Venture Shakes Up Cocktails With K-Cups -- WSJ
March 19 2019 - 3:02AM
Dow Jones News
AB Inbev and Keurig to roll out Drinkworks machine as sales of
core products slow
By Jennifer Maloney
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 19, 2019).
Keurig Dr Pepper Inc. and Anheuser-Busch InBev SA are pushing
ahead with an idea to automate home bartending with a K-Cup machine
for cocktails, seeking to tap new areas of growth as sales of their
core products slow.
After a recent pilot in St. Louis, the Drinkworks drinkmaker
machine this year is rolling out across Missouri, Florida and
California.
AB InBev is looking beyond beer for growth as the world's
biggest brewer grapples with declining sales of Budweiser and Bud
Light. Keurig, meanwhile, is trying to replicate the success of its
namesake coffee-brewing device. Sales of the machines, which the
company says are now used regularly in 22% of U.S. homes, declined
in the fourth quarter.
The Drinkworks machine is offered for preorder for $299 and is
on sale in St. Louis for $399. Using liquid-filled pods, it adds
water and carbonation to serve up cocktails like a Moscow Mule, an
Old Fashioned, a mojito or a gin and tonic -- plus three brands of
beer and cider. The machine chills drinks but doesn't add ice. The
pods, which contain the equivalent of a shot of alcohol plus
flavorings, sell in a pack of four for $15.99 for most cocktails.
To avoid consumption by children, they are designed so that they
can't be opened by hand, according to Drinkworks CEO Nathaniel
Davis. The company is working on developing a lock for the machine,
he said.
The joint venture between AB InBev and Keurig follows a failed
effort between the coffee maker and Coca-Cola to sell single-serve
machines for cold soft drinks. In 2016, they discontinued the
Keurig Kold after the home soft-drinks machine failed to catch on.
Many consumers balked at the price of the machine, which initially
cost $369. The pods also were expensive, costing $1.25 to make an
8-ounce drink. And the machine took about 60 seconds to make a
single serving, much longer than it took to grab a can of soda from
the fridge.
Drinkworks faces some of the same challenges. At $4 per drink,
the price is higher in many cases than mixing a cocktail by hand.
Drinkworks is betting that its target consumers -- couples who have
a drink at home each night and have guests over a few times a month
-- will be attracted by the convenience of popping in a pod instead
of measuring and mixing a cocktail. While Keurig's coffee pods come
in brands such as Starbucks and Peet's Coffee, Drinkworks doesn't
currently offer any spirits brands, and AB InBev doesn't own any
large ones. The company is in discussions to license brands, Mr.
Davis said.
French spirits maker Pernod Ricard SA is planning to launch its
own home-bartending assistant this year, a system called Opn that
dispenses spirits such as Absolut vodka and Jameson whiskey from
flasks shaped like books in a library. Through an app it will offer
cocktail recipes, but consumers will need to mix the drinks
themselves. Pricing for the flasks and the tray they sit on hasn't
been disclosed, a spokesman said.
For AB InBev, the project helps it expand its portfolio beyond
beer as consumers in the U.S. shift from American lagers to craft
and Mexican import beers as well as wine and spirits. In February,
the brewer bought a maker of ready-to-drink canned cocktails,
adding to its nonbeer offerings, which include spiked seltzer,
nonalcoholic energy drinks and ice tea.
The brewer reported that Budweiser and Bud Light volumes
continued to decline in the fourth quarter.
The Drinkworks project also signals a push into e-commerce.
About 15% or 20% of sales in the St. Louis pilot were made online,
Mr. Davis said. Selling booze online is difficult, both because of
the weight of the bottles and because U.S. regulations prohibit
alcohol makers from distributing or selling their own products. The
small, lightweight Drinkworks pods, by contrast, are well-suited
for e-commerce, Mr. Davis said. The e-commerce startup Thirstie is
operating the Drinkworks website and working with third-party
alcohol retailers to ensure that the sales comply with the law,
executives at Drinkworks and Thirstie said.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
March 19, 2019 02:47 ET (06:47 GMT)
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