Yahoo Finance Keurig 'Kold' gets cold shoulder from investors
Trouble is brewing for Keurig as the company unveils details of its new cold beverage system.
Keuirg (GMCR), best known for its single-serve coffee and tea makers, announced that its new Kold brewing machine would be released on a slower schedule than expected. While Kold will be available online this fall, it won't be distributed to the full retail channel until the end of 2016. Keurig also revealed that the machine would cost around $300, a price point higher than analysts anticipated.
Kold, which will dispense carbonated drinks, juices and teas, is expected to compete with drink makers such as SodaStream (SODA).
Shares of Keurig are falling sharply on the news today after the announcement. The stock, which is down over 20% this year, has struggled in part due to disappointing fiscal second quarter results.
“People are wondering where the next avenue of growth is going to come from,” says Yahoo Finance Senior Columnist Michael Santoli. “This has been a stock the skeptics have loved to hate for a very long time…Now it seems that this is another product that I don't think the world is clamoring for.”
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Yahoo Columnist Rick Newman adds that demand for the Kold machine could be stronger than anticipated.
“People didn't think they needed a single serving coffee either and that caught on. This is the hunt for the next innovation and I think this is the trouble that companies like Keurig get into," he says. "They come up with one great idea and then they have to improve on that…it's just taking too long."
Both Coca-Cola (KO) and Dr. Pepper (DPS) have signed partnership deals with Keurig to provide drink formulas for the Kold machine. Yahoo Finance’s Aaron Task notes that despite Coca-Cola’s support of Keurig, which includes financial backing, Keurig faces many difficulties.
“The real challenge here is how much counter space do people have in their kitchens for another device? And…they're not so environmentally sound,” he says. "For Millennials, is this something that they really want?"
Newman notes that the price may also be an additional hurdle.
“If you could make Coke at home for about the same price as buying a can, it would be a terrific innovation," he says. "But if it's going to cost four times as much, it's not going to be worth it.”
Related: Keurig: We messed up
