Keurig soft drink machine reckons with fizzled soda market
(Reuters) – Keurig Green Mountain Inc’s thrust into the home-brewed cold beverage market, once seen as a potential game changer for the single-serve coffee machine maker, faces increased skepticism from investors worried in part about waning consumer enthusiasm for soft drinks.
Keurig Kold, which will make everything from craft sodas to iced teas, is expected to launch in the fall, entering a space dominated by home-brewed cold drinks market leader SodaStream International Ltd.
Keurig has heralded the new machine as giving it access to a $50 billion market for cold beverages in the U.S., five times the size of the hot drink market.
But Keurig’s partnerships with Coca-Cola Co and Dr. Pepper Snapple Group Inc on branded pods highlight a risk for the machine: that it will be associated with carbonated soft drinks, the sugary beverages whose volumes have been declining in the U.S. for about a decade.
“I’m the type of investor who would like to see it work first,” said Ian Shaffer, portfolio manager and CEO of Galliant Capital, an investment firm based in Montreal that owned shares in Keurig but sold them after Coke increased its stake in the company to 16 percent last year. “Before I start buying into something that looks exciting, I need to see how the numbers pan out.”
SodaStream, the once fast-growing Israeli company whose investors have been watching the Keurig machine’s introduction with trepidation, has seen its own shares fall 35 percent over the past year in a sign of the wider challenges in the space.
While SodaStream, whose device carbonates drinks using a C02 canister, just completed a limited testtest is test of some of PepsiCo Inc’s brands, the company says it is mainly focusing on marketing its devices as a way to make seltzer instead of soda.