An Ontario coffee roaster and grinder is suing U.S. coffee goliath Keurig for anti-competitive behaviour, claiming it is keeping the price of single-serve coffee pods artificially high for consumers.
Club Coffee's $600-million lawsuit against coffee supplier and equipment maker Keurig Green Mountain alleges the U.S. chain is flouting the rules to maintain a near monopoly and keep single-serve coffee prices artificially high.
"First, their new brewers have what they claim to be 'proprietary technology' that rejects any single serve pods not authorized by them," a Club Coffee spokesperson told CBC News in an email. "Secondly, Keurig has used the threat of this lockout technology to coerce retailers into exclusive arrangements to sell only Keurig-controlled products."
When asked for comment on the lawsuit by CBC News, a spokesperson for Keurig Green Mountain said the company could not comment on the complaint because they've yet to see it.
Keurig controls about 90 per cent of the burgeoning market for single-serve coffee pods, often called K-cups. Keurig recently increased the retail price of its pods by about nine per cent, citing higher coffee prices on the wholesale market.
The company had a patent for the design of the pods that work with its ubiquitous coffee machines, but it expired in 2012. Since then, new players like Club Coffee and others have tried to compete with pods they say work just as well, if not better.
Robert Carter, a food industry analyst at research firm NPD Group, said the market is growing swiftly. Roughly 40 per cent of Canadian households currently have a single-serve coffee machine, and $95 million was spent on them in Canada last year, NPD says.
"The single serve coffee market in Canada is definitely the fastest area of growth within the coffee market, and a number of different players are coming aboard," Carter said.
Club Coffee says it is the biggest seller of non-name-brand coffee in Canada. It says Keurig's business practices harm not only other companies, but also consumers, who are paying higher prices than they should be.
Unlike Keurig's pods, Club Coffee manufactures something it calls a "soft pod," which it says makes coffee without the use of a plastic cup. The company is also bringing a fully compostable coffee pod to market imminently that uses bio resins instead of plastics.