New coffee pods from Nespresso and Keurig aim to put an end to waste.

• Since 2017, there has been a 45% increase in single-cup brewer ownership in the US, making it the second-most popular at-home coffee preparation method, after drip coffee makers.
• The coffee pods and capsules market in the U.S. is expected to reach $10.1 billion by 2028, an increase from $8 billion in 2021, with Keurig and Nespresso remaining dominant.
• Both coffee companies are introducing new methods to reduce their reliance on plastic and aluminum pods with low recycling rates, but Keurig's solution requires purchasing new brewing machines.

Single-brew home coffee systems like Nespresso and Keurig have made at-home caffeine consumption more convenient, but sustainability is a major issue.

Single-brew machines are being used by companies like Keurig Dr. Pepper and Nespresso to reduce waste from the pod approach. Compostable pods made from plants and paper are becoming more widely available in markets.

The National Coffee Association's latest report reveals that Americans are the heaviest coffee drinkers, with more adults drinking coffee daily than any other beverage, including tap or bottled water. Single-cup brewers are the second most popular at-home preparation method, with a 45% increase in ownership since 2017.

Last year, Keurig coffee sales in the U.S. surpassed $4 billion, while Wall Street estimates Nespresso sales at around $1.5 billion. The U.S. coffee pods and capsules market is projected to expand to $10.1 billion by 2028 from $8.4 billion in 2021, according to market research firm Mordor Intelligence.

NEXE, a Canadian packaging solutions supplier, has been offering compostable coffee pods in the U.S. and Canada since 2021, which are compatible with Nespresso machines. These eco-friendly pods are in high demand and have been on the market for several years.

Despite the challenges, companies are still looking to produce more sustainable coffee pods. However, they face obstacles such as a disparate recycling system in the U.S., where only 73% of households have access to recycling and only 21% of household recyclables are captured, according to The Recycling Partnership's 2024 State of Recycling Report. Additionally, strained supply chains and lengthy lags between product idea generation and time to market pose a challenge. Getting customer buy-in for new products is also a challenge for companies looking to produce more sustainable coffee pods.

"Dillon Baxter, founder and CEO of PlantSwitch, stated that these companies are trying to find something that, if not recycled, would result in negative consequences. He explained that this process takes time and can be an additional expense, which can affect their bottom line. Transitioning to a more sustainable approach is not as straightforward as some people may believe."

Keurig and Nespresso, the two largest manufacturers of at-home coffee pod systems, have announced plans to reduce the amount of waste generated by their products.

Keurig Dr Pepper's new plastic-free pod is coming

In March, the company announced that it would be launching K-Rounds pods, which are made of plastic-free materials. These new pods will be covered in a plant-based coating, eliminating the need for recycling, which has been a challenge for the company as it strives for greater sustainability.

While recycling is a great solution, its effectiveness is limited due to inconsistency, according to Monique Oxender, the company's chief corporate affairs officer responsible for sustainability initiatives.

The plan to introduce plastic-free pods in the Keurig system has been under development for five years, and while beta testing is set to begin in the fall, there is no specific timeline for their widespread availability. "We are confident that this is the future of the Keurig system, but we want to ensure its success before scaling it up," said Oxender.

Consumers will need to purchase a new brewer to use the new plastic-free pods, but they will still be able to utilize existing K-Cup pods for a wider range of flavors. The company anticipates that its new pods will be certified compostable and is currently going through the certification process.

Keurig's journey towards sustainability is an ongoing process. In 2020, the company transitioned from No. 7 plastic to recyclable polypropylene (No. 5 plastic) for its K-Cup pods to increase recyclability options. However, this was not the complete solution as No. plastic is widely accepted in curbside recycling systems across North America, but many communities do not yet accept certain polypropylene containers, including coffee pods, for recycling. To address this issue, Keurig is collaborating with individual communities and recyclers to enable more consumers to recycle their pods in local communities, but it takes time, said Oxender.

Keurig aims to reduce its plastic waste and use recycled plastic in some of its brewers. Additionally, the company will launch a mail-back recycling program for K-Cup pods on its website later this year, providing an option for consumers who cannot recycle these pods in their local communities.

Nespresso's paper-based compostable pod in Europe

Nespresso's U.S. head of sustainability, Jessica Padula, stated that the aluminum capsules used in their machines are easily recyclable and provide a unique flavor and taste protection.

Nespresso uses aluminum for more than three decades to preserve coffee taste and because not all plastics are recyclable. Consumers can recycle their capsules through pre-paid shipping labels at 88,000 UPS drop-off locations across the U.S.

According to Tom Szaky, CEO of TerraCycle, a private U.S.-based recycling company that specializes in coffee capsule recycling, the best way to encourage consumers to recycle is by making it easy and accessible for them to return the pods to the company. By offering mail-in programs, local store drop-offs, or curbside pickups, companies can increase the likelihood that consumers will recycle.

According to Szaky, curbside picking is the most efficient method. In New York City, Nespresso has partnered with the city's recycling contractor to create special equipment for consumers to recycle capsules directly from their at-home bin. Nespresso has also extended the curbside program to Jersey City, New Jersey, starting this month, as stated by Padula.

According to Szaky, who works for both Keurig and Nespresso, the goal is to make a significant investment in products that are easy and convenient for consumers, even if they are not curbside recyclable.

The Recycling Partnership reports that just 43% of households participate in recycling, with only 57% of recyclable material being put in recycling containers, despite an effective system aiming for 90%.

According to a company spokesperson, only about 36% of U.S. Nespresso drinkers recycle their capsules.

Nespresso is exploring sustainable options for its pods due to recycling issues, and has piloted compostable paper capsules in France and Switzerland, where its coffee is produced. These capsules are home compostable and have been well-received, according to Padula.

Despite facing challenges in replicating its momentum in the U.S., the company is committed to providing sustainable options to customers without compromising taste. To achieve this, the company is actively exploring a paper option that can preserve the coffee's quality and taste.