Will Keurig Green Mountain’s Cold Brewing System Be a Success? By Sean O’Reilly презентация

O’Reilly

new business line since introducing the Keurig to the mass market
Developed in partnership with Coca-Cola (NYSE: KO)
Will be released in Fall 2015 in limited quantities online
Will be available nation-wide at retail outlets by December 2016







Source: Keurig Green Mountain Investor Presentation

and Dr. Pepper Snapple, as well as GMCR’s own brands of ice tea, lemonade, carbonated water, etc…
GMCR believes that the Kold beverage system will deliver on the same elements as the Keurig® hot beverage system: quality, convenience, choice and simplicity










Source: Keurig Green Mountain Investor Presentation

2015:
GMCR’s Gross Margin has fallen from 43.5% to 36% YoY
Net sales fell 5% year over year in the same quarter
Diluted EPS fell 22% to $0.73 year over year
Pod net sales fell 1%, even after factoring in volume growth of 5%
Keurig brewers and accessories net sales fell 26%
To Summarize: Growth is slowing – a lot

thought to be the company’s saving grace - has been a disaster
GMCR continues to generate profits thanks to its pod business, but it’s days of growth appear to be over
In-home coffee brewing business is suffering from both pod price competition and market saturation
Keurig Green Mountain as pinned all of its future growth on The Kold

the company’s partnership with Coca-Cola (NYSE: KO) which also owns 16.8% of GMCR
Partnership with Coca-Cola, the largest and most successful beverage purveyor in the world, is a bullish point
The potential market for cold beverage is multiples of the hot beverage market
Another potential use for the Kold is in-home alcoholic cocktail creation

Presentation

case study for in-home cold beverage systems – Sodastream (NASDAQ: SODA)
Sodastream too offered investors two somewhat separate businesses
A stable, profitable, European-based carbonated water business
A new U.S. focused soda business that offered investors a good deal of potential upside IF the American consumer bought in
The results of Sodastream’s U.S. push were not good

2014:
Revenues fell 9% YoY to $511.77 mil.
Net income fell from $42.03 mil. to a depressing 12.3 mil.
Losses marred by inventory write downs in anticipation of U.S.-division sales that never materialized
For the quarter ended June 30, 2015:
Revenues fell 28% to 101.7 mil.
Net Income fell from $9.2 mil. To $3.5 mil. YoY
Sodastream has more or less thrown in the towel as an in-home soda system company, opting to become a “ ’Water brand’ behind a health and wellness positioning” according to CEO Daniel Birnbaum in SODA’s Q2 Conference call

be priced at $299
Coca-Cola flavored cold beverage pods are estimated to cost $0.99 to $1.29 per pod at retail
This pricing does not compare well with Sodastream’s models which start at $80

hot-beverage Keurig based business is still profitable but it’s days of growth are gone
The weight of the evidence seems to imply that the Kold has a steep hill to climb
Investors hoping for the days of growth in both the company’s top and bottom lines need to have a high opinion of the Kold’s prospects