Green Mountain is betting consumers want to get soup from the same machine that brews their morning joe

Updated September 4, 2013, 7:14 p.m. ET

Maker of Coffee Pods Adds New Flavor: Soup

Green Mountain, Campbell to Introduce Packets for Broth

ANNIE GASPARRO

Green Mountain Coffee Roasters Inc. GMCR +1.34% is betting consumers want to get soup from the same machine that brews their morning joe. The company on Wednesday announced a deal with Campbell Soup Co.CPB +0.40% to sell K-Cups for Green Mountain’s Keurig machines that will brew a cup of chicken broth. The K-cups will come with packets of dried noodles and vegetables to mix in. The deal marks Green Mountain’s first attempt to expand its single-serve coffee brewers beyond beverages.Green Mountain has been looking to diversify its business, which has come under pressure from increasing competition in single-serve coffee packets. The company previously has mentioned the possibility of nontraditional K-Cups that could make medicated teas, similar to Theraflu, or energy drinks, such as Starbucks’s Refreshers, as well as vitamin drinks. But the jump to food has been less anticipated by investors and analysts.

Green Mountain Chief Executive Brian Kelley said in an interview that the idea to partner with Campbell Soup came after consumers told Green Mountain they were using their Keurig coffee machines to add hot water to dried soup mixes already.

“We don’t think we will have to convince consumers to think of their Keurig machines this way; they already are,” he said.

Green Mountain’s stock has recovered sharply since plunging in autumn 2011 after hedge fund manager David Einhorn of Greenlight Capital said that its business model was unsustainable because expiring patents on its K-cups would open up debilitating competition. Green Mountain’s share price has more than doubled this year, though it remains well below levels before Mr. Einhorn’s