Keurig is betting drinkers will run both hot and cold
Single-serve brewing machines completely revolutionized the way people make coffee at home.
But can they do the same for cold drinks?
Coca-Cola Ltd. and Keurig are betting heavily on that potential with the introduction of Keurig Kold, an at-home appliance the size of a compact microwave, which makes an instant eight-ounce glass of Coca-Cola or Canada Dry, as well as a range of other still and sparkling beverages.
Even though sales of Keurig’s hot beverage makers and pods has been slowing, company executives say Keurig Kold has even greater growth potential due to the overall size of the respective markets.
“There are progressive things that will make it go faster in terms of the adoption rate,” Stéphane Glorieux, president of Keurig Canada, said in an interview as the system made its online sales launch in Canada on Tuesday.
Annual dollar sales of cold beverages are five times larger than hot beverages in North America, Glorieux said, a US$50 billion market compared with about US$10 billion for hot drinks. “It took us five or six years on the hot platform, but it’s going to go faster and farther.”
The system, which debuts in Canada with 13 varieties of drinks including Coca-Cola’s top brands, sports drinks and flavoured waters, began selling in the U.S. in September.
Priced at $399, Keurig Kold costs about four times as much as rival SodaStream’s system, which makes carbonated drinks in a refillable bottle that users pre-refrigerate at home.
“When you are comparing it with competitors, it is not the same experience,” Glorieux said, noting Keurig’s system functions as a mini-fridge to keep its refillable chamber of water always chilled. “It delivers a perfect 8-ounce drink at four degrees, as it is designed.”
But critics wonder how much demand there is for the appliance, given its cost (in addition to the machine, pods cost more than $1 each, priced at $5.49 to $5.99 for a four-count box) and the 90-second time commitment it takes to make a chilled drink.
“I don’t understand what is convenient about this, or how this is better than getting a can of Coke from your fridge,” said Kevin Grier, an independent food industry analyst at Guelph, Ont.-based Kevin Grier Market Analysis and Consulting Inc.
“Consumers will buy things that are expensive if they make life simpler or for a unique product, but I do not see how this fits into that. You can see it with coffee (pods) — you avoid making a whole pot of coffee — but this is not comparable,” he added, given that small sizes of carbonated beverages have been sold in bottles and cans for decades.
The innovation comes as CocaCola and rival Pepsi have broadened considerably beyond their core carbonated beverage business over the last decade and into other categories such as sports drinks.
Sales of carbonated soft drinks slid for the tenth straight year in 2014, according to the industry publication Beverage Digest, as health conscious consumers drank more water and eschewed both sugary and artificially sweetened drinks. The industry is now selling 1.4 billion cases fewer per year than in 2004, a peak year for soda pop. Total volume of carbonated drinks fell 0.9 per cent in 2014 from the prior year.
Coca-Cola, which owns 16 per cent of Keurig Green Mountain Inc., has been trying to get into the single-serve at-home beverage market for “many, many years,” Glorieux said.
“They were trying to find the right technology so that the experience could be exactly the same” as drinking one of its chilled beverages from a can or bottle.
Glorieux says the Keurig Kold is targeting the same technologysavvy, early-adopter crowd that initially embraced its hot singleserve drink machine, and predicts its cost will likely come down in the future. “Right now it is a premium price, because we are starting with this first generation, but as we go along, we will certainly find some ways to have a different proposal.”