For months, Keurig Green Mountain (GMCR.DL) and its investors have been pinning their hopes for a comeback on the Keurig Cold, the countertop drink maker capable of making sodas and other cold drinks. However, early reviews for the product poised to heat up Keurig have been cooler than hoped for.
Among the complaints being lobbed by the first adopters are that the machine takes up too much countertop space, it's very loud, and it takes as long as five hours to cool down once it's plugged in. The long cooling process means that users must keep it plugged in on the counter if they wish to use it.
Source: Keurig Green Mountain.
Some users also said the flavor was not as expected, or that the pods didn't always work. Overall, the device receives a respectable four out of five stars on Keurig's website, with many satisfied customers. Some have remarked that the Kold saves refrigerator space, can allow a variety of different flavors to be made in just a few minutes, and liked its ability to make any other cold drink, including cocktail mixers, iced teas, and sports drinks.
While there are certainly some satisfied customers, the number of tepid responses indicates that this may not be the blockbuster product that Keurig's investors, including Coca-Cola (KO 0.15%), which acquired a 17% stake in the company and partnered on the Kold, were expecting.
The hard numbers
Many commenters noted the high price of the machine and the pods necessary to use it. The product retails for $370, while the soda pods, which make 8 oz. of the fizzy stuff, sell for $1.25 apiece. In other words, drinking a liter of soda a day with the Keurig Kold would cost more than $2,000 a year, including the price of the machine, as opposed to spending around $400 annually purchasing it in the store.
At that price, the Keurig Kold is likely to attract interest only from those buying it for a group, such as an office, or individuals and families with considerable disposable income. As the early reviewers demonstrate, there's clearly a market for the product, but it's likely to be much smaller than for the Keurig coffeemakers. Its coffeemakers run as low as $80, while pods tend to sell in the $0.50-$0.75 range, which is more expensive than preparing drip coffee yourself, but cheaper than getting it from the barista around the corner.
The difference between the Keurig coffeemakers and the Keurig Kold is that the K-cup machines solved a problem that made it worth the extra cost to consumers. The single-cup coffee brewers are not only more convenient to use, but they allow for flavor customization for individual cups, and do not produce the waste that is usually the result of a pot full of coffee. Coffee producers have estimated that as much as 20% of brewed coffee ends up getting poured down the sink, and the popularity of the K-cups has grown so much that it's actually brought about a decline in ground coffee sales at a time when coffee has never been more popular.
The SodaStream conundrum
Another key difference is that the K-cup was a novel product when it was introduced. Countertop soda making, on the other hand, was brought to the mass market just a few years ago by SodaStream International (SODA). Though SodaStream's stock initially spiked after it rolled out in the U.S, Americans fell out of love with at-home fizzing as quickly as they fell for it, and the company is still licking its wounds.
There are some real advantages to the Keurig Kold. Its partnership with Coke means it can offer the real thing, as well as the rest of Coke's portfolio, instead of the knockoff versions. Plus, the machine doesn't require exchanging CO2 canisters, one of the biggest hassles of using SodaStream.
The Keurig Kold could be a breakthrough product. It's the most convenient device on the market for making cold beverages at home; but the company needs to find a way to make pods more affordable, and to eliminate the other hassles that are turning off some early adopters.
