Keurig Green Mountain plans to import coffee beans through duty-free zones
US-based coffee brewing company Keurig Green Mountain is planning to import coffee beans into the US through duty-free zones, in an effort to cut down costs as sales of its pods and brewers see a tepid run.
This is part of the firm’s latest move to bolster its coffee-buying program after it shifted its coffee sourcing operations to Switzerland from Vermont.
One of the reasons being attributed to this move is that the company wanted to benefit from a tax exemption, reported CNBC.
Keurig submitted applications to create foreign trade zones (FTZs), which could have helped the company save as much as $1.6m in operating costs in 2014, according to a Reuters report.
With this move, Keurig has become the first coffee company to operate under FTZs. In the documents that were submitted to the US regulators, Keurig said that it would use four of its coffee warehouses in the ports of Seattle, Virginia and New Jersey for coffee beans distribution, Fox News reported.
While the ports have given their approval to the arrangement earlier this year, the applications have not been activated by Customs and Border Protection, which usually takes many months.
Though coffee does not carry import taxes, with this strategy, Keurig expects to benefit from the several advantages offered by FTZs. One such advantage is that companies need to pay customs processing fees only once a week instead of on every shipment.
FTZs facilitate companies to import goods into the country without having to pass through customs or pay taxes while they are in the specified zone.
Last month, Keurig Green Mountain launched a countertop pod machine to make carbonated drinks at home, a move to offset the decline in its core business of single-serve coffee pods and brewers and wrest marketshare from rival SodaStream.
Earlier this year, the company announced its plans to roll one-button carbonated countertop beverage appliance.