CSDs Under Pressure?

Carbonated-soft-drink sales unlikely to feel the heat from at-home soda machines—for now
keurig kold

Now that at-home soda machines have passed the flash-in-the-pan stage and become a viable kitchen appliance, could this new technology put pressure on an already struggling carbonated-soft-drink (CSD) category?

Lots of research and development dollars are being spent on re-creating the packaged beverages consumers love. Only they’re not in the cold vault. They can be created in the comfort of your customers’ own homes.

Launched in September, Keurig Kold allows consumers to make cold sparkling and still beverages including brands from The Coca-Cola Co. and Dr Pepper Snapple Group. SodaStream, meanwhile, rolled out the Pepsi Homemade line, which allows consumers to make Pepsi, Wild Cherry Pepsi and Sierra Mist.

But there’s no need to fret. These home-brewing systems are unlikely to cause CSDs’ fizz to fizzle. The taste will likely pale in comparison, and “liking the taste of CSDs is the main reason consumers drink them,” says Elizabeth Sisel, beverage analyst for Chicago-based Mintel.

Not to mention that it costs significantly more to purchase an at-home soda-making machine.

Keurig Kold, manufactured by Waterbury, Vt.-based Keurig Green Mountain, is available for an SRP of $369.99. That equates to about 206 20-ounce bottles of soda at an approximate SRP of $1.79. And each pod used to make an 8-ounce serving costs $1.12 to $1.25.

However, the SodaStream—available in seven options and manufactured by Airport City, Israel-based SodaStream International—can be purchased for as little as $60 or as much as $199.99.

With high costs, what’s the appeal?

“It’s a premium—it’s about choice and convenience,” Brian Kelley, president and CEO of Keurig Green Mountain, recently told the Associated Press.

Keurig Kold is a way for soda drinkers to have a variety of beverages at their fingertips without cans and bottles taking up space in their homes, Kelley said. The machine can also make craft sodas, iced teas and seltzers.

SodaStream, the largest at-home soda brewer in the market, also makes seltzer and other flavored drinks. It uses a CO2 tank for carbonation, whereas Kold uses what the company calls Karbonator beads, which are contained within the flavor pod.

Another new entry in the homemade-soda market is Bonne O, which encourages consumers to “create carbonated drinks using fresh, healthy ingredients found in their kitchen.” Bonne O also ditched the CO2 tank, using disks of citric acid, sodium bicarbonate (baking soda) and fumaric acid to carbonate the water. The system, which hit the market in May, is available from select retailers for an SRP of $149.99.

If the success of Keurig’s at-home coffee makers is any indication, there just might be a market for Keurig Kold and other soda-making machines as they continue to innovate and bring new brands and flavors to consumers. The Keurig hot-brew machines are in about 20 million U.S. households.

Despite the at-home opportunity, Sisel is confident the convenience of purchasing a CSD from a c-store will come out on top.

“At this point, I do not think at-home soda machines will have much of an impact on the CSD category,” Sisel says. “When we truly compare the two, retail CSD tastes are likely preferred, they are going to be cheaper, and consumers will get immediate satisfaction by just having to open the drink. However, it will be interesting to see how these at-home soda machines evolve.”

To that end, Keurig Green Mountain is rumored to be developing a machine that makes both hot and cold drinks. Stay tuned.