March 10, 2014 Leave a comment
The growth of small home appliances like coffee makers, mixers, and juicers has led to new business opportunities between Coca-Cola and Green Mountain Coffee Roasters (GMCR). Through their 10-year agreement, GMCR and Coca-Cola will develop a Keurig Cold beverage machine that serves cold beverages and provide GMCR the exclusive licensing rights to single-cup beverage pods for Coca-Cola products. While many analysts have detailed how this deal affects manufacturers like Coca-Cola, Starbucks, and SodaStream (my article on manufacturer impact here), the retail impact is similarly significant. With grocer’s help, this partnership will increase Coca-Cola’s consumer reach across more grocery aisles and in the consumer’s home. For retailers where soft drinks is a trip driver, supporting this innovation stands to benefit them just as much.
Given the changing beverage market, the consolidated retail landscape, and the consumer’s taste preferences, the challenges are much greater toward winning in the competitive environment. For retailers, getting the grocery shopper to choose one retailer over another retailer has never been greater, which pressures the retailer to be more creative when communicating out. For manufacturers, the rise of beverage categories like liquid flavor drops, energy drinks, and coconut water gives the grocery shopper more options than ever before. The choice to try alternative and healthier beverages are positively reinforced as soft drinks come under scrutiny for containing unwanted sugars and calories. With Coca-Cola bringing new news to a retailer’s trip-driving category, in-store support and product placement helps ensure full potential is realized. Winning the grocery trip is the first step, but winning at the shelf requires proper retail support.
Grocery retailers have already started building single-cup pod sales by offering these single-cup pods next to tea bags and ground coffee. However, a dedicated section for pods itself will soon be warranted. As the selection variety expands beyond tea and coffee, these single-serve cups can no longer be confined to the tea and coffee aisle. Rather, they deserve their own section where a consumer can find pods for teas, coffees, and soda.
While the Keurig Cold isn’t expected to reach the market until 2015, grocery retailers should continue monitoring the selection and sales of their beverage pods. Beverage pods may become a trip driver in and of itself for some retailers.