Although I have questioned GMCR’s razor/razor blade growth model, My-Kap.com may further complicate the company’s strategy with its promotion of a product that allows customers to recycle their K-cups. My-Kap.com maintains that its product allows customers to reuse each K-Cup up to 20 times by filling it with any coffee or tea, which if true (full disclosure: I have never bought or used the My-Kap product so I cannot vouch for it), could provide real risk to GMCR’s K-Cup sales projections and margin story. Keurig already sells a reusable K-Cup, which costs about $15, but My-Kap.com states that Keurig’s reusable product does not make as good a cup of coffee as the K-Cups due to its different design.
The GMCR story is dependent on significant growth in sales of K-cups. Given there are zero profits generated from selling the brewers, a blip in the sales trends of K-cups could be disastrous for the stock.