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The One Simple Reason That Keurig Kold Failed: No One Makes Soda at Home


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Image via cnet.com

Keurig Green Mountain Inc., the company known for their single-serve coffee machines, announced yesterday that it will be laying off 130 employees due to the discontinuing of the Keurig Kold after only being on the market for less than a year.

The Keurig Kold, which was/is a home soda-making machine, debuted last fall and instantly raised concerns regarding its affordability for the average consumer. The suggested retail price of the bulky countertop units was $369.99, with a 4-pack of soda pods costing $1.99 per pack - an average of 50¢ per pod. For comparison, a 12 pack of Sprite - a Coca-Cola Company (KO) brand - costs $4.68 on Amazon.com (AMZN) , which averages out to 39¢ per 12oz can.

According to an Associated Press report , the company had high hopes when its Kold machines debuted, suggesting the soda-machine could eventually be bigger than its coffee brewers. At the time of the Keurig Kold's debut, the company stated that Keurig coffee makers were in about 17% of U.S. households.

Keurig Green Mountain did not provide a specific reason for why it is discontinuing the Kold, but it is rather apparent why this is occurring - who "brews" soda at home? The fact that the machine and the pods obviously played a role in its demise, but it is not like Keurig's premier single-serve coffee machines and pods are cheap.

Keurig Brewers can cost anywhere from $99.99 to $249.95, with a majority of its 24-pack K-Cup pods costing $14.99 per pack, according to the company's website . That comes out to about 62¢ per cup of coffee - 8oz in a US customary cup, not a figurative "cup of coffee," though some Keurig machines offer different ounce sizes ranging from 6oz to 10oz - plus the cost of the single-serve coffee machine. By comparison, 13oz of whole bean Kenya AA Coffee at Trader Joe's (you can grind the coffee at the store) costs only $6.99 per container , plus the cost of a traditional autodrip coffee maker - i.e. a basic Mr. Coffee 12 cup machine - is much cheaper in terms of value.

To put the ground coffee numbers into perspective, the ratio between cups of water and coffee grinds is usually 1 tablespoon of coffee grinds per 1 cup (8oz) of coffee. A single tablespoon contains 0.5 ounces. Therefore, a 13oz container of coffee grinds contains 26 tablespoons of coffee grinds, or 26 cups of coffee.  Therefore, the cost of the Trader Joe's Kenya AA Coffee comes out to about 27¢ per cup of coffee.

The reason why many individuals pay an extra 35¢ per cup of coffee when using a Keurig is because of the ease and convenience the machine and coffee pods provide.  There is no having to clean the coffee pot, throwing out tablespoons of wet coffee grinds, or purchasing the wrong size coffee filters when using a Keurig. You simply pop in a pod into the slot, press the 8oz size button, and place your mug under where the machine dispenses the coffee. The Keurig single-serve coffee machines are truly convenient. Furthermore, you can even have a reusable filter to brew any type of coffee you want without having to purchase specific K-Cups, including the cheaper Kenya AA Coffee.

Despite the same convenience and a lower price difference between 12oz can and soda pod, why didn't the Keurig Kold become the phenomena it's coffee cousin was when it first launched? Back in October 2015, CNET gave the Kold a 2 out 5 star rating. Here is what they wrote in the review :

"Putting aside its price for a moment, the concept of Keurig Kold sounds compelling if you're a soda drinker. In practice, it's anything but. The machine is bulky, loud, and it makes drinks too slowly -- about 90 seconds to produce one 8-ounce glass of soda. Worse, especially for American soda drinkers who famously demand consistency, Kold-produced Coke doesn't taste the same as the canned or bottled versions. Keurig's carbonation technique results in a flatter mouth-feel. It also tastes syrupy."

After reading that excerpt, do you want to rush out and drop $370 on the Kold? I know I'm not. But besides the fact that the machine itself apparently makes syrupy soda, the very concept of making soda at home is flawed in the first place: people simply don't make soda at home.

Back in the early days of the 20 th century, people went to the local drugstore and had a soda jerk fix you up a soft drink. From the beginning, the "soft drinks" or "sodas" that we are accustomed to currently are drinks people had to leave their home to get. It's not like people had easy access to carbon dioxide.

Coffee, on the contrary, has been a beverage that people brewed at home with percolators and other devices long before sodas became popular. It is ingrained in the subconscious of society that soda is not made at home - the idea is simply foreign and illogical. Why would you make a glass of soda at home when it is already so easy to access the product?

Keurig was way too bold in thinking that it can change the social paradigm on how humans consume and acquire soda. It wasn't exclusively the price of the Kold or the pods that led to Keurig discontinuing the product, it was the initial concept.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Stocks
Referenced Symbols: AMZN , KO




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