Sign up for the Talking Points newsletter, a recap of the most important business news, delivered fresh each afternoon, Monday through Friday.
Ever dream of brewing beer with the push of a button? If so, hang on to your pint, because the parent companies of Budweiser and Keurig want to make your dream a reality.
International beer conglomerate Anheuser-Busch InBev and Keurig Green Mountain, Inc. announced Friday that they are launching a joint venture to develop an “in-home alcohol drink system.”
Employees from both firms will work on research and development of the system at offices in Massachusetts and Vermont, where Keurig is headquartered, according to a press release. The partnership will focus at first on the North American market, the firms said.
For now, the details of any potential home-booze gadget are scant. The companies did not specify a timeline for the release of the system, and offered only two clues about how it might work: the product, they said, would target “the realm of the full adult beverage category, including beer, spirits, cocktails and mixers.” And it will draw on the technology Keurig developed for its failed “Kold” product, a countertop device that made sodas and mixers on demand but was withdrawn from the market last summer following dismal sales.
While the Kold was a commercial flop — perhaps because the large machine cost $369.99, plus more than $1 for each drink pod — it did incorporate a clever technological advance: gas-filled “Karbonator” beads, which allowed consumers to make their drinks fizzy without bulky carbon dioxide canisters.
It’s possible that the technology could now be used in an appliance that makes Bud Light, or dispenses a fresh glass of AB InBev’s SpikedSeltzer sparkling drink.
And resurrecting the Karbonator innovation might help Keurig and investor Coca-Cola Co. recoup some of the $1 billion-plus they spent developing the beads.
A countertop alcohol machine could also open up a new product category for AB InBev, which has struggled to prop up declining sales of its mass-produced beers amid competition from innumerable craft breweries. The megabrewer, which recently merged with SABMiller in a complex transaction designed to reduce costs, posted lower-than-expected profits in the third quarter of last year, a result it blamed on the economy in Brazil, a major market.
Bringing such a device to market, however, won’t be as simple as selling pods of coffee grounds.
For one thing, alcohol is intensively regulated, and each state has different rules about whether, where, and how different types of drinks can be sold. In Massachusetts, for example, regulators in recent years have cracked down on powdered alcohol and boozy ice cream. How would authorities treat alcohol-containing pods for use in a home brewing appliance? That’s a question the joint venture will have to answer before it can book its first sale.
Another key challenge will be identifying a target customer. Keurig’s coffee makers became widely popular because they made the process of brewing hot coffee at home faster and more convenient. But with Kold, the company failed to convince enough consumers that making their own sodas at home was somehow better than buying a bottle at the store and simply twisting off the cap. Can the joint venture now persuade Bud Light drinkers to brew beer at home — even if the machine makes it easy — instead of just buying a case that’s cheaper and ready to drink? Or cajole the less militant elements of the craft-beer-loving homebrew crowd into making decidedly macro Budweiser?
On the other hand, AB InBev has more experience selling alcohol than just about anyone, plus an extensive national network of wholesalers who could potentially hawk booze-filled pods to your local package store.
“We’re thrilled to be moving forward with this joint venture and look forward to working closely with the Keurig Green Mountain team to explore the possibilities of what we can achieve together,” said Nathaniel Davis, chief executive of the new venture, in a written statement. “We can’t wait to get started.”
In 2015, Keurig was taken private for almost $14 billion by an investment group led by JAB Holding Co.