Keurig Green Mountain (GMCR) is betting on the healing qualities of chicken soup.
Two years after announcing a partnership with the Campbell Soup Co. (CPB), the coffee company is rolling out pods that will allow coffee fans to whip up a bowl of hot soup in their Keurig machines. The product is available in two flavors: chicken noodle soup and Southwest chicken noodle soup.
Even though chicken soup is often touted as one of nature's cure-alls, getting Keurig back to health might be beyond its powers. Keurig has been struggling this year, following a tepid rollout of its Keurig 2.0 coffee machines, which irritated consumers by using a scanner to lock out rivals' coffee pods. It's also under pressure to successfully debut its soda-making machine before the holidays, but it's unclear whether consumers will stomach its $300 price tag.
In the meantime, Keurig has turned its sights to food, with its Campbell's effort representing its first foray beyond beverages. While soup might be an obvious extension for Keurig, given instant soups and ramen require hot water, soup isn't exactly a growth market. Soup sales were almost flat in 2012 and 2013.
No surprise, then, that Campbell's sales and earnings are hardly at a boil. The company this month forecast revenue to be flat to up 1 percent for the 2016 fiscal year, while analysts had expected 1 percent growth, according to The Wall Street Journal.
The idea to join forces came after data showed that Keurig machine owners tended to eat Campbell's Soup products, said Michael Goodman, marketing director of innovation at Campbell's.
"We designed the proposition to allow consumers who love Campbell's and love their Keurig machines, and want to fit soup into different parts of day," Goodman said. "Of course we hope this continues to grow and strengthen the business."
The challenges of engineering soup for the Keurig machine was partly why it took the companies two years to roll out the product, he added. Asked if the soup pods leave an aftertaste for subsequent coffee brewing, Goodman said the company worked on ensuring that wouldn't be an issue.
"We were careful not to taint coffee with a soup taste or soup with a coffee taste," he noted. "I brewed quite a few personally and didn't have any aftertaste with any form." However, the company is recommending flushing the machine with water after brewing soup "just to ensure there's no possibility of an aftertaste."
While some coffee drinkers might cheer another way to use their pricey Keurig brewers, investors may be holding off until they see more evidence. Shares were slightly higher on Thursday, while the stock has slumped more than 50 percent this year. Last month, the company reported a hit to its second-quarter sales and said it would shed five percent of its workforce.
Like Keurig's coffee pods, the Campbell cartridges are on the pricey side. One soup pod -- which makes one serving -- costs about $1.50. By comparison, Campbell's condensed Healthy Request Chicken Noodle Soup costs about 63 cents a serving, based on its price on Amazon.
That pricing model "is consistent with the business model Keurig has developed and proven to be successful," Goodman said. "Consumers told us they were willing to pay the price."