For more than a year, excitement has been building around Keurig Green Mountain’s upcoming cold beverage platform, Keurig Kold. The new appliance promises “fresh-made” cold servings of favorite brands or “new discoveries.” The expectations have been high for two reasons: first, Keurig’s success in revolutionizing hot beverage brewing; and second, Keurig’s strategic partnerships with cold beverage leaders like The Coca-Cola Company and Dr. Pepper Snapple Group.
In the past few months, however, the hype has fizzled as Keurig has released more details about its upcoming cold platform launch in the U.S. – namely, the $299 starting price for the Keurig Kold appliance. The past two quarters have been disappointing for the company, based on the icy reception of the new, premium-priced Keurig 2.0 hot beverage brewer, and many believe that Keurig Kold’s pricing may repeat Keurig’s recent mistake.
I am skeptical about the launch of Keurig Kold in the U.S., like many people. Keurig’s pricing seems high, especially for an unproven technology, Sodastream has already captured the early adopters, and Americans in general are consuming less soda every year. But it’s easy to be skeptical. It’s harder, conversely, to chart the way forward for a new product launch, given the aforementioned obstacles. In that vein, here are four ideas on how Keurig Kold can increase its chances for success.
1. Enable risk-free trials
2. Redefine consumers’ expectations versus Sodastream
3. Create a different and better drink “experience”
4. Build Keurig’s own beverage brands
1. Enable risk-free trials
Keurig Kold is a new and unfamiliar product and it carries a relatively high price tag. And while it certainly gives Keurig credibility to offer brands like Coca-Cola and Sprite, the quality of Keurig Kold is currently unknown. For these reasons, inducing trial is critical. Here are two ways to enable risk-free trials to spur adoption and growth.
First, offer a no-questions-asked, free-shipping, money-back guarantee. Keurig produces high-quality products, as we well know from the hot beverage category. A 100% satisfaction guarantee would send a strong signal to consumers that Keurig believes in and stands by its product’s quality and ability to satisfy and delight.
Second, create trial opportunities for target consumers. A key part of Keurig’s past success with its single-serve hot beverage brewers was making them available in offices to facilitate trial and build familiarity and trust, leading to purchases for the home. A similar strategy should be used with the cold beverage platform. I would also encourage Keurig to go beyond the office and consider pop-up stores, for a fun surprise with social media amplification potential, and venues with higher-quality associations, such as business class lounges, boutique hotel lobbies, corporate suites at sports stadiums, and luxury car dealers.
2. Redefine consumers’ expectations versus Sodastream
Especially for innovative product categories, there are major benefits to being the “second mover.” For example, Sodastream as the first mover had to spend years investing significant resources (including Super Bowl ads) to educate U.S. consumers and retailers about at-home cold beverage preparation. Keurig, as the second mover, will not.
However, as evidenced by its 1% U.S. household penetration, Sodastream has struggled with its category-creating value proposition, based on critiques of lower-quality beverage flavors and inconvenient gas canister replacement. In effect, Sodastream has created a “perception deficit” about at-home cold beverage preparation from which Keurig must now dig out – while Keurig sells its own unique product.
For these reasons, Keurig must reshape how consumers think about the category that Sodastream has pioneered. First and foremost, Keurig needs to tell a credible and compelling story about higher quality. A Sodastream starts at $99, and consumers must understand and value the incremental quality improvements (for both the Keurig system and its beverage flavors) that a $299+ Keurig Kold system signifies relative to what is in the market today. While partnerships with companies like The Coca-Cola Company help to communicate higher quality, additional ideas deserve consideration, such as blind taste tests vs. Sodastream, a Food Network spokesperson, or a quality seal from the American Beverage Association.
Second, Keurig needs to tell a story about relative convenience. To Keurig’s benefit, Sodastream households already know the hassle of replacing Sodastream gas canisters. And as another advantage for Keurig, almost 20% of U.S. households currently have a Keurig coffee brewer – which means that those households are very likely to already associate the convenience benefit with the Keurig brand.
