Keurig Kold is coming, the company’s executives told its audience at the Consumer Analyst Group of New York conference earlier today, and it aims to capitalise on a $US50 billion market.
This is a huge opportunity for the company, which is famous for its hot coffee machines.
Both Keurig Green Mountain and Sodastream International have underperformed the market over the last 12 months — but Keurig could be poised to turn that around next, with plans to enter the cold beverage market.
Keurig has a partnership with Coca-Cola, which is meant to counter the Sodastream-Pepsi partnership that gave Sodastream’s shares a short-term lift last year. Later this year, the company has plans to launch Keurig Kold, which will allow consumers to home-brew fresh Coke, but also make iced teas and sparkling water.
This chart shows it was only a matter of time, both for Keurig, and for soda companies, to partner up with machines that allow consumers to create fresh beverages at home.
The market for cold drinks is five times that of the hot coffee-and-tea market, meaning that Keurig has an enormous opportunity to expand its home brewing machines’ value to the consumer, as well as for investors.
It also shows why Keurig, despite its partnership with other entities, like the Dr. Pepper Snapple Group, is rolling out its in-house iced tea brand, called Tierney’s. Big soda companies like PepsiCo (up nearly 29% over the last 12 months) and Coca-Cola (up more than 12%) have seen shares perform well in the face of more public health campaigns warning consumers from soda.
For ‘Big Soda,’ maintaining that trajectory could require further integrating themselves into consumers’ daily lives. As consumers make the switch to home brewing more beverages, that could mean Keurig or Sodastream turn into attractive M&A targets.