It's not looking very good for Keurig Green Mountain (NASDAQ:GMCR) in the world of carbonated beverages. Keurig Kold has only been on the market for a few days, but the early adopters appear to be overpaying for a machine that the early reviewers are more than a little lukewarm about.
"Buying into the Keurig Kold system is staggeringly expensive, and its drink-making is slow," CNET writes. "The Coke products it makes also don't taste the same or as good as the store-bought variety."
Even on Keurig's own website -- where many of the initial reviewers were given free or nearly free test machines -- there are mixed opinions when it comes to the $370 machine that makes sparkling beverages.
In terms of nightmarish rollout scenarios, this may not seem to be as bad as last year's Keurig 2.0 fiasco. Keurig Green Mountain got slammed for the digital rights management feature where non-Keurig pods and even some of Keurig's older K-Cups wouldn't brew on the new machines without a simple workaround.
However, if you were betting on Keurig Kold's success could you -- in good faith -- place a wager on its success? As dominant as Keurig Green Mountain has been with its original coffee brewer, is the market ready to invest $370 for a machine that makes eight-ounce servings for Coca-Cola (NYSE:KO) products for $1.25 a serving -- served cold if it's turned on a couple of hours ahead of time?
The market's been buzzing about Keurig Kold since Coca-Cola initiated a minority stake in Keurig Green Mountain and committed to supporting the platform. However, with the cons outweighing the pros, it's hard to get excited about the platform now that it's out in the wild.
Savvy investors know that some of the best opportunities to cash in on one company's failure is to gravitate to the company that will take advantage of the flop. That would seem to point to SodaStream (NASDAQ:SODA) as the pioneer in this field, but let's hold back on the optimism.
SodaStream's stock may have come under fire since Coca-Cola and Keurig Green Mountain announced that they would be teaming up for a SodaStream killer, but let's not assume that an icy grave for Keurig Kold will breathe new life into SodaStream's moribund shares. After all, SodaStream machines start at $80, and comparable soda servings cost substantially less. If Keurig Kold is too cost-prohibitive in terms of initial investment and the concoctions are more expensive than store-bought pop, it won't drive the thirsty to SodaStream's most cost-effective platform.
SodaStream's fundamentals started to falter long before Keurig Kold hit the production line. SodaStream's stateside presence hasn't been the same since it overestimated demand ahead of the 2013 holiday shopping season, and it's been reeling ever since. There's also now weakness in Europe -- SodaStream's largest market -- and other territories that may never see Keurig Kold. SodaStream's in a funk and Keurig's failure will do more to validate SodaStream's lull than turn things around.
The only think that will help SodaStream here is if Keurig Kold is actually a hit. If Keurig Kold is able to convince consumers that convenience is more important than savings or that there's an art to homemade pop, widening the market will open up the potential for incremental sales as folks set out to buy a Keurig Kold machine before being won over by the much cheaper and customizable SodaStream.
It may seem strange, but SodaStream's best shot at success right now is riding on Keurig Kold's coattails -- even if the coat itself doesn't seem to know where it's going.
Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool owns shares of SodaStream and has the following options on Coca-Cola: long January 2016 $37 calls, short January 2016 $43 calls, and short January 2016 $37 puts. The Motley Fool recommends Coca-Cola and Keurig Green Mountain. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.