The $1.25bn (£767m) deal sees Coke acquire a 10 per cent stake in the coffee business to develop and co-market the new Keurig Cold at-home beverage system. Brands such as Coca-Cola, Sprite and Fanta will be made available in single serving plastic pods, also known as K-Cups, for use with the machine.
The product is currently under development and is due to be released in late 2014 or early 2015. It will dispense “freshly-made cold drinks including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas”, the companies said in a joint statement.
Muhtar Kent, chief executive of The Coca-Cola Company, says the move aims to accelerate efforts to double profits from its bottling division by 2020. The product brings Coke into direct competition with DIY soda maker SodaStream, which saw revenue in 2013 grow by 30 per cent year-on-year.
Kent adds: “This agreement demonstrates our creative approach to partnerships and ability to identify and stay at the forefront of consumer trends driving the industry.
“By pairing The Coca-Cola Company’s brand leadership and global footprint with GMCR’s innovative technology, together we will be able to capitalise on the many exciting growth opportunities in the single-serve, pod-based segment of the cold beverage industry. Importantly, this partnership provides our consumers with a convenient way to enjoy the brands they love through in-home preparation.”
The move is also a fillip to Green Mountain, which has come under pressure from growing competition in the single serving coffee arena. Both Starbucks and Mondelez International have increased investment in their own products over the last 2 years in an attempt to unsettle Nespresso’s dominance.