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Keurig Green Mountain's First Cold Pod Manufacturing Unit - Analyst Blog


Keurig Green Mountain Inc. (NASDAQ: GMCR) has taken the first step in relation to the launch of its highly anticipated product – the Keurig Cold coffee brewer.

On Jun 19, the company announced that it will build its first-ever cold pod manufacturing facility for the cold brewer.

The facility will be built in a 585,000 square foot building in Douglasville, GA which is already undergoing renovation. The new investment will create 550 jobs. Cincinnati-based Hixson Inc. is offering engineering services to Keurig Green Mountain for the project. Keurig Green Mountain will invest $337 million on the manufacturing facility over the next five years.

Similar to the coffee machines, Keurig Cold machine expected to be launched in 2015, will use pods to make sodas, sports drinks and other beverages at the touch of a button.

In order to increase the brand power of Keurig Cold, Keurig Green Mountain has inked a 10-year partnership deal in Feb 2014 with beverage giant The Coca Cola Company (NYSE: KO). Per the deal, Keurig Green Mountain will exclusively make Coca-Cola branded pods for the cold beverage system. Additionally, both the companies will work toward the development and launch of the new brewer. The strategic partnership will not only aid the launch but also provide a strong platform to the new brewer for global growth. (Read: Green Mountain Coca Cola Close Deal)

Keurig Green Mountain produces coffees, teas and other hot beverages that are sold in K-Cup and Vue portion packs. These packs are especially made for the single-serve Keurig brewers. Keurig Green Mountain has several strategic distribution agreements to incorporate popular brands like Dunkin' Brands Group Inc. (NASDAQ: DNKN) and Starbucks Corp. (NASDAQ: SBUX) into its portion pack system. After Keurig Green Mountain's phenomenal success in single-serve hot beverage category, the Keurig Cold brewer will expose it to the fast growing cold beverage category.

Coffee preferences vary from country to country, while soda and carbonated beverage drinks enjoy a fairly consistent global appeal. As a result, Keurig Green Mountain should be able to target a larger customer base with Keurig Cold than the Keurig brewers.

Currently, Keurig Green Mountain has a Zacks Rank #3 (Hold).

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