Lessons to Be Learned by the Appliances Industry from the Failure of the Keurig Kold
Less than a year after its launch, Keurig Green Mountain announced it is withdrawing from the market its Keurig Kold at-home pod sparkling beverage maker. When it was first launched Euromonitor International identified that the Kold machine was entering the market with several hurdles to overcome (please read Challenges for Keurig Kold ). In this article we will discuss how the fate of the Kold, in no way undermining the innovative efforts behind it, is the result of important trends that are leading consumer behaviour in small appliances and what the industry can learn from this.
1. Do not underestimate consumers’ health and wellness concerns
One of the main flaws of the Keurig Kold was portraying itself as an at-home soda maker. To begin with, soda was already experiencing a loss of popularity in line with the burgeoning health and wellness trend. Data from Euromonitor International show that sales of carbonates, and especially cola carbonates, have been posting little or negative growth for the past five years, whereas other soft drinks are seeing growth . Bottled water in particular is anticipated to see twice as much volume expansion as all other soft drinks categories combined from 2015 to 2020. Of the bottled water products, functional bottled water is expected to see the most dynamic growth. This same health and wellness trend is evident in small appliances. Deep fat fryers posted the lowest CAGR in small appliances in 2010-2015, while, in contrast, light fryers posted the second highest CAGR (51%) after electric facial cleaners. Other “health-related” appliances like air purifiers and juice extractors were also among the most dynamic product areas. Sodastream had this same problem when it had to rethink its whole market positioning to change from “home soda maker” to “sparkling water maker” to cater to this growing trend of consumers concerned with health and wellness.
2. Premiumisation yes, but only if it is worth the money
It is true that the super-cocooning trend is driving sales of anything that allows us to replicate the “gourmet” feel at home. A good example of this is the buoyant behaviour of pod coffee machines. In this sense, it was easy to believe that an at-home pod sparkling beverage maker would have the same success, yet the big difference lies in the fact that cola carbonated drinks are by no means seen as “gourmet” and a cola should taste the same no matter whether drunk at home or in the most expensive restaurant. Why then try to replicate at home and at a premium something that can so easily be grabbed from the convenience store? At-home soda machines are trying to sell a difficult-to-replicate (due to consistency and flavour) and expensive alternative to an easy-to-attain, ready-made and non-expensive beverage. Coffee pod machines, on the other hand, were competing with stale home or office coffee from a drip machine, and, at the same time, were able to improve on that experience by offering a similar feel to a professional coffee house drink, at the touch of a button and at a lower price per cup when compared to the typical coffee house cup. The lesson to learn here for appliances manufacturers is that consumers have become more discerning and are willing to pay a premium on a product so long as they feel it is worth their money by improving their overall experience. The Keurig Kold, according to customers’ reviews, failed in terms of delivering consistency and the specific flavour so demanded by cola drinkers in every drink, defeating the purpose of paying a premium for the machine and for the pods.
3. Convenience is key
An Analyst Pulse Survey conducted by Euromonitor International revealed that convenience features ranked second in popularity as the most important factor for consumers when choosing an automatic washing machine. Among these convenience features were noise control, size and speed features. These ranked ahead of design or format features, and even technological features. This is telling for other appliances as well. Ultimately, what consumers look for in an appliance of any kind is convenience when performing a specific chore. The Keurig Kold failed to properly leverage on the fact that it could offer great convenience for drinkers of sparkling beverages by being able to enjoy a great variety of flavours at home without actually having to buy one bulky bottle or a pack of cans of each of them. This, in turn, would help in terms of space saving in fridges, on countertops or generally in the kitchen, but also make it easier when carrying the groceries home from the store. However, not only was this not advertised enough for the Keurig Kold, but it was also a bulky machine itself that occupied a lot of countertop space.
Another feature that has become very important for appliances consumers is low-noise machines. As the trend for cocooning increases, we want to feel that our home is our haven, so that having to listen to all your appliances working really detracts significantly from the experience of using them. According to consumer reviews of the Keurig Kold, the machine was loud and constantly buzzing. Speed is also a key convenience feature for consumers, particularly if you are looking to quench your thirst, which was another area where Keurig Kold disappointed users, who felt it did not perform quickly enough.
There is no blaming Keurig for trying to revive its stale sales by introducing another innovative option, but certain consumer requirements cannot be ignored without having to pay the price for doing so, a lesson that industry players should definitely bear in mind when flexing their innovation muscles in future.