What Coke Is Brewing by Increasing Its Stake in Keurig
Coca-Cola is hoping that K-Cups contain the future of Coke.
The beverage giant announced Tuesday that it would increase its stake in Keurig Green Mountain Inc. to 16 percent from 10 percent. The move will make Coca-Cola the largest shareholder in the coffee company known for its single-cup servings, or K-Cups.
In February, Coca-Cola acquired a 10 percent holding in Keurig and signed a 10-year partnership to sell Coke drinks through an at-home beverage system developed by Keurig. Keurig will offer Coca-Cola products, from Coke to Powerade, through the KeurigCold system. The company plans to roll out the home-carbonation system in fiscal 2015, which begins this September.
Why is Coke deepening its stake in the creator of K-cups? The beverage giant knows it needs to expand its reach outside of the sugary soda sphere, especially as consumers become more health conscious. But it could also be looking to buy Keurig. Coca-Cola has previously acquired Zico coconut water and Honest Tea, taking equity stakes and helping incubate the brands prior to gaining full control.
Plus, Coke needs to compete with other beverage giants who are pushing to expand its offerings in the realm of "homemade" carbonated drinks. Starbucks recently began selling "handcrafted" sodas under the name Fizzio, with three carbonated beverages made to order. SodaStream—the biggest name in the carbonated beverage machine game--has potential to boost any company's efforts in the carbonated market, with rumors that both PepsiCo and Starbucks have considered buying significant stakes in the company.