Keurig Green Mountain has offered the most detailed look to date at a new cold beverage system, scheduled to be introduced later this year.
In a presentation for investors and industry analysts from the company’s Waterbury headquarters on Thursday, CEO Brian Kelley said Keurig is poised to enter a market five times larger than the hot beverage market.
“The upcoming launch of our cold machine allows us to expand our reach into more beverage categories, day parts and beverage occasions, making our Keurig system attractive to significantly more households,” Kelley said.
Keurig is banking on consumers embracing a technology that will initially cost several hundred dollars, which the company says offers convenience and freshness while eliminating the need to store and chill cans and bottles of cold beverages.
Keurig Kold will be more expensive than single serve coffee systems, the most popular of which sell for around $100. The Kold pods will retail at $.99 to $1.29.
In response to a question about the system’s price Kelley said, “We’re very confident in the pricing. Consumers see this very, very differently than a coffee machine. We’ve seen very, very strong interest at these price points.”
The company will offer consumers the ability to purchase the system on a monthly payment plan.
Keurig Kold will be more expensive than single serve coffee systems, the most popular of which sell for around $100. The Kold pods will retail at $.99 to $1.29.
Like its hot counterpart, KeurigKold will use pods. The system is designed to dispense sodas, iced teas, flavored waters, sports drinks, seltzers and cocktail mixers.
Beads inside the pods will add CO2 to carbonated drinks. Kelley said the company has 150 current and pending patents on the system.
According to company officials Keurig Kold will deliver an 8 ounce beverage in 60 seconds.
Keurig says the cold beverage pods will be recyclable in select communities where number 7 plastic is accepted. Hot beverage K-Cups have drawn criticism because they can’t be recycled by home users.
Last year Keurig announced a partnership with Atlanta-based Coca Cola, which made Coke the largest stockholder in the Vermont company.
"I think Keurig Kold will be a sound product, but you can only garner as many users as can afford the price of the system." - Seth Golden, Capital Ladder Advisory Group research analyst
Keurig has also partnered with the Dr. Pepper Snapple Group to produce beverages for the new system.
The company will also produce its own brands of cold pods.
Recently, lower-than-anticipated sales of the next generation of Keurig hot beverage systems have hurt the company’s bottom line. Consumers have balked because of the cost of the Keurig 2.0 system and the fact the brewers only work with K-Cups licensed by the company.
Seth Golden, a research analyst with Capital Ladder Advisory Group, says the cold beverage system market may not be as large as Keurig and others believe. He says consumers may not see the new appliance as solving a problem because cold beverages are already conveniently packaged.
“With coffee it's easy; it’s a matter of convenience. Making a hot cup of coffee, you can’t just reach into your refrigerator and grab one. But with a carbonated drink or a cold beverage, you don’t have to make it, it’s already made for you,” says Golden.
Golden also says the price of the system will make it unaffordable for many consumers.
“For every hundred dollars you increase the price, your total addressable market diminishes by tenfold. I think Keurig Kold will be a sound product, but you can only garner as many users as can afford the price of the system,” he says.
Keurig Kold will debut online at the company’s website this fall before it is rolled out to retail outlets.
