Coke Acquires 10 Percent Stake in Green Mountain Coffee; Will Launch Pod-Based Product Line in 2015

The Coca-Cola Co. has agreed to acquire a 10 percent minority stake in Green Mountain Roasters, maker of the popular Keurig Single Cup brewing system, for $1.25 billion, according to a joint statement. As part of the deal, Coke and Green Mountain have signed a 10-year exclusive arrangement in which the cola giant will launch a Coke-branded line of pod-based, single-serve beverages for use in the Green Mountain’s forthcoming Keurig Cold at-home beverage system.

While the purchase will give Coke a foothold in the fast-growing market for pod-based products, the deal is especially significant for Green Mountain, which has landed the world’s biggest beverage company as a partner for its Keurig Cold system. The new system, scheduled for launch in 2015, will allow consumers to create a variety of cold beverages at home, including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas, according to the statement.

“By pairing The Coca-Cola Company’s brand leadership and global footprint with [Green Mountain’s] innovative technology, together we will be able to capitalize on the many exciting growth opportunities in the single-serve, pod-based segment of the cold beverage industry,” said Coke Chairman and CEO Muhtar Kent. “Importantly, this partnership provides our consumers with a convenient way to enjoy the brands they love through in-home preparation.”

Coke and Green Mountain “will explore other future opportunities to collaborate on the Keurig platform,” according to the statement.

The deal sent Green Mountain shares soaring by over 30 percent in after-hours trading.  Meanwhile, Soda Stream, which manufactures a line of at-home carbonation devices —  and taken direct aim at Coke and PepsiCo in its marketing efforts — saw its share price plummet by over 10 percent.

With an expected close date in March, Green Mountain plans to initiate a share repurchase program that the company hopes will alleviate dilution created by the newly issued shares.