Green Mountain products on display at the Kroger at 901 Lombardy St. (Photo by Michael Thompson)
The coffee business can get bitter.
Richmond-based Black Hand Coffee Co.’s recent efforts to market a new product line were met with pushback from a large competitor, throwing a wrench in the company’s plans.
Clay Gilbert
Black Hand owner Clay Gilbert said he received a cease-and-desist letter in January from a law firm representing Green Mountain Coffee Roasters related to language he used to promote Black Hand’s new line of single-serving coffee pods.
The language in question was the term “K-cup,” a trademarked brand owned by Green Mountain. K-cups are one of the more popular brands of single-serving coffee cups or pods.
The letter demanded that Gilbert stop using the term “K-cup” and begin describing his single-serving cups generically, although Gilbert said Green Mountain Coffee Roasters does allow him to note on Black Hand’s packaging that the single-serving cup can be used for Keurig coffee machines.
Green Mountain “has and will continue to take steps to protect its trademarks, including use of its registered K-Cup trademark,” the company’s vice president of corporate communications and investor relations Suzanne DuLong said in an email regarding the Black Hand situation.
Although he has complied with Green Mountain’s demands, Gilbert said he’s run into another obstacle.
Black Hand has had trouble landing deals with independent distributors of single-serving coffee cups that also do business with Green Mountain, he said.
“We were turned away [by distributors] due to the fact that they were carrying Keurig products,” Gilbert said.
Gilbert’s original strategy was to work with such distributors to get Black Hand single-serving cups into offices across Richmond. He said he’s since had to rethink his plans to sell the 36,000 Black Hand single serve cups he has in production.
Black Hand isn’t the only company that claims to have run into the dominance of Green Mountain.
![Read TreeHouse Foods' lawsuit against Green Mountain [PDF]](/wp-content/uploads/2014/02/TreeHouse-v-GreenMountain.jpg "On way to market, roaster runs into Goliath 3")
Read TreeHouse Foods’ lawsuit against Green Mountain [PDF]
The suit alleges that “Green Mountain has abused its dominance in the brewer market by coercing business partners at every level of the K-Cup distribution system into anticompetitive agreements.”
TreeHouse alleges that “Green Mountain requires distributors to enter into a multi-year KAD [Keurig Authorized Distributor] agreement which prevents them from purchasing any and all competitive cups.”
Gilbert, a former vice president for a beer distributorship, said he observed such leverage plays in his previous industry.
“I don’t think they should be excluding us from the market,” he said. “I’ve seen this before in the beer business. They were trying to discount the craft [beer] movement, and look what happened – it blew up in their face.”
DuLong of Green Mountain would not comment on Gilbert’s claims of Black Hand being turned away by Green Mountain’s independent distributors.
The company said TreeHouse’s suit is without merit, according to a Chicago Tribune report.
It isn’t just small coffee roasters like Black Hand that see the value in the single-serving cup market. Coca-Cola this month paid about $1.25 billion for a 10 percent stake in Green Mountain, according to a Bloomberg news report.
Black Hand’s single-serving coffee cups. (Image courtesy of Black Hand.
In January, Green Mountain announced its plans to change its name to Keurig Green Mountain, Inc., a change that signifies the prominence of the Keurig brand and the growth of the single-serving coffee cup market, according to a Wall Street Journal report.
Green Mountain sold a record 5.1 million Keurig single cup brewing machines in the first quarter of fiscal 2014, according to a February SEC filing. Its most popular K-cup machine for home use sells for about $120 in its online store.
Gilbert said he’ll now look to sell to offices directly in and around Richmond and that he wants to get on the shelves of stores like Ellwood Thompson’s and Libbie Market.
“Hopefully that will open up some doors to bigger chains,” Gilbert said. “Our strategy has to alter a little, but it’s not the end of the world. All options are on the table.”
Gilbert said he is working out a deal with Newco, a coffeemaker manufacturer that sells its own single-serving brewing machines.
A 12-count box of Black Hand single-serving cups retails for $11, while wholesale prices for the same unit will be between $7 and $8. A 24-count box of K-cup single serve cups retails for about $17, according to Keurig’s website.
Obstacles aside, Gilbert still raised a mug to the company that he said did a lot to develop the industry Black Hand is fighting to enter.
“All this ingenuity has lead to even better machines,” Gilbert said of Green Mountain’s efforts. “They’ve done a lot to set the vision for this market.”
Green Mountain products on display at the Kroger at 901 Lombardy St. (Photo by Michael Thompson)
The coffee business can get bitter.
