Drinkworks, Top or Flop innovation? Reviewing the new cockatil-making pod machine from a people perspective.
Keurig (#1 single serve coffee system producer in the U.S.) and AB InBev (world’s largest beer company) announced Drinkworks, a new joint venture that aims to bring an automatic cocktail machine directly into your home.
The product has been announced during CES 2020, the annual Consumer Electronic Show organized in Las Vegas. The exhibition is the world’s biggest technology event, during which thousands of new consumer products are disclosed to the public. The show is considered a true glimpse into the future and a real Mecca by tech-fanatics. But I think it also shows some limits of the Silicon Valley attitude. Some technological products, in fact, are so bizarre that it’s really difficult to understand which problems aim to solve. And an actual need for them. These gadgets clearly represent a modern misconception about innovation: technology itself is not enough. Innovation must be people-first (second and third!).
Cool technology alone is not enough. If it were, we’d all be riding Segways and playing with robotic dogs.
(Tom Kelley - IDEO)
Drinkworks, however, seems to be a big bet by Keurig and AB InBev that created a dedicated joint venture in 2017, after years of experimentation. In this article I would like to review the product in an unconventional way: analyzing it from a people standpoint. While, in fact, traditional reviews focus on the technical performance of the specific device assuming that technology is the only innovation success driver, my aim is to analyze the whole experience through an emphatic approach putting myself in the customer shoes.
Empathy, according to a study made by The Empathy Business organization, has a measureble impact on company’s performance. The top 10 companies in the Global Empathy Index 2015, in fact, increased in value more than twice as much as the bottom 10, and generated 50% more earnings.
Examples of Top and Flop innovations
In order to review Drinkworks through an emphatic approach I will take two capsuled-beverage machines as reference: Juicero and Nespresso.
Juicero, an example of flop innovation — the device was a $400 Wi-fi connected juicer that used single-serving packets of pre-juiced fruits and vegetables sold by subscription. The packs cost between $5 and $7 and they had a limited lifespan of 8 days. The machine wielded 4 tons (enough to lift two Teslas) to extract the juice. The firm received $120 million in venture capital in 2014 from different investors including Alphabet Inc. (aka Google) but shutted down in 2017. Two Bloomberg reporters, in fact, discovered that the juice packets could be squeezed by hands achieving the same results as using the machine, in less time. For this reason Juicero represents a model of flop innovation: a sophisticated and expensive technology that didn’t put customer in the center.
Nespresso, an example of top innovation — is an operating unit of the Nestlé Group, founded in 1986. The company is actually the global leader in the coffee capsule industry reporting 11% of global market share and more than 13.500 employees. Nespresso created a superior experience to its customers thanks to its winning business model. Coffee capsules, in fact, are sold only through direct channels in the e-commerce or inside proprietary boutiques. The iconic claim “what else” represents the luxurious moment provided by Nespresso coffee. For these reasons it represents a model of top innovation: a meaningful experience that provides customers pleasure.
Drinkworks empathic review
In order to review Drinkworks machine through an empathic approach, adopting a people-centered perspective, we will dissect and analyse the system through the 3 lenses of innovation: desirability (human factor), feasibility (technical factor) and viability (business factor).
1. DESIRABILITY (human factor)
The machine’s functioning is pretty simple: Drinkworks uses proprietary pods to prepare drinks at the press of a button. Each pod contains premium spirits infused with all-natural ingredients. Currently the offering includes 24 different cocktails to choose from, beer, wine and ciders. Capsules don’t expire but they have a suggested 6-months shelf life. Currently the system is actually sold through the e-commerce channel and inside few selected retailers.
Questions:
Why would people buy this product?
Which desires, needs, tasks, meanings are trying to fill with it?
Are people going to fall in love with the experience?
Is the product proposing a unique and unbeatable value? Is the solution making competition irrelevant?
Is is the company delighting customers through innovative channels or a distinctive brand identity?
