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Keurig Abandons Cold Beverage System, Cuts 108 Vermont Jobs

Steve Zind
The Keurig Kold system entered the market last fall but failed to catch on with consumers. Now Keurig Green Mountain is discontinuing the product and laying off 108 Vermont workers.

Keurig Green Mountain is laying off 108 Vermont workers in the wake of a decision to discontinue its cold beverage system.

In a statement, Keurig said the workers are being encouraged to apply for 200 job openings, although it’s not clear how many are in Vermont.

The decision to discontinue the Keurig Kold system, which hit stores last fall, is significant and raises questions about the company’s future growth.

Sales of the Keurig’s long-popular hot beverage K-Cup systems have slowed and the company had hoped that the cold system would be a "disruptive technology" that would boost profits and give it access to the much larger cold beverage market.

“When it comes to their hot beverage platforms, nothing has gotten materially better,” says Seth Golden, head research analyst with Capital Ladder Advisory Group.

“It’s a one-product company that found market saturation and [hasn’t] been able to address that problem," Golden says.

While the cold beverage machines were made in China, the pods for the system were being manufactured in Williston.

Eventually, the company planned to open a new manufacturing facility in Georgia to meet demand for cold system pods, but according to published reports, that plant may never open.

Analysts have been skeptical of the system from the start, citing its high price and questioning whether consumers would embrace it.

"It's a one-product company that found market saturation and [hasn't] been able to address that problem." - Seth Golden, Capital Ladder Advisory Group

Over the years, Keurig has received more than $10 million in tax incentives, cash payments and job training funds.

Keurig has been awarded $7.7 million in Vermont Employment Growth Incentive (VEGI) funds, although not all the money has been paid out.

The state funds are pegged to creating jobs and increasing payroll and capital expenditures.

It’s not clear how this week’s layoffs will affect Keurig’s VEGI funding, but in April 2014, the company was awarded a $971,000 incentive to create a center for testing cold beverage pods in Williston. Presumably that center is now being closed.

In an email, Fred Kenney, executive director of the Vermont Economic Progress Council, said, “If an employment action by Keurig in 2016 results in the company not meeting or not maintaining performance requirements … the Tax Department will take appropriate action.”

Kenny said action could include denying payment of incentives.

"If an employment action by Keurig in 2016 results in the company not meeting or not maintaining performance requirements ... the tax department will take appropriate action." - Fred Kenney, Vermont Economic Progress Council

Last year, state auditor Doug Hoffer told legislators the basic premise of VEGI awards – the idea that without them companies wouldn’t create the promised jobs or undertake expansion in Vermont – is impossible to verify.  

“The very heart of the program is a subjective assertion by applicants,” Hoffer said in remarks submitted to lawmakers.

Hoffer also questions the "clawback" provision for the program that is supposed to enable the state to recover funds once they are completely paid out, which he says is “extremely weak.”

The Vermont Department of Taxes reviews compliance with VEGI incentives.

Last August, Keurig cut 200 Vermont jobs in Waterbury as part of a company-wide reduction. At the time, the company said those cuts were partially offset by the addition of 60 jobs in Williston.

Earlier this year, Keurig was purchased the Luxembourg holding company JAB, which also controls several major international coffee companies.

Golden says historically Keurig has done well by acquiring other companies.

It was founded as Green Mountain Coffee Roasters, a specialty coffee roaster in 1981. In 2006 it acquired the Keurig, which gave it the ability to market brewing systems using single serve K-Cups.

“What would benefit them longer term is to find an acquisition, a product, a company that they could bolt on to the Keurig business model that could lift up revenues,” says Golden. “Otherwise, more than likely, Vermont is looking at a continuation of job losses from Keurig.” 

Steve has been with VPR since 1994, first serving as host of VPR’s public affairs program and then as a reporter, based in Central Vermont. Many VPR listeners recognize Steve for his special reports from Iran, providing a glimpse of this country that is usually hidden from the rest of the world. Prior to working with VPR, Steve served as program director for WNCS for 17 years, and also worked as news director for WCVR in Randolph. A graduate of Northern Arizona University, Steve also worked for stations in Phoenix and Tucson before moving to Vermont in 1972. Steve has been honored multiple times with national and regional Edward R. Murrow Awards for his VPR reporting, including a 2011 win for best documentary for his report, Afghanistan's Other War.
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