Startups jostle for space in coffee pod wars
It was a business brainwave that came while having a cuppa and Pod Star co-founder Kirsten Williams says traction is only growing.
"It is actually a business that is made from a mission — and the mission isn’t about getting rich."
Instead, it's all about harnessing Australian consumer's appetite for a war on waste to let them have their capsule coffee machines without the stress over empty pods.
The global market value of tea and coffee pods jumped from $22 billion in 2017 to $42.4 billion in 2019, according to Fior Markets. Millions of pods are disposed of in Australia each year.
Advertisement
The major market leaders in Australia including Nespresso and Aldi have services to recycle the pods, with postal and drop off options for customers.
Scrapping single use
Despite this, founders like Williams and her partner Mark Denning, have questioned why there needs to be single-use capsules at all.
Last year the duo embarked on a project that saw "a couple of fails": reverse-engineering the design of stainless steel pods that can be successfully used in different capsule coffee machine brands.
It was a process of designing prototypes, running them through machines and then tasting the resulting coffee until the company had the perfect fit for the products consumers already owned.
"The idea is that it should be able to last a lifetime… though it wasn't quite as simple as putting any coffee in and away it went," Williams says.
The couple invested just over $20,000 to start the design and manufacturing process and now offer reusable pods that fit the Aldi, Caffitaly and Nespresso machine brands.
Users buy coffee that is ground for reusable machines and then can add a small portion to the capsule each time they brew a cup.
Williams says after more than a decade operating a commercial printing business, the switch to a company designed to reduce waste is heartening.
"To us it’s exciting, as with every sale we get, we’re not just making money. Somebody is partnering with us," she says.
Less than a year on from launching the company, it's turning over more than $200,000.
Sustainability becomes 'a fad'
For the first-movers in Australia's eco-coffee space, tracking consumers' budding concerns about waste has been a fascinating process.
"Sustainability has almost become a fad — that’s not necessarily a bad thing," says founder of Melbourne's Crema Joe, Kayla Mossuto.
"We have found and we can see a lot of business-minded people jumping on board and capitalising on this wave. If that's contributing to reducing waste, that's the most important thing, really."
Mossuto and her husband founded Crema Joe around five years ago and were also inspired by their own at-home coffee making experiences.
Crema Joe doesn't produce its own pods, instead it operates an online store is licenced to sell global reusable capsule brands including Sealpod, Waycap and Bluecup.
As the company heads towards $1 million in revenue, Mossuto believes her community of customers avoid using 11.5 million disposable capsules a year by switching to reusable items.
Loading
Replay
Mossuto says the growth has been "pretty substantial" off the back of a $10,000 personal investment used to kick off the business.
Even so, she's aware that as fashions and consumer trends change, she might need to review the business.
"We talk about not having our eggs all in one basket. With capsule machines, who knows how long they'll be around for. This is supporting our family and staff as well – it's important [the business] does well," she says.
At the moment, Crema Joe is focused on coming up with a reusable solution for as many pod machines on the market as possible. In the long-term, giving shoppers a convenient way to reduce their waste is the larger goal, Mossuto says.
"As far as customer loyalty goes, it’s always been the number one priority for us. We want to provide them with a long-term solution. It's important they have a good experience with us."
The company's calculator predicts that if you buy ground coffee at $20.00 for 250g, customers drinking three coffees a day can save more than $150 a year using a reusable pod in their machines compared with a disposable option.
Is there a worry the big machine manufacturers will decide to roll out their own reusable pods to go alongside single-use options?
"Not really. If there’s not that repeat purchase, it’s not worth it for that kind of company. Single use is where the profits are," Mossuto says.
Nespresso has been contacted for comment on the prevalence of multi-use pods in its machines.
In a warranty card for its products sold in Australia, it warns consumers 'any defect resulting from the usage of non genuine Nespresso capsules will not be covered' when making claims under the company's own warranty.
Follow MySmallBusiness on Twitter, Facebook and LinkedIn.