WATERBURY, VT. — Keurig Green Mountain pulled the curtain back on its Keurig Kold beverage brewing platform in a May 14 presentation for financial analysts and first impressions were less than positive. On May 15, the company’s share price fell nearly 9%.
The issues that came out of the meeting had less to do with the technology itself and more to do with the company’s launch strategy and the price range of the new system.
“… we will launch Kold in a disciplined and phased manner and we expect to sell hundreds of thousands of appliances in the first 12 months of the launch, versus millions,” said Brian Kelley, president and chief executive officer of Keurig Green Mountain. “We will then scale from there. This will maximize our learning and the consumer experience, which will provide a strong foundation for the future of the Kold platform.”
The initial introduction of the Kold platform will take place on-line this fall and the national introduction of the system at retailers will not take place until the 2016 holiday season.
“The Keurig Kold drink maker will be a premium price technology,” said Tara Murphy, general manager of the Kold business. “We expect consumers to experience retail prices in the range of $299 to $369, depending upon the retailer's pricing and promotional strategy. We have tested the proposition extensively with consumers and the drink maker consistently received high top two-box purchase intense scores, with scores at or above our hot system average. Importantly, we also will be offering on keurig.com a Keurig Choice plan, allowing consumers to purchase our Kold system on an easy monthly payment basis.
“We will introduce our beverage pods in four-count boxes, which we expect will retail in the 99c to $1.29 per-pod range, depending upon the brand’s premium position and level of promotion. We are starting with four-count boxes and expect to confirm consumption rates and purchasing patterns over time. From there, we plan to add additional count sizes as demand dictates.”
Financial analysts who participated in the presentation had many questions about the appliance’s price point and launch schedule.
With regard to the Kold’s initial price point, Mr. Kelley said it is justified by the uniqueness of the concept.
“This machine, when you experience it, when you feel it, when you touch, when you see the variety of brands we have, consumers see this very, very differently than a coffee machine,” Mr. Kelley said. “This is a new piece of technology. Unlike Keurig hot, where we had the ability as consumers to make coffee at home, we don’t have the ability to do this.”
But Mr. Kelley added that as the Kold platform gains traction in the marketplace the price will come down.
“It’s a startup and you’re at day one of a brand new machine,” he said. “And that cost as we scale, it does come down.”