Responding to the growing popularity of home soda maker SodaStream, Coca-Cola announced that it will purchase a 10 percent stake, worth a cool $1.25 billion, in Green Mountain Coffee Roasters, the parent company of Keurig.
With its single-serve coffee makers and K-Cups, Keurig has become a household name in home-brewed hot beverages. An odd bedfellow for a soda company? Not when you consider that Keurig is developing a cold-beverage maker, the Keurig Cold, due in the fall.
Keurig says the new cold brewer will make everything from sodas to sports drinks, all with the same sort of pod system that made the company famous. Initially, it may sound very similar to the SodaStream beverage maker, which has been steadily gaining popularity in recent years. Unlike SodaStream's product, however, the Keurig Cold machine will not require CO2 cartridges.
The need to replace the cartridge has garnered SodaStream criticism for both wastage and hassle, and has, in part, prevented SodaStream from becoming as popular in the United States as it has in Europe. Keurig hasn't disclosed how it will carbonate drinks in the new device, but it will have a clear advantage if it can introduce an effective canister-free device.
In addition, SodaStream lacks a partnership with a major cola manufacturer to lend brand-name recognition to its cola-flavored syrup. In a world where Coke and Pepsi loyalty is feverish, lack of a brand-name cola product has prevented many consumers from embracing SodaStream, in spite of successful partnerships with brands like Kool-Aid, Country Time, and Cooking Light. Green Mountain CEO Brian Kelley previously served as a high-ranking executive at Coca-Cola, however, which works well for Keurig's new product.
The convenience of not using CO2 cylinders, coupled with the big brand names of Keurig and Coca-Cola teaming up, could revolutionize the beverage industry, which seems to be exactly what Coke is aiming for.