Coke in a K-cup

Feb. 6, 2014
Coca-Cola Co. buys into Green Mountain Coffee Roasters for $1.25 billion to launch cold beverage machine.

Coca-Cola Co. announced Feb. 5 it agrees to buy a 10 percent equity stake in Green Mountain Coffee Roasters Inc. (GMCR) as the maker of the Keurig coffee-making system prepares to launch a home machine for making cold beverages, including but not limited to carbonated drinks.

"In an effort to align long-term interests," Coca-Cola will acquire 16,684,139 newly issued shares in GMCR for approximately $1.25 billion. GMCR called it "a 10-year agreement … to collaborate on the development and introduction of the Coca-Cola Company's global brand portfolio for use in GMCR's forthcoming Keurig Cold at-home beverage system."

Exclusivity is a part of the deal, with GMCR the exclusive partner for Coca-Cola's anticipated single-serve, pod-based cold beverages. But it didn't clearly state if GMCR would market only Coca-Cola products. The agreement noted potential use of Coca-Cola's global brand portfolio for use in the machine, which could bring some novel flavors to America from other parts of the globe.

The two companies did say they will explore future opportunities to collaborate on the Keurig platform.

The deal amps up some interest in at-home creation of carbonated beverages. Sodastream, which sells machines designed to turn syrup flavors into sodas at home, has increased advertising and bought an ad during the recent Super Bowl.

GMCR’s Keurig Cold single-serve beverage system is under development with expected availability in 2015. Keurig Cold will use precisely formulated single-serve pods to dispense freshly-made cold beverages, including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas, in consumers’ homes, the statement said.

The newly issued GMCR shares were priced at $74.98 each. By the way, GMCR plans to change its name to Keurig Green Mountain Inc.

“With the Coca-Cola Company as a global strategic partner in our multi-brand at-home Keurig Cold beverage system, we believe there is significant opportunity to premiumize and accelerate growth in the cold beverage category by empowering consumers with an innovative, convenient way to freshly prepare their favorite cold beverages at the push of a button,” said Brian Kelley, president and CEO of GMCR.

This global relationship combines the Coca-Cola Company’s unparalleled brand, distribution and marketing strengths with GMCR’s innovative technology and beverage system expertise.”

“Our 2020 Vision calls for decisive and timely action to continuously improve and evolve our global system to best serve our customers and consumers around the world,” said Muhtar Kent, chairman and CEO of Coca-Cola. “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 capitalize 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.”

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