Keurig Introduces Kold Brewer in Challenge to SodaStream

  • Company is battling sluggish demand for K-Cup drink pods
  • New cold-beverage machine supported with Coca-Cola investment

Keurig Green Mountain Inc. is going cold.

The new Keurig Kold brewer -- which allows consumers to brew cold beverages such as sodas and iced teas at home -- will go on sale on the company’s website Tuesday. The product also will be available at stores in six major markets, including New York and Los Angeles, in the next two weeks.

Keurig is betting that the Kold can rekindle growth by moving it beyond the increasingly crowded market for single-serving coffee brewers and pods. Coca-Cola Co. is backing the new product, which will compete with machines from SodaStream International Ltd., and has become the company’s largest investor, with a 17 percent stake. Executives said on Keurig’s earnings conference call last month that the company expects to sell "hundreds of thousands" of Kold brewers in the product’s first year.

“We’re expanding from one beverage occasion,” Keurig Chief Executive Officer Brian Kelley said in an interview. “This product allows us to expand to all other day parts.”

Keurig shares have plunged 59 percent this year as demand for the company’s K-Cup beverage pods slumped, in part because of increased private-label competition. The Waterbury, Vermont-based company cut its revenue and profit forecasts last month, an announcement that wiped out more than $3 billion from its market value in a day. Keurig’s stock rose 1 percent to $53.71 at the close of trading in New York on Tuesday after the Kold announcement.

Three Hurdles

Keurig started working on a cold-drink product six years ago and faced three major hurdles: temperature, carbonation and taste, Kelley said. Consumers want the product to come out at a ready-to-drink temperature, they don’t want to fuss with a carbonation tank, and they want brands they know, he said.

“We essentially had to take a bottling plant and shrink it down and make it look beautiful,” Kelley said. “Consumers want variety, they want to make the drink for themselves, but they want it to taste perfect.”

Keurig solved the carbonation problem by creating pods in which the top half is made of carbon dioxide beads, and agreements with Coca-Cola and Dr Pepper Snapple Group Inc. ensure customers will be able to find brands they know. Keurig also says the Kold can chill drinks to nearly freezing in 90 seconds.

Keurig plans to expand its cold drinks inside the U.S. and abroad with enhanced technology and with new beverages. In December, Keurig will expand to non-alcoholic mixers.

(A previous version of the story was corrected to fix the amount of time it takes to make drinks cold.)

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