World’s largest soft-drink maker purchases Green Mountain, which is soon to launch a SodaStream-like home soda machine.
Israel’s SodaStream, which has suffered a rough month amid profit warnings and the controversy over its West Bank factory, got some more bad news on Wednesday when Coca-Cola said it would be buying a stake in a company readying to launch a cold drink machine for home use.
The world’s biggest maker of soft drinks – whose products have been targeted by SodaStream commercials – is taking a 10% stake in Green Mountain Coffee Roasters, best known for its popular Keurig one-cup coffee brewer. Coke will pay $1.25 billion for the stake and help launch Green Mountain’s new cold drink machine planned for release as soon as October.
Shares of Green Mountain soared 42% to $114.85 in extended trading, while those of SodaStream, retreated 3.9% to $34.39 after hours trading on the Nasdaq.
Under their 10-year agreement, the companies will collaborate on the development and introduction of Coca-Cola products on Green Mountain’s upcoming machine that will serve both carbonated and non-carbonated beverages, including soft drinks, tea and juice.
Green Mountain’s Keurig machine popularized the use of pods – small packets containing everything from coffee, tea or hot chocolate powder – for easy, in-home, one-cup brewing of hot drinks. The company has sold more than 30 million Keurig machines around the world for use in homes, offices and other locations.
The deal will make Green Mountain the global exclusive partner for the production and sale of Coke’s branded single-serve, pod-based cold beverages, the companies said.
Still, Green Mountain also retains the option to sign deals with other cold drink makers, CEO Brian Kelley told Reuters.That includes Coke rival PepsiCo, which last year shot down rumors it planned to buy SodaStream. A spokesman for Pepsi declined comment for this article.
The Israeli company has taken swipes out the two big soft drink makers in advertising, although the networks broadcasting the Superbowl have censored them. In this year’s spot, stress Scarlett Johansson extolled the virtues of SodaStream’s fizzy-drink device and then turns to the camera to say, “Sorry, Coke and Pepsi.”The reference to Coke and Pepsi was deleted for the Superbowl broadcast.
SodaStream stock has tumbled 28% in the past three weeks after the company said fourth-quarter earnings would be well below analysts’ consensus due to a “challenging holiday season” in the U.S. It said it expected some of the problems that developed in 2013 to continue this year.
In the meantime, SodaStream’s recruiting of A-list celebrity actress brought it to the attention of the global boycott, divestments and sanctions movement, which campaigned for consumers to avoid the company’s products because if its factory in the West Bank industrial zone Mishor Adumim.
Green Mountain’s cold drink machine is scheduled to debut in fiscal 2015, which begins in October this year.
“This gives Green Mountain a beverage partner with some hugely powerful global brands. For Coke, it gives them access to some really cool, new cutting-edge pod cold-beverage technology,” said John Sicher, editor and publisher of Beverage Digest.
Sicher said soda sales in the United States have been in decline since 2005, while growth in pod-based coffee brewing has boomed.
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