Now Keurig must connect the dots for the rest of consumers. To be perceived as more convenient relative to Sodastream, Keurig Kold needs to emphasize the ease of its carbonated pods that do not require a gas canister and that can be purchased online for easy home delivery. To further communicate its convenience story, Keurig might consider additional ideas, such as monthly “subscriptions” that ship pre-selected flavors to your home or a logistics partnership (e.g. UPS, Amazon) to support same-day or next-day flavor pod deliveries so consumers can avoid a trip to the store.
Source: foodnetwork.com
3. Create a different and better drink “experience”
Keurig’s hot beverage platforms up-ended the brewing category because they offered a level of convenience (no more coffee grounds mess) and flavor variety that traditional brewers could not match. Keurig Kold will still deliver the benefit of flavor variety, but its convenience benefit is limited when compared to options beyond Sodastream – is it really that inconvenient for me to open a can of Coke?
For this reason, I would suggest that Keurig Kold’s benefit proposition focus squarely on a different and better drink experience compared with that of an ordinary can of Coke. Three ways to create that different and better drink experience, in addition to offering many different varieties (which is a given), are content, community, and containers.
Content and community are linked because Keurig will want to create – and enable – content and a community around its unmatched and growing variety of flavors. At a minimum, this would mean creating social media spaces and platforms where consumers can engage and share things like drink recipes, “hacks,” and beverage requests and where Keurig can provide unique content to stimulate the conversation, such as Food Network guest content, limited release flavors, consumer recipe contests, and food and beverage events. Cold drinks are typically more fun than hot ones, and Keurig should aim to build content and community to highlight and elevate that cold drink experience.
Another way to improve and distinguish the drink experience is containers. Sometimes overlooked in their importance, beverage containers can have a material impact on how drinks taste and how we feel while we’re consuming them. Think about how pleasantly different it feels to drink a Coca-Cola in a vintage glass bottle versus a can. By offering beverage containers like mason jars, retro soda fountain glasses, copper mugs, or margarita glasses, Keurig has an additional avenue – and revenue stream – for making its drink experience different and better.
Source: crateandbarrel.com
4. Build Keurig’s own beverage brands
There are multiple reasons why Keurig has partnered with The Coca-Cola Company, but the primary reason is to offer its iconic brands to consumers. Think about it this way: why would anyone go to the trouble of making a generic glass of Sodastream’s “cola,” when a cold can of the world’s leading soda brand is waiting right there in the refrigerator to simply pop open? Sodastream’s approach of offering only an unbranded “cola” flavor is not helping to establish the category value proposition.
Keurig’s approach, therefore, of offering Coca-Cola and other name brands is spot on. This association should certainly help support Keurig Kold’s intended higher quality, premium position, as well as the category’s. But it also means that Keurig must build its own beverage brands, too. The logic comes from the role and value of brands in communicating to consumers something more than the basic category benefits. Coca-Cola stands for something more than “cola,” and all of the beverages made by Keurig Kold must also aim to deliver more than the basic product benefits. Therefore, for beverage categories where an existing equity is unavailable or unattractive, Keurig must create its own unique brands – or risk failing to deliver on its quality value proposition.
Another consideration is that Keurig’s own beverage brands can go where established brands like Coca-Cola and Dr. Pepper cannot, such as niche sub-categories like craft soda, ciders, drink mixers, and specialty waters. This flexibility will allow Keurig to build and offer an array of branded beverage choices that goes well beyond the portfolios of its beverage partners.
Source: sodastreamusa.com
Conclusion
Keurig Kold has a challenging path ahead, especially given the market’s “sticker shock” regarding Keurig’s intended pricing strategy. However, Keurig can increase its likelihood of success by considering the following four points: reduce barriers to trial, redefine consumers’ expectations of the category, create a unique drink experience, and build Keurig’s own beverage brands.
*Banner picture source: keurig.com
