Keurig 2.0: Will it be able to brew up profits?
Listen up, coffee lovers! Keurig Green Mountain (GMCR) is introducing a new coffee brewer. The Keurig 2.0 goes on sale this weekend on the retailer's website and it will set you back about $140-$200.
“It is a high-risk, high-reward venture,” said Yahoo Finance Senior Columnist Michael Santoli. Keurig has to do this because they’ve seemingly exhausted the very rapid growth of their single cup coffee model, according to Santoli.
A new feature of the Keurig 2.0 is its ability to brew an entire pot of coffee. Santoli sees this is as a bit of a yellow flag because here is a company which is known for one thing, and now it’s doing the exact opposite.
The new coffee maker is the first major product launch under CEO Brian Kelley, who took over as CEO in December 2012.
“It’s going to be a challenge for Kelley and his team to show that they can change the dynamic here with multiple cups of coffee at once, which doesn’t sound like a revolutionary thing, but for Keurig it is,” said Yahoo Finance Editor-in-Chief Aaron Task.
The company has been looking for ways to grow its business beyond coffee machines and single-serve K-Cup packets. It announced on Friday it will team up with Kraft Foods (KRFT). Under the deal, Kraft will allow Keurig to make single-serve pods for Kraft coffee brands, such as Maxwell House and Gevalia. The new Kraft-Keurig coffee packets are expected to go on sale this fall.
Keurig also struck a deal with Coca-Cola (KO) earlier this year to make various cold drinks at home. And the company is also working on a product called Keurig Cold, which would allow consumers to make their own carbonated drinks at home.
It is not clear yet if all these moves by Keurig will help boost its bottom line. But the company did lock-in lower coffee prices for this year and that is likely to help earnings, said Santoli.
