The Drinkworks Home Bar by Keurig allows users to utilize pods with a pre-mixed cocktail, beer, or cider (alcoholic or non-alcoholic) to make drinks. This process, as well as the device itself, is extremely similar to coffee machines that also use pods. Drinks such as Manhattan, margarita, or Moscow mule are said to take less than a minute to prepare. Manufacturers also claim that through an Internet connection, they will be able to upload new recipes to the device, and users can use a mobile application to control the operation of the device. Alcohol consumption at home is quite common, but they need to mix many ingredients, and the high cost has not made-at-home cocktails popular. However, in addition to Drinkworks, there are companies that produce pre-mixed cocktails in cans and deliver appliances needed by subscription. Thus, consumers have cheaper and more convenient alternatives to this device, which does not make it attractive, so it cannot be unequivocally said that this is a good product.
First of all, the company faced the problem of determining the target audience and market segmentation. This device is new within the industry, which does not allow defining a market for distribution and promotion. Another problem was the pricing policy of the device and pods, which depends on the desire and ability of people to pay for Drinkworks. Another problem was the definition of distribution channels for the device and pods. The main issue related to this is the need to distribute alcohol pods. Finally, another difficulty was the choice of a market launch strategy, which required many decisions to be made.
The best target market for Drinkworks are residents of urban areas aged 21 to 29 with an upper middle income. They must also be regular drinkers and socialize within the home environment. At the same time, the potential market size for in-home alcohol consumption is about $130 million, which makes the niche quite large (Gupta et al., 2020, p. 1). Thus, the company’s target market is limited to the young urban population with a relatively high income. However, Drinkworks is an innovative device for the industry, which makes it promising against competitors.
Drinkworks’ value proposition is the ability to create a variety of cocktails at home using pods, making the process extremely fast and convenient. Compared to companies that offer canned cocktails, the device provides a greater variety of different recipes, which is an advantage. It is also important that use pre-mixed cocktails that do not contain alcohol; consumers can use their favorite alcohol to create a cocktail. Compared to competitors, Drinkworks offers faster and on-demand preparation of various recipes. Finally, the device allows you to significantly save on the preparation of drinks due to the relatively low price of pods.
The most reasonable thing for Drinkworks would be to use multiple distribution channels depending on the product. The main difficulty lies in the need to sell alcohol pods, which is associated with regulatory restrictions. These products can be sold in specialized liquor stores. The main device, as well as non-alcoholic pods, are best distributed through e-commerce channels, including the company’s website and marketplaces. Moreover, the device also requires other consumables such as CO2 and filters, which can be convenient to buy in one place. Limited sales from physical retailers may be an approach for promotion but not the main distribution channel.
Reference
Gupta, S., Levav, J., & Kelley, J. (2020). Drinkworks: Home Bar by Keurig. Harvard Business School. Web.