This is the weekend for steep markdowns, and Keurig Green Mountain(NASDAQ:GMCR) is getting in on the discounting action. Keurig Kold -- the carbonated-beverage maker that hit the market at $370 less than two months ago -- is seeing its stiff price tag get a big haircut over the holiday weekend.
Keurig is offering the machine that makes chilled brand-name sodas for just $199.99 on its website through the end of the weekend. It's not just Keurig.com that's marking down the versatile beverage maker. Bed Bath & Beyond (NASDAQ:BBBY) -- the housewares superstore chain that helped put Keurig's original coffee brewer on the map -- is also offering Kold at that price as a Black Friday deal. Bed Bath & Beyond billed the markdown as a "manufacturer's savings event."
Now, a $170, or 46% discount may seem pretty sweet on the surface, but this is also the kind of knee-jerk desperation that should give a potential buyer pause. Keurig wouldn't be selling a new product for a little more than half of its original price if it was selling well, and that's where early adopters can get burned. An investment in a new platform is also a bet on support.
What happens if Keurig cans Kold? Where will owners get their supplies? This isn't a machine where readily available soda syrup or third-party carbonation solutions can fit the bill. Kold pods are unique in that they combine the flavor and the carbonation. If Keurig decides to nix the Kold, the days will probably be numbered on the proprietary pods.
One also has to wonder what will happen next week. Will Keurig Kold merely go back to $369.99 as if nothing happened? If smoking out new buyers has been hard so far, imagine how it will be when folks realize that they missed the narrow window to buy it under $200. They're not going to jump on the platform at all, making it surprising if Keurig Kold's retail price remains at its original sticker in the future.
Pricing of the starter system was just one of the many shortcomings of Keurig Kold. There's also the matter of convenience. Keurig Kold may produce cold soda in just 90 seconds, but that also entails turning on the machine a couple of hours ahead of time to chill the water reservoir at a cool 39 degrees Fahrenheit.
There's also the issue of the pricing of the actual Kold pods. Keurig was able to get some of the soda industry's biggest brands on board, but brewing your own Diet Coke, or Canada Dry Ginger Ale, will cost you $1.25 for a mere eight-ounce serving. That's a high price to pay when larger soda cans are considerably cheaper.
So, yes, the temporary drop to below $200 is a good start; but Keurig Green Mountain has a long way to go if it wants to be successful in the sluggish carbonated-beverage market.
Rick Munarriz owns shares of Keurig Green Mountain. The Motley Fool recommends Bed Bath & Beyond 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.
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