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Coca-Cola and Green Mountain Coffee Roasters Challenge SodaStream

RP Siegel | Tuesday February 18th, 2014 | 0 Comments

Coke-GMCRIn a move that some might find surprising, Green Mountain Coffee Roasters (GMCR) and The Coca-Cola Co. announced a major strategic partnership last week. According to the announcement, the “companies have signed a 10-year agreement to collaborate on the development and introduction of The Coca-Cola Co.’s global brand portfolio for use in GMCR’s forthcoming Keurig Cold at-home beverage system. Under the global strategic agreement, GMCR and The Coca-Cola Co. will cooperate to bring the Keurig Cold beverage system to consumers around the world.”

The two companies certainly come from opposite ends of the business spectrum: GMCR, with its humble Vermont origins and Ben & Jerry’s-like commitment to sustainable practices and Coke, being the oft-criticized old school corporate behemoth.

Yet, in some ways, you could say the two have been moving closer towards each other. Coke, under the leadership of Muhtar Kent, who, in 2010, won Corporate Responsibility (CR) Magazine’s “Responsible CEO of the Year” in the Large Market category, has begun taking seriously the criticisms the company has received and trying to address them. At the same time, GMCR has been getting a lot bigger, in the wake of the enormous success of the Keurig line of coffee makers. The fact that GMCR saw net sales of $4.36 billion last year, up 65 percent over the previous two years, underscores the point in its 2013 Annual Report, that, “Our values reflect our belief that a strong business is in fact, a pre-requisite for contributing to social good.”

Under the terms of the agreement, Coke will acquire approximately a 10 percent ownership in GMCR in exchange for $1.25 billion. This is clearly a big deal.

I don’t think the move by Coke to partner with GMCR is as much an effort to burnish its reputation as it is to fend off the penetration of a new at-home soda brewing business model entering the market, led by Sodastream. For GMCR, it’s clear that aligning with the world’s No. 1 brand will be a tremendous boon for sales.

Coca-Cola is still not out of the woods yet as far as their reputation is concerned. Despite the sincere efforts it has been making, particularly in the area of water stewardship, it was still a nominee for Corporate Accountability International’s 2013 Hall of Shame for obstructing national park efforts to go bottled-water- free and lobbying against anti-obesity laws in several states ranging from New York to Texas.

Company backgrounds aside, let’s take a look at what they are proposing to do here. GMCR’s new Keurig Cold will come out as a direct challenge to upstart Sodastream, backed with genuine Coca-Cola flavors, as well as their enormous manufacturing and distribution infrastructure. That’s great for the company’s business, but what does it mean for the planet?

I’ve had mixed feelings about Keurig ever since the first time I saw it. While tremendously convenient, and much neater to use, what about all that packaging? If you buy a pound of coffee, either whole bean or ground, that is one package. Now, you get a whole bunch of individual, single-serving size packages that get thrown in the trash after being used. Yes, I know there is a reusable option, but I don’t know what percentage of usage that represents.

Admittedly, I have not seen a lifecycle analysis (LCA) of this yet, so I cannot quantify Keurig’s impact. GMCR has promised that it will provide a LCA on the new Keurig Cold, and when it does I will post the results. My expectation is that it will look very good, far better than the coffee version, for one very important reason.

When you buy coffee, unless you buy pre-brewed iced coffee in bottles or cans, you are essentially buying the main flavor as a dry ingredient and nothing else. You add the water, as well as sugar, milk or whatever else you like to put in your coffee, at home. Imagine if you bought all your coffee pre-brewed in bottles or cans to heat up at home. Think about how much water would have to be shipped long distances to make that possible. Think about what the carbon footprint of that would be, never mind the expense.

Yet, that is exactly what we do with soda, which is, after all, mostly water. The amount of water being shipped in soda bottles from bottling plant, to distribution center, to store, to home is enormous.

So, moving a large portion of soda consumption over to the coffee consumption model, which is essentially what this does, will substantially reduce the carbon footprint of this business. It also has the added benefit of significantly reducing the amount of water that companies like Coca-Cola will need to withdraw from the communities surrounding their bottling plants, something that has gotten them into trouble in many localities.

This will  represent a big change for Coke, which has, whether it or anyone else realized it or not, has been primarily in the business of selling water all these years. They will still be doing a lot of that, of course, but perhaps, if this new model really catches on, there will be a significant shift to the point where their business will become more focused on the core value-add that they bring to the party, which is, after all, the flavors, and the formula that turns a glass of water into a glass of Coke.

This kind of refocusing of businesses and business models onto the unique value-adds that they bring to the market, through their innovative designs and formulations, will, I think, in a world where 3-D printers now allow consumers to produce their own products at home, prove to be an essential step in the journey to a sustainable future.

Ed note: The lifecycle assessment for GMCR’s Keurig K-Cup Hot Brewing System can be found here

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.

Follow RP Siegel on Twitter.


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