cheap, but then had to pay extortionate prices for cartridges.

Oh wait.

Anyway, embarrassing walkback for KGM. But help is on the way, in the form of its new cold-beverage system. Er, “kold.”

Keurig Kold, set to launch this fall, was developed in a partnership with Coca-Cola, Keurig’s largest shareholder, and the Dr. Pepper Snapple Group. Keurig CEO Brian Kelley said the new machine will make a Coke, and other beverages, indistinguishable from the originals.

The magic behind the Keurig Kold: its patented Karbonator system. Ah, the Keurig Kold Karbonator, or “KKK” for short. What could go wrong?

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The Inaugural Address: A pretty good start

The speech by Governor Shumlin — which he billed as the first of two parts — included some welcome elements. It left a lot unsaid; presumably he will confront property taxes, school governance, health care, and government spending in his budget address next week.

Today’s address focused on two areas: energy, and the environment. In the latter category, his primary focus was on Lake Champlain. It was, if I recall correctly, the first time he’s drawn attention to these issues in a major January speech. To me, it’s a welcome development.

It’s also an opening for him to regain some credibility among liberals. When Peter Shumlin was running for Governor in 2010, his two big issues were single payer health care and the environment (climate change, green energy and Vermont Yankee). But while his administration has made some good incremental gains on the latter issues, they’ve never seemed to get the spotlight. Now they have.

With single payer off the table, perhaps Shumlin is returning to his other signature issue and hoping to put his stamp on Vermont’s future on energy and the environment. If he can’t be the single-payer governor, perhaps he can be the environmental governor. It’s a good strategy.

The caveat, of course: Now he’s gotta deliver.

He also opened the door to raising taxes as part of the effort to close a $100 million budget gap. In a brief preview of next week’s budget address, he said this:

We cannot simply cut our way out of our fiscal challenge year after year – taking away services that are important to so many Vermonters. Nor can we tax our way out of the problem.

Which would seem to indicate that his plan will include a mix of cuts and “revenue enhancements.” I’d urge him to take a long look at the plan that nearly passed the House a couple years ago, which would have raised taxes on the wealthy (by closing loopholes and limiting deductions) and provided some tax relief to the middle and working classes. I say “nearly passed the House” because it was stopped in its tracks by Shumlin’s stubborn opposition.

As for the details on energy and the environment:

The centerpiece on energy is a new renewables strategy, as the current (and, in some circles, controversial) SPEED program is sunsetted in 2017. The Energy Innovation Program is aimed at further boosting our investment in renewables and energy efficiency. Shumlin called the EIP “our single biggest step so far toward reaching our climate and renewable energy goals.”

Sounds good. We await the legislative process with anticipation and a bit of trepidation.

On Lake Champlain, Shumlin came up with a decent-looking package. It doesn’t go far enough, but it’s better than anything he’s offered before. He realizes, as he told the legislature, that if the state fails to meet EPA muster, we’ll face some burdensome federal regulations.

His plan includes:

— New transportation funding to curtail runoff and erosion around our roads and streets.

— New funding and technical assistance for farmers and loggers, to help them meet water-quality standards.

— More thorough efforts to enforce current water quality regulations.

— Making a change in the Current Use program, which would take away that tax break from farmers who fail to reduce pollution.

As for funding, his plan includes two new fees: One on agricultural fertilizers, and one on commercial and industrial parcels in the Champlain watershed.

The revenue would go into a newly created Vermont Clean Water Fund, a repository for state, federal and private funds. The first private money, he announced today, is a $5 million donation (over the next five years) from Keurig Green Mountain, which Shumlin called “a company that depends upon clean water.” He expressed the hope that KGM’s generosity will “inspire others.”

If he can leverage substantial donations from the private sector, his plan could accomplish quite a bit without too much stress on the state’s bottom line. Maybe enough to get the EPA off his back, at least for a while.

From this liberal’s point of view, it’s a good start. But as VPR’s Bob Kinzel said today, the Governor effectively served us dessert before dinner. Next week’s budget address will be a much less appealing dish. Plenty of mushy steamed vegetables scattered around a hunk of gray meat.

Beyond that, well, actions speak louder than words, and we’ve heard plenty of words from this Governor in the past. The political question is: Can he deliver on this agenda in a way that will repair his reputation for effective governance and bring liberals back into the fold? He can; but will he?