Coffee Costs: 5 Ways to Save Money on K-Cups
It's no wonder more and more java sippers are tossing out their coffee pots for single-serve machines.
Green Mountain Coffee Roasters (GMCR) shipped a whopping 4.2 million Keurig brewers through its partners during the holiday quarter. Revenue more than doubled to $1.16 billion as earlier buyers loaded up on the K-Cup portion packs that provide the bean-based caffeinated kicks.
Keurig isn't the only single-serve specialist. Tassimo, Nespresso, Senseo, CBTL, and now even Green Mountain's brand new Vue system are just some of the one-cup platforms vying for your morning swig.
Slick, But Not Cheap
Single-serve coffee is certainly easier on the pocketbook than hitting up the Starbucks (SBUX) barista every time you need a caffeine fix. But you may be surprised at how much you're actually paying for the ground coffee that shakes in the proprietary pods like maracas.
The New York Times' Oliver Strand did the math earlier this month. He looked at Nespresso Arpeggio pods that retail at $5.70 for 10 espresso capsules. Since each capsule contains just five grams of coffee, we're looking at about $51 a pound. Ouch!
He also priced the Folgers Black Silk blend available for Keurig machines at $10.69 for a dozen K-Cups. Since each of those pods contains eight grams of coffee, it would take nearly 57 K-Cups -- setting a fan of joe back close to $50.50 -- for a pound of the stuff.
Thankfully for Strand and others with single-serve machines, there are ways to avoid paying $50 a pound for coffee. Here are tips on ways to save. Though specifically for Keurig's K-Cups, many of these suggestions apply to rival makers as well.
1. Buy in bulk
If Strand's prices seem outrageous, it's because you're probably not paying them. His article singles out retail pricing and not what savvy sippers can find if they shop around.
Amazon.com (AMZN) offers larger counts of pods at substantial savings through its website. For instance, the same Folgers K-Cups that he was pricing at $0.89 per refill can be had for about $0.47 a K-Cup through the leading online retailer.
Amazon sells three of the 12-packs bundled together for $16.97. A buyer is paying a little more than half per K-Cup, but they can even do better than that.
2. Subscribe for Savings
Amazon has a "Subscribe and Save" program, offering buyers who commit to automatic repeat purchases discounts of as much as 15% on select items.
It's a forgiving program. You can go online to skip deliveries or change the frequency of the shipments. If you've found your favorite single-serve brand -- and it's available through Amazon's subscription plan -- what do you have to lose? Your K-Cup consumption is likely to be pretty steady anyway.
Soon other plan choices outside of Amazon may be available, too. Target (TGT) revealed last month that it's exploring a subscription service to provide shoppers with discounts on regularly purchased merchandise.
3. Be Less Brand-Loyal
Remember that last tip about finding your favorite brand? Forget about it! There are more than 200 varieties of K-Cups on the market. Rival single-serve systems offer dozens of options.
If you're not stuck on a particular flavor, there will probably be different price points available to you across the many K-Cup varieties. You won't find the same kind of pricing disparity for smaller platforms, but it never hurts to hunt for sales or more compelling prices on other pods.
4. Buy a reusable filter
Environmentalists worried about the disposable nature of single-serve capsules have flocked to reusable Keurig filters for years, but they're also a great way to save money.
It won't be as clean, but wiping the counter for stray coffee grounds is a small compromise for the serious money that can be saved by the pound.
5. Be Patient
Green Mountain is going to lose some key intellectual property later this year. The two patents related to Keurig's K-Cup portion packs expire in September. At that point, anyone will be able to make K-Cup refills without having to pay Green Mountain a royalty that amounts to a few cents per K-Cup.
The move should drive prices lower, obviously. The level playing field will make it easier for companies that have been sitting on the sidelines to throw their K-Cups into this brew ring.
There's serious money to be saved now, and more to be saved later. So drink up!
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Green Mountain. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters and Starbucks. Motley Fool newsletter services have recommended writing covered calls in Starbucks. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters.