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Daily news and analysis about the food tech revolution

Coke

Coca-Cola Launches Subscription Service That Gives a First Taste of New Beverages

Coca-Cola has figured out a way to get feedback on the more than 20 new drinks it plans to launch next year — and charge people for the privilege.

The company yesterday launched the Coca-Cola Insiders Club, which for $10 per month or $50 up front (with one month free), grants subscribers six monthly shipments of “three category-spanning beverages — from AHA flavored sparkling water to Coke Energy — plus a few surprises and swag,” according to a press release. Sounds appealing, right? Well, the 1,000 subscriptions on tap sold out in three hours, but Coca-Cola invites you to join its waitlist, which more than 8,000 people have already done.

While the company said it was inspired by the success of the ecommerce subscription market and the online excitement around Coke Cinnamon, it also seems to point out that the program is a great way to build buzz. “Coca-Cola North America is treating the program as a pilot as a proof point of the company’s entrepreneurial, test-and-learn culture,” the release says. “The team will monitor sales, feedback and social media buzz and consider expanding beyond the six-month trial.”

It’s a smart bet. If the company launches a product that Insiders Club members love enough to post about, it will create pre-launch buzz at a great discount. But on the other hand, if the Insiders bash a product, it will surely create curiosity. Research cited in Harvard Business Review showed that negative reviews of an obscure product actually led to increased sales.

If Coca-Cola, which calls itself a “total beverage company,” decides to further pursue a subscription service, the economics may be in its favor. As long as the shipping costs aren’t too great, $10 for three beverages could bring in some profits. And, if you’re like me, you may be more likely to subscribe to a service that lets you try new drinks rather than buy them a la carte in the store, if they even get to stores, that is.

If Insiders Club does prove to be a success, it could become like the Apple Arcade or Netflix of beverages, as long as Coca-Cola keeps rolling out variations of its products that keep people curious.

Maker of Dirty Lemon Gets $15M Investment Led by Coca-Cola

Iris Nova, the company behind Dirty Lemon water, announced today that it has received a $15 million seed round led by soft drink giant Coca-Cola, as well as a host of celebrities including Kate Hudson, Sophia Bush, Alex Rodriguez and Scooter Braun (Justin Bieber’s manager).

Dirty Lemon made a splash (sorry) in the industry with its SMS-based direct sales model that allows customers to order the bougie water via text message. According to the funding press announcement, Iris Nova has sold over 2 million bottles of Dirty Lemon since 2015 and processed 90% of orders entirely via text message.

Pay by text for Dirty Lemon water

In addition to slinging Dirty Lemon drinks with unconventional flavors like Tumeric, Charcoal, and Collagen (though no more CBD), Iris Nova also launched Drug Store, a cashierless retail store in New York city where people pay via text message on the honor system.

Sales of traditional sodas are declining, and this investment caps off a year that saw Coke diversifying beyond its carbonated cola roots. Earlier this week, Coca-Cola led a $10 million series A round in restaurant POS software company Omnivore. In August, it spent $5.1 billion to acquire Costa Coffee, one of Europe’s biggest coffee chains. And back in September it was even rumored that Coca-Cola was in talks with Canadian marijuana producer Aurora Cannabis to create beverages.

So Coke’s investment in Iris Nova makes sense. It broadens the portfolio of brands Coke is involved with, and now an old dog like Coke can learn a bunch of new tricks from an upstart like Iris Nova. Not only from a tech standpoint, but also in creating direct relationships with consumers, new sales channels and branding to maybe make grabbing a Coke and a smile hip again.

Coca-Cola Should Stay Out of the Home Device Business

After I wrote up the news this morning about PepsiCo buying SodaStream for a bubbly $3.2 billion, a commenter got me thinking about what rival Coca-Cola’s next steps should be. Spoon reader “James” asked:

So now that Pepsi has Sodastream and Dr. Pepper has Keurig, what consumer hardware company is Coke going to buy?

I almost feel like a sports radio talk DJ, because I’m about to give a hot take on this question: Coke should not buy or invest in any hardware company that allows users to make their own Coca-Cola beverages at home. Instead, Coke should focus on getting their existing products into the hands of people in the fastest way possible.

Coke actually dipped its toe in the home hardware market in 2016 with the Keurig Kold, a countertop pod-based device that would let you make your own cold beverages at home. Coke referred to its partnership on the device as a “game changer,” but Keuring killed off the Kold just ten months after its launch.

While there were a lot of reasons the Kold failed: it was expensive, required a lot of space, and took a minute and a half to make a soda. A second-gen version of the Kold (or similar device) could address those issues, but what it can’t address is the consistency and convenience of popping open a can and chugging.

When you’re thirsty and craving a particular drink, you want that drink. Not some approximation thereof. You know when you buy a can of Coke that it will taste exactly like a Coke. There is a giant infrastructure in place to make sure each drink tastes the same, every time. Not so when you make a drink at home. Your flavor amounts could be off, the carbonation levels could be different, and the minerals in your tap water could impact the taste. Homemade sodas can approximate your favorite drink, but they won’t be the exact drink you want.

Then there is the convenience aspect. Coke products are available just about everywhere you go. And it’s super easy to stock up and keep a bunch of them ready to go in your fridge. Thirsty? Boom. Grab one and start drinking. There is no waiting for a machine to carbonate your water or add flavor or any of that. Plus, there’s no machine to maintenance or keep clean.

And though I’m referring to Coca-Cola drinks, this advice applies to all beverages. The growth and ubiquity of seltzers on store shelves will still make the experience of drinking from a packaged can easier and better than making something at home.

With this in mind, instead of investing in any type of hardware that attempts to recreate the Coke experience at home, Coke should invest in methods that get their existing drinks to people faster and more conveniently. Perhaps put money in robot companies like Nuro, which is working with Kroger on self-driving delivery vehicles that could theoretically bring cases of Coke to your door any time of day or night. Or get into the high-tech fridge game a la Byte Foods to provide drinks conveniently in the office. Or heck, get a drone to deliver a Coke based on a person’s mood.

The point is, Coke should stick to doing what it does best: making Coke drinks and (for better or worse) making me want Coke drinks.