Wal-Mart plans to sell new drink machine

Stock Market Predictions

NEW YORK (Global Markets) - Wal-Mart Stores Inc (WMT.N) plans to start selling a new single-serve beverage maker, a move that could threaten the U.S. dominance of Green Mountain Coffee Roasters Inc's (GMCR.O) Keurig machines.

The introduction of the Esio Beverage System by Walmart, with its relatively inexpensive drinks, could pressure the price that Green Mountain, the dominant player in the U.S. single-serve coffee market, can charge for its K-Cups, which are the portions of coffee used in its brewers, according to a report on Thursday by research firm Detwiler Fenton.

Shares of Green Mountain fell as much as 6.3 percent following the report, before closing down 3.4 percent at $49.34 on the Nasdaq. Shares of Sodastream International, which also sells a home beverage machine, closed down 4.3 percent at $36.75.

Wal-Mart, the world's biggest retailer, plans to start selling the Esio system later this year, a company spokeswoman confirmed. She declined any further comment.

The Esio system can make single servings of hot and cold drinks including coffee, tea, energy drinks and vitamin waters, according to Detwiler Fenton.

That machine's presence at Walmart would provide more competition for Keurig as well as for Kraft Foods Inc's (KFT.N) Tassimo and Nestle's (NESN.VX) Nescafe Dolce Gusto, the report said.

Prices per serving are expected to be much lower than the average cost of Keurig's K-Cups, which range from 60 cents to 90 cents each, the report said.

"We believe that this introduction will likely be a game changer in the single-serve category," Detwiler said in the report, adding that Walmart had been frustrated with Green Mountain's pricing, which was considered too high for the Walmart consumer.

"We see this introduction as fulfilling Walmart's goal of offering a competitive value option," the report said.

For its part, Green Mountain seemed to welcome the challenge.

"Walmart consumers clearly value the quality, convenience and choice inherent in the Keurig system and anyone that hopes to compete will have to match that," said a Green Mountain spokeswoman.

Officials at Esio did not return calls seeking comment.

News of the report was first mentioned by a CNBC business news correspondent.

(Reporting By Martinne Geller in New York; Editing by Matthew Lewis, Bernard Orr and Steve Orlofsky)