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Heineken Taps the Home Market

By Rich Duprey - Oct 1, 2013 at 6:15PM

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Are you ready for a tabletop brew dispenser?

Source: Heineken.

Bellying up to the bar soon might not be any more inconvenient than standing next to your kitchen counter, as Heineken ( HEINY 1.03% ) says it will be unveiling a new beer-dispensing appliance for the home. 

Since it worked for Green Mountain Coffee Roasters ( GMCR.DL ) in coffee and SodaStream ( SODA ) in DIY soda, the brewer thinks the consumer is ready for a high-end, designer beer unit. Think of it as a kegerator for the elite. 

Heineken plans to unveil its beer dispenser later this month in the design capitals of Paris and Milan through a partnership with designer Marc Newson. While there aren't a lot of details about the unit's design or its pricing, the company did note it was the success of home-brew coffee machines that showed the potential for "developing an iconic high end home appliance."

Yet it's not like Heineken hasn't tapped this keg before. Back in 2006, it expanded its relationship with Krups to offer its BeerTender draught beer system that was matched with its 5-liter recyclable DraughtKeg. And other brewers like Interbrew, which is now owned by Anheuser-Busch InBev, introduced the Perfect Draft appliance in 2004 with Philips for use with its Stella Artois and Jupiler 6-liter metal kegs.

Source: Phillips.

While these systems haven't really taken off, there is a sense that perhaps the market is ready for one now. Green Mountain really blazed the path here in popularizing the value in brewing up single servings of coffee, and though sales of its Keurig machines fell 4% last quarter, it still sold some 1.5 million units. That's a lot of coffee, and that undoubtedly served as the impetus for SodaStream to successfully enter the do-it-yourself soda market in the U.S. Last quarter its starter kit sales jumped 25%, with expansion in the Americas enjoying 55% growth.

So, why not a dedicated beer appliance? Well, for one, it's an alcoholic beverage dispenser, which is a bit different than brewing coffee or making fizzy drinks a la SodaStream. And while soda and beer are suffering from declining volumes, it seems to be a wide-ranging malaise, with dairy markets also trying to get people to drink more. Bottled water may be the one remaining growth opportunity in beverages.

I'm also not sure there's a large market for mini-kegs. Keeping a six-pack of beer in the fridge is one thing (and not all that hard to retrieve), so having a keg on the counter screams "closet drinking problem." While the beer appliance will keep beer colder for weeks -- you wouldn't want to drink a pot of coffee that old -- it also speaks to why the coffee machines are successful. People have to go back to them day after day to brew a new cup. And the homemade soda has the benefit of being a healthier alternative, which I don't think we can say about the beer.

But the countertop-dispensing system is born out of Heineken's larger design initiatives like the one that saw it build a nightclub based on input from 19 designers, as well as crowd-sourced industrial buildings, advertising, and packaging. Seeing the beer appliance in that light, it becomes more an effort to further position itself as the premium alternative to mass-produced beer, and indeed, the company with the distinctive green bottles says it wants to be the "Apple in the beer market."

Heineken is my brew of choice, but a beer-dispensing appliance within easy reach just might be tapping the home market at the right time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Heineken N.V. Stock Quote
Heineken N.V.
$52.23 (1.03%) $0.54
Keurig Green Mountain, Inc. Stock Quote
Keurig Green Mountain, Inc.
SodaStream International Ltd. Stock Quote
SodaStream International Ltd.

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