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Keurig and Anheuser-Busch Cocktail Maker Ready to Expand

It seems there is a market for a "Keurig of cocktails" after all. Keurig Dr Pepper (NYSE: KDP) and Anheuser-Busch InBev (NYSE: BUD) are making their countertop cocktail-making appliance, called Drinkworks Home Bar by Keurig, available to consumers in additional markets.

The cocktail-making machine was originally limited to the St. Louis area, but since it sold out within hours of its release, it seems there was enough demand for the device to start being offered statewide in both Missouri and Florida. It will be coming to California in 2020.

A Drinkworks Home Bar is shown beside three cocktails.

Image source: Drinkworks.

Alcohol service for the lazy

Like the Keurig coffeemaker technology, the Home Bar uses proprietary pods to make everything from mai tais and margaritas to cosmopolitans, daiquiris, and even a gin and tonic. With the expansion, Keurig and A-B have added four more cocktails to the drink menu: rose spritzer, something called a lemon bubbly, vodka lemonade, and whiskey cola.

Yet it's those kinds of drink combinations that still make you scratch your head wondering how it is catching on. While mixing a perfect cocktail can seem like alchemy sometimes, others remain relatively straightforward. A gin and tonic, for example, simply just requires mixing gin and tonic water. And one would guess a whiskey cola is nothing more complicated than what its name implies.

Similarly, the Home Bar can also pour you a beer or hard cider. Bass, Beck's, and Anheuser-Busch's Stella Artois Cidre are included in the mixology, too. How it's more convenient having the appliance dispense a glass instead of walking over to your refrigerator to open a bottle is hard to discern.

Paying for the privilege

And you're going to pay for the experience of having the Home Bar make a cocktail for you. The Drinkworks appliance itself costs $399, which is $100 more than when it was released in St. Louis, and the cocktail pods are sold in sleeves of four that will retail for $15.99.

While the roughly $4 per drink price doesn't seem bad when compared to typical cocktail bar prices, the serving size is pretty chintzy. Drinkworks makes three drink sizes: 3.9 oz., 6.5 oz., and 8.1 oz.

For perspective, a Drinkworks mojito gives you one of the larger servings at 200 milliliters,  while a white Russian, at 118 ml, is one of the smallest.  A glass of Beck's or Bass are one of those in the middle. That's not exactly cost effective, where you can get a 12-pack of 12-oz. cans of Beck's for $12 at your local package store.

Others have tried launching cocktail appliances in the past, too, including Monsieur and Somabar, while Heineken had a beer dispenser, and Sodastream added wine to its sparkling-water machines. None of these have enjoyed particular popularity, and Somabar since gave up on the consumer market and instead makes cocktail machines for the commercial market.

Hey, it worked for coffee

As I noted when the Drinkworks appliance was first unveiled, there are people who will undoubtedly buy the Home Bar, as it might make the perfect device for a party instead of having the host stuck behind the bar all night. After all, consumers could have chosen to continue using their 12-cup Mr. Coffee machine they bought for $10, but instead opted to make a $300 Keurig single-serve coffeemaker the must-have kitchen gadget for millions. 

To a man with a hammer, everything looks like a nail, and Keurig had this technology gathering dust on its shelves following its failed Keurig Kold experiment with Coca-Cola. Instead of letting it go to waste, it seems to have opted to try to make a new go of it with alcoholic beverages.

Even so, it doesn't seem likely the Home Bar will sell enough appliances to impact the fortunes of either Keurig Dr Pepper or Anheuser-Busch InBev. While the name recognition of the former and the distribution network of the latter may help give this device legs where others failed, this seems to be an extremely niche product that will appeal to only a very small subset of the population.

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.

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

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