On Wednesday, Coca-Cola announced that it will buy a ten percent stake in Green Mountain Coffee Roasters for about $1.25 billion. In return for the investment, Green Mountain—most famous for its Keurig pod-based coffee makers—becomes the official manufacturer of Coke's single-serving cold beverages.
The deal had a number of financial effects. Shares of Green Mountain rose 41 percent in after hours trading. Shares of SodaStream, a competing at-home soda machine manufacturer, fell seven percent, likely in response to the news that one of the world's largest soft drink manufacturers was entering their turf. (SodaStream was recently in the news due to a separate incident involving their spokesperson Scarlett Johansson's relationship with OxFam.)
From Bloomberg News:
The move fits into Coca-Cola’s preferred strategy of taking equity stakes in promising new brands and technologies, such as Zico coconut water and Honest Tea, and helping incubate them. Coca-Cola eventually acquired all of Zico and Honest.
Despite the high-profile partnership, exclusivity is not a given. Green Mountain already works with a number of different brands for its machines, including Campbell's Soup. That means that, theoretically, a company like Pepsi could strike a similar deal.
The company's first cold drink machines are expected in FY 2015.
This article is from the archive of our partner The Wire.