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Keurig Kold Partners Up to Capture Cold Beverages Market

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Cold beverages market

According to market research firm Information Resources, the US cold beverages market is about five times the dollar size of the hot beverages market. Based on data for the 52 weeks ending December 28, 2014, the value of the US cold nonalcoholic beverage market was over $50 billion, while the hot beverage market was worth just $10 billion.

Keurig Green Mountain’s (GMCR) Keurig Kold beverage maker will offer proprietary brands as well as brands from partners in beverage categories such as craft sodas, iced teas, flavored waters, sports drinks, seltzers, and cocktail mixers. The company is planning for a total of 16 brands when it launches Keurig Kold in the retail market this fall.

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Keurig-owned brands

The Keurig Kold system will launch with six of the company’s proprietary brands:

  • Waterful – a zero-calorie, lightly flavored water
  • Flyte – a thirst-quenching sports drink
  • Seraphine – a zero-calorie seltzer available in Mediterranean flavors
  • Tierney – an iced tea available in still and sparkling varieties
  • Red Barn – craft soda made with real cane sugar available in multiple flavors
  • Flynn’s Soda Shop – fountain soda, including indulgent flavors like vanilla cream

Keurig plans to add many more brands and beverage categories over time.

Key partners for Keurig Kold

Aside from its own brands, Keurig Kold will offer major beverage company brands from Coca-Cola (KO) and Dr Pepper Snapple (DPS). In February 2014, Keurig Green Mountain signed a ten-year agreement with Coca-Cola to codevelop the Keurig Kold at-home beverage system. Under the agreement, Coca-Cola’s popular brand portfolio will be distributed for use with the Keurig Kold system. Coca-Cola purchased a 16% stake in Keurig as part of the deal.

In January 2015, Keurig struck an agreement with Dr Pepper Snapple to develop a selection of Dr Pepper Snapple brands for the Keurig Kold system.

Keurig, Coca-Cola, and Keurig Green Mountain together account for ~10.6% of the Consumer Staples Select Sector SPDR Fund (XLP) and 1% of the iShares Core S&P 500 ETF (IVV).

In October 2014, PepsiCo (PEP) made a deal with SodaStream International (SODA) to test some of its flavors on the latter’s soda maker.

Despite the promising prospects for Keurig Kold, Keurig Green Mountain saw its stock price fall following its presentation. We’ll explore why this happened in the concluding part of our series.

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