👍 Top points
- Drinkworks concept could be summarized with a metaphor: the home-bar
- The solutions is targeted to people that likes to invite guests to their house and that wants to delight them with fresh-made cocktails
- The machine seems to be a great alternative to the classic home-bar as it reduces the space taken up by spirit bottles
- Drinkworks allows people to serve fresh-made and natural cocktails directly in their home without the knowledge and the equipment needed for mixology. For this reason, it creates new consumption moments for cocktails
- The cocktails are created using premium spirits infused with all-natural ingredients
👎 Flop points
- The concept started as a beer-pod system but the company decided to pivot towards cocktails as the beverage served by the machine couldn’t be defined beer from a technical point of view
- The machine occupies a quite large space (35cmx33cmx35cm) at a time when kitchens’ available space for appliances is globally shrinking
- The needs filled by Drinkworks could be compared by the ones addressed by canned cocktails and hard seltzers. Both the market segments are experiencing an exponential growth last year that the machine will struggle to capture
- Drinkworks requires a periodic maintenance in order to work properly. It requires, in fact, a monthly cleaning cycle using tablets and CO2 cartridge replacement every 12 serves
DESIRABILITY: ⬛⬛⬛⬛⬛⬜⬜⬜⬜⬜ 5/10
2. FEASIBILITY (technical factor)
The Drinkworks system has been launched by a joint venture signed by two giants in the beverage industry: Keurig and AB InBev. Keurig is considered 1st single serve coffee system producer in the U.S., with 29,9% market share. AB InBev is the world’s largest beer company, operating in 25 countries and producing more than 567 million hectoliters annually.
Drinkworks takes advantage of advanced technology. The machine, in fact, recognizes the pods through a bar-code reader and uses on-board chilling and carbonation systems to serve the beverage in about 60 seconds. The machine could be synced to its app in order to be controlled directly from the smartphone.
Questions:
Are the machine’s technical features improving substantially the status quo?
Is the technology increasing the current offering’s value perceived by the customers by, at least, two times?
Does the company own unique and difficult to imitate physical, human or intellectual, financial resources?
Does the company have unique and difficult to imitate partnerships?
👍 Top points
- Thanks to the joint venture signed by Keurig and AB InBev, the company could exploit the technological knowledge owned by Keurig in the pod-machine market, and the expertise owned by AB InBev in the beverage industry
- Thanks to this partnership Drinkworks can take advantage of unique resources in terms of physical, financial and intellectual assets
- The cocktails served by the machine are designed in collaboration with leading mixologists
- Even if the capsules sold are difficult to dispense, the company signed a partnership with Loop to provide customers a free up-cycling program
👎 Flop points
- The main competitors of the Drinkworks system are ready-to-drink cocktails and hard seltzers. Even if the machine serves fresh cocktails in just 60 seconds, the technology doesn’t improve the current offering substantially in terms of space required and time consumed
- From a technical point of view, the machine could be considered a slight example of over-engineering
- The technology, in fact, addresses the same needs covered by other products without radically enhancing the status quo or creating unique value to customers
- As regards beer, wine and cider the device competes with a wide variety of similar solutions (such as The Sub and Perfect Draft by Philips)
FEASIBILITY: ⬛⬛⬛⬛⬛⬛⬜⬜⬜⬜ 6/10
3. VIABILITY (business factor)
Drinkworks drinkmaker is sold for $299 including two CO2 canisters, cleaning tablets and a water filter. Pods are sold in tubes containing 4 capsules at $15,99 for cocktails and at $9,99 for beers and ciders. For this reason, one serve of cocktail costs $4 while one serve of beer costs $2,5.
In order to give some context, $12 is the average price of a drink across most of the major US markets and canned cocktails made with actual spirits sell for somewhere between $4 and $8 each.
Questions:
Is the technology doubling the price performance ratio of the category?
Is the product convenient compared to other solutions in the industry?
Is the profit model chosen by the Company favorable to customers?
👍 Top points
- The cost of a single serve of cocktail is very convenient, if compared to price applied in bars
- The profit model chosen by Drinkworks is called razor and blades model
- The model owes its name to Gillette, that pioneered the idea to sell for a drastically reduced rate (or given away for free) one item in order to increase sales of a complementary good, sold for a high price
👎 Flop points
- The machine has an important price. It’s not clear whether the consumption moments targeted by Drinkworks will justify the investment
- Compared to its main competitors, hard seltzers and canned cocktails, the machine is not a convenient choice
- The price of a single serve, in fact, is comparable with a small increase in terms of quality and performance
- Drinkworks is a closed system as it works exclusively with proprietary pods. For this reason the system gives a quite limited choice to customers compared to its main rivals
- The razor blade profit model is commonly used for consumable products, as it helps turning a frequent purchase into a habit. Cocktails don’t look appropriate to this kind of approach
VIABILITY: ⬛⬛⬛⬛⬜⬜⬜⬜⬜⬜ 4/10
