Coca Cola: Investment in “Keurig Cold”

Coca Cola: Investment in “Keurig Cold”

The soft drink giant is planning its future

The US giant Coca Cola bought over a billion dollars from the US coffee company Green Mountain Coffee. The deal came about against the background of an innovation: The company Green Mountain Coffee is developing a mixing system for cold beverages that appears to be of interest to the beverage manufacturer.

Keurig: intelligent coffee capsule brewing system

The company Green Mountain Coffee has developed a coffee capsule brewing system called “Keurig”. The success of the manufacturer, which sold over 5.1 million machines in the Christmas quarter alone, is based on this brewing system. The new system for cold drinks also uses capsules. This is currently being developed and should be published towards the end of 2017. Green Mountain Coffee was founded in 1980 and is growing up till now. The soft drink company Coca Cola has also recognized this. They bought ten percent of the shares for 1.25 billion euros in the company. The cooperation with Coca Cola is initially limited to ten years. After the Coca Cola announcement, Green Mountain Coffee’s stock shot up 55 percent. The rival Sodastream was left behind with a share that had fallen by seven percent.

The next evolutionary step: Coca-Cola from the capsule

The billion dollar transaction looks obscure at first glance. The well-known soft drink producer Coca Cola is investing billions in a coffee company. At second glance, however, this step is long overdue. Every year, beverages with volumes of several billion liters are shipped halfway around the world. A capsule system would significantly reduce the weight to be transported, as only a little powder is required. The beverage company Coca Cola will in future have its soft drinks served directly in the kitchen: fresh from the capsule machine. Since the coffee roaster Green Mountain with more than 5 million machines sold – in the Christmas quarter alone – on the road to success is, Coca Cola expects a high level of acceptance from the use of the well-known and proven technology.

Keurig Cold – innovative capsule system for home users

Coca Cola wants to stir up the market for cold drinks with the new capsule system “Keurig Cold”. Green Mountain Coffee will help launch the product, while Coca Cola will contribute its flavors. The new capsule systems are to be called “Keurig Cold” and function on the basis of portion capsules.

Keurig Cold is an attempt by Coca Cola to counteract the steady decline in American soft drink consumption. Coca Cola has a global portfolio of brands including “Powerade”, “Fanta”, “Sprite” and “Minute Maid”. Green Mountain’s Keurig Cold system is designed to bring all of these brands together in capsule form. The deal is an advantage for Green Mountain: the tried and tested capsule system faces competition from all over the world. Nestlé has become a serious competitor with its Nespresso system. Green Mountain can consolidate and expand its market position with the new cold beverage system. The merger of Coca Cola and Green Mountain came about on the basis of personal contacts together. The top of Green Mountain, top manager Kelley, had previously been one of Coca Cola’s top managers for five years.

Constant expansion of the market position

The current plans envisage that the cold beverage capsule system should be available for private households and companies. Size and functions should be tailored for the place of use. Coca Cola and Green Mountain Coffee are putting a lot of pressure on their rivals. Above all, Sodastream is the world market leader for soft drink machines. While Green Mountain reserves the right to cooperate with other brands, it is uncertain whether Coca Cola would still like to secure the exclusive rights to the machines.

In the past, Coca Cola was often good for surprises: a few years ago, the group took over America’s largest beverage bottler in order to secure all sales channels. The company Coca Cola is owned by more than 500 beverage brands, which in more than 200 countries are sold. The company serves over 1.9 billion drinks daily. With the latest investment, Coca Cola wants to improve its image. In addition to opening additional sales channels, Coca Cola aims to reduce its biological footprint and promote a healthier lifestyle .

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Fight against the health trend

Coca Cola has created a new pillar for itself through the contract with Green Mountain Coffee. Coca Cola, like McDonalds, BurgerKing and many other manufacturers of sugary foods, is suffering from the increasing health trend. The sales of sugary soft drinks are falling. The management level of Coca Cola has known for a long time that they have to change or supplement the traditional offer. The first turnaround was initiated in 2007 when Coca Cola bought the vitamin water manufacturer Glaceau for a proud price of 4.1 billion dollars. Coca Cola expanded through smaller acquisitions in rapidly growing market segments: for example in the areas of exotic fruit juices and coconut milk.

Conclusion

By investing in Green Mountain Coffee, Coca Cola is well equipped for the future. The strategy will work against the background of growing health awareness and secure a sustainable position for the global corporation .