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Current Position:Home » News » Beverages & Alcohol » Beverages » Topic

Keurig Soars After Deal to Bring Kraft Coffees to Machines

Zoom in font  Zoom out font Published: 2014-08-25  Origin: esmmagazine  Views: 61
Core Tip: Keurig Green Mountain Inc. shares surged the most in three months after announcing a deal to bring Kraft Foods Group Inc. coffee brands such as Maxwell House, Yuban and McCafe to its home brewing system.
Keurig Green MouKeurigntain Inc. shares surged the most in three months after announcing a deal to bring Kraft Foods Group Inc. coffee brands such as Maxwell House, Yuban and McCafe to its home brewing system.

Kraft will offer its coffees in portion packs for Keurig machines as part of a multiyear licensing, manufacturing and distribution pact, according to a statement today. That includes K-Cup packs, which make single cups of coffee, as well as the K-Carafes and Bolt packs for larger portions.

The move brings another high-profile partner to Keurig, which also is working with Coca-Cola Co. on a system for producing cold beverages. In February, Coca-Cola bought 16.7 million newly issued shares in Keurig for about $1.25 billion. The beverage giant announced that it was increasing its stake to 16 per cent in May, making it Keurig’s largest shareholder.

“Adding Kraft’s celebrated brands to the licensed Keurig family means Keurig consumers will be able to enjoy even more beverages they know and love with the quality and consistency they expect from their Keurig brewer,” Keurig chief executive officer Brian Kelley said in today’s statement.

Keurig jumped as much as 12 per cent to $132.23 in New York, marking the biggest intraday gain since May. Shares of the Waterbury, Vermont-based company climbed 56 per cent this year through yesterday, bringing it near a record high.

Manufacturing Agreement

The Kraft-branded Keurig packs will begin appearing in the autumn, with both companies initially making them. Eventually, Keurig plans to take over manufacturing of the packs, with Kraft supplying and roasting the coffee.

The agreement also covers Kraft’s Swedish-inspired Gevalia coffee. Its McCafe product is part of a collaboration with McDonald’s Corp., with the two companies jointly marketing the brand and selling it at grocery stores nationwide.

Keurig, which changed its name from Green Mountain Coffee Roasters Inc. in March, has been seen as a takeover candidate for at least three years, in part because of its rapid growth. The Coca-Cola investment could be a precursor to an eventual acquisition of Keurig, Ali Dibadj, a New York-based analyst at Sanford C. Bernstein & Co., said earlier this year.

 
 
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