Richmond-based Black Hand Coffee Co.’s recent efforts to market a new product line were met with pushback from a large competitor, throwing a wrench in the company’s plans.
Clay Gilbert
Black Hand owner Clay Gilbert said he received a cease-and-desist letter in January from a law firm representing Green Mountain Coffee Roasters related to language he used to promote Black Hand’s new line of single-serving coffee pods.
The language in question was the term “K-cup,” a trademarked brand owned by Green Mountain. K-cups are one of the more popular brands of single-serving coffee cups or pods.
The letter demanded that Gilbert stop using the term “K-cup” and begin describing his single-serving cups generically, although Gilbert said Green Mountain Coffee Roasters does allow him to note on Black Hand’s packaging that the single-serving cup can be used for Keurig coffee machines.
Green Mountain “has and will continue to take steps to protect its trademarks, including use of its registered K-Cup trademark,” the company’s vice president of corporate communications and investor relations Suzanne DuLong said in an email regarding the Black Hand situation.
Although he has complied with Green Mountain’s demands, Gilbert said he’s run into another obstacle.
Black Hand has had trouble landing deals with independent distributors of single-serving coffee cups that also do business with Green Mountain, he said.
“We were turned away [by distributors] due to the fact that they were carrying Keurig products,” Gilbert said.
Gilbert’s original strategy was to work with such distributors to get Black Hand single-serving cups into offices across Richmond. He said he’s since had to rethink his plans to sell the 36,000 Black Hand single serve cups he has in production.
Black Hand isn’t the only company that claims to have run into the dominance of Green Mountain.
Read TreeHouse Foods’ lawsuit against Green Mountain [PDF]
The suit alleges that “Green Mountain has abused its dominance in the brewer market by coercing business partners at every level of the K-Cup distribution system into anticompetitive agreements.”
TreeHouse alleges that “Green Mountain requires distributors to enter into a multi-year KAD [Keurig Authorized Distributor] agreement which prevents them from purchasing any and all competitive cups.”
Gilbert, a former vice president for a beer distributorship, said he observed such leverage plays in his previous industry.
“I don’t think they should be excluding us from the market,” he said. “I’ve seen this before in the beer business. They were trying to discount the craft [beer] movement, and look what happened – it blew up in their face.”
DuLong of Green Mountain would not comment on Gilbert’s claims of Black Hand being turned away by Green Mountain’s independent distributors.
The company said TreeHouse’s suit is without merit, according to a Chicago Tribune report.
It isn’t just small coffee roasters like Black Hand that see the value in the single-serving cup market. Coca-Cola this month paid about $1.25 billion for a 10 percent stake in Green Mountain, according to a Bloomberg news report.
Black Hand’s single-serving coffee cups. (Image courtesy of Black Hand.
In January, Green Mountain announced its plans to change its name to Keurig Green Mountain, Inc., a change that signifies the prominence of the Keurig brand and the growth of the single-serving coffee cup market, according to a Wall Street Journal report.
Green Mountain sold a record 5.1 million Keurig single cup brewing machines in the first quarter of fiscal 2014, according to a February SEC filing. Its most popular K-cup machine for home use sells for about $120 in its online store.
Gilbert said he’ll now look to sell to offices directly in and around Richmond and that he wants to get on the shelves of stores like Ellwood Thompson’s and Libbie Market.
“Hopefully that will open up some doors to bigger chains,” Gilbert said. “Our strategy has to alter a little, but it’s not the end of the world. All options are on the table.”
Gilbert said he is working out a deal with Newco, a coffeemaker manufacturer that sells its own single-serving brewing machines.
A 12-count box of Black Hand single-serving cups retails for $11, while wholesale prices for the same unit will be between $7 and $8. A 24-count box of K-cup single serve cups retails for about $17, according to Keurig’s website.
Obstacles aside, Gilbert still raised a mug to the company that he said did a lot to develop the industry Black Hand is fighting to enter.
“All this ingenuity has lead to even better machines,” Gilbert said of Green Mountain’s efforts. “They’ve done a lot to set the vision for this market.”
What a great attitude by Clay! Black Hand Coffee has been wonderful for the Museum District and for the City. I know we’ll be buying BHC coffee pods for the office (or whatever the name ends up being).
The problems that I find with K-Cup coffee brands is that very few roasters offer a choice of decaf blends. A second issue is that I want to TRY the coffee before I buy a dozen or more K-Cups. The samples that come with the brewer just don’t make it.That’s just bad marketing.