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The Spoon

Daily news and analysis about the food tech revolution

Soda

Report: Grab a Can(nabis) of Coke?

Coca-Cola could be prepping a move into the cannabis drink market, according to a report out this morning from Bloomberg. The business site writes that the soda giant stalwart is in discussions with Canadian marijuana producer Aurora Cannabis to create beverages.

The talks are around CBD (cannabidiol)-infused drinks, which do not have the psychoactive THC that produces the high from pot. CBD reportedly helps with easing pain, inflammation and anxiety, among other ailments, and is quickly becoming the hip ingredient with which to imbue bougie beverages.

A spokesperson for Coca-Cola told Bloomberg that it was “closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” but the company hadn’t made any decisions at this time.

It would make sense for Coca-Cola to be actively exploring the CBD market. First, soda sales are declining as consumers look to less sugar-packed, healthier alternatives like sparkling waters. Coca-Cola’s move to diversify into a CBD category would follow Pepsi’s recent $3.2 billion acquisition of SodaStream last month.

While beer giants like Molson Coors, Corona, and Heineken have already made moves into the cannabis-infused beer space, there is still room for a soda company to get in and basically create and dominate a whole new category. With Coca-Cola’s size, CBD soft drinks could hit the market at scale pretty quickly.

Scaling, however, may not be the biggest issue for any cannabis-derived sodas as marijuana is still illegal at the federal level. There is a patchwork of state laws when it comes to legalization on a more local level. So there will be a lot to navigate as the market matures.

But cannabis isn’t the only area where Coke is diversifying. Last month the company bought the British coffee shop chain Costa Coffee for $5.1 billion, adding hot beverages to its brand portfolio.

We wouldn’t be surprised to see Coca-Cola move into the canna-biz, as it were; we’ll just have to see exactly where and how it chooses to roll out such a product. Soon enough, “grab a Coke and a smile” could have a whole new meaning.

Coca Cola 'Have A Coke and a Smile' 1970's TV Commercial

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.

Will a Combined Keurig Dr. Pepper Bring Back the Kold?

We have banned the headline “X company hopes to become the Keurig for Y” here at The Spoon. But perhaps we should make an exception since it could literally be applied to today’s news that Keurig Green Mountain plans to buy Dr Pepper Snapple Group in a deal valued at $18.7 billion. Will the addition of Dr Pepper make Keurig the, uhhh, Keurig of sodas?

It wouldn’t be the first time Keurig tried to pop into the soda market. In 2015, Keurig launched the Kold to use its pod technology to create name brand sodas, even lining up Coca-Cola as a partner. But the Kold was shut down just ten months later in June of 2016 amidst complaints that the machine was too expensive, too loud, and too big.

By bringing on Dr Pepper Snapple, Keurig now has its own full stack soda solution, as it were, with brands like Dr Pepper, 7Up, Canada Dry Ginger Ale, A&W Root Beer and more. And according to the analyst call Keurig and Dr Pepper held today for the announcement, merging of the two companies will expand distribution opportunities for Keurig into new markets like convenience retail (7-Eleven, CVS, etc.).

But even if the two companies can create new efficiencies and better technology, has the opportunity for a soda spouting Keurig passed? Sugary sodas have been the target of new taxes, and consumption has been declining. Bottled water sales surpassed soda last year, and millennials love their LaCroix, which leads the $2 billion and growing carbonated water market.

Then there are other factors to consider. People are used to putting in some “effort” when it comes to brewing coffee, so popping in a K-cup and waiting is not that big a deal. But is it the same for soda, where people just grab a can and go about their day? Additionally, with the proliferation of same day grocery delivery options, it’s easier than ever to make sure that your soda selection is fully stocked at all times.

Perhaps Keurig will be able to make a more environmental pitch for conscientious consumers. During the analyst call Keurig said it will be expanding the roll out of its recyclable K-Cup pods and is on track to have that completed in the U.S. by 2020.

By then, we’ll see if anyone can become the Keurig of soda machines.

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