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Can Keurig Kold Replicate the Success of Keurig Coffee Brewers?

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Keurig Kold

Keurig Green Mountain (GMCR) is a leading producer of specialty coffee and coffeemakers in North America. The company is gearing up to launch the Keurig Kold beverage system in May 2015. Keurig Kold lets you make cold beverages such as carbonated soft drinks, enhanced waters, and juice drinks at home. Keurig held a press event about Keurig Kold on May 14 to discuss its soon-to-be-released cold-beverage maker.

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Keurig’s successful coffee brewers

According to market research firm Information Resources, Keurig system coffee brewers account for 30% of the US coffee retail business. Keurig feels that there’s room for growth since the Keurig system is currently used in ~16% of US households.

The wide variety of brands the company offers is a key reason for the Keurig hot brewing system’s success. Aside from its Green Mountain Coffee and 12 other Keurig-owned brands, the company’s partnerships with other beverage companies allows it to offer its consumers popular brands including Folgers, Dunkin’ Donuts (DNKN), and Starbucks (SBUX). The company offers over 60 brands in the Keurig system and ~400 beverage varieties.

Keurig’s sales have grown considerably in the past few years. In fiscal 2014 ending September 27, 2015, the company’s net sales increased by 8% to $4.7 billion. In fiscal 2014, Keurig sold 10.4 million Keurig system brewers.

Keurig Green Mountain makes up about 0.6% of the Consumer Staples Select Sector SPDR Fund (XLP).

The Starbucks Verismo and Mondelez International (MDLZ) Tassimo are two of the coffee brewers competing with the Keurig coffee brewer. Starbucks currently pays royalties to Keurig for selling its K-Cups for Keurig’s brewing machines. Although Starbucks’s coffee products have achieved huge success, its Verismo coffeemaker hasn’t been able to touch the popularity of Keurig’s.

What will work for Keurig Kold 

Keurig Kold can leverage Keurig’s established brand name. Also, Keurig Kold has about 50 issued patents worldwide and 100 patent-pending applications related to the Kold platform.

The system delivers a cold beverage at ~39 degrees Fahrenheit in about 60 seconds. Keurig Kold doesn’t require carbon dioxide cylinders for carbonated beverages and uses innovative carbonator beads.

Keurig Kold has an interesting portfolio of proprietary and third-party beverage brands. The Keurig Kold beverage system will offer both sparkling and still beverages, including those of Coca-Cola (KO) and Dr Pepper Snapple (DPS). The next article in this series explores why Keurig Kold has a huge opportunity in the cold beverages market.

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