The deal has cost The Coca-Cola Company $1.25bn and I find the timing interesting.
Green Mountain’s Keurig single-cup coffee machines are well established in the North American market, and it has already expanded beyond coffee with a soup deal with Campbell’s.
The move towards cold drinks is surely fuelled by the high profile resurgence of SodaStream, which has not only regained its space on kitchen worktops around the world, but also successfully introduced SodaStream Caps – its first ever flavour concentrates in a single-use capsule.
Branded tie-ins are part of the SodaStream story too, with recently announced partnerships with Welch’s, Ocean Spray as well as Cott and Kraft Canada.
So this $1.25bn investment moves Coke towards this territory, giving it the opportunity to compete with (and maybe even outflank) alternatives and providing it with a potential ‘home delivery’ option. Of course, Coke is no stranger to ‘mix your own’, as demonstrated through its Freestyle vending units. But to make that technology scaleable to reach the residential and small office market would no doubt cost more than its $1.25bn investment in GMCR.
The competition for kitchen worktop space is becoming intense, with major marketing investment from most of the coffee players, including Nestlé’s Nespresso, Green Mountain Coffee Roasters’ Keurig, Russell Hobbs and Delonghi. Starbucks has even launched Verismo, its own in-home pod machine (while still working with Green Mountain on K-Cup pods for Keurig in the US). Add SodaStream to the mix and per household, surely only one can win each space.
I said the timing was interesting. Only last week, we ran the story about US broadcaster Fox refusing to show SodaStream’s commercial during the NFL Super Bowl XLVIII – because brand ambassador Scarlet Johansson ended the advert by saying, ‘Sorry, Coke and Pepsi’. Little did we know at that time that Coke was on the edge of announcing a move into the SodaStream space.
I had thought that water enhancers would take the headlines this year, but maybe it’s podded drinks to mix at home that will see the bigger investment and make the most noise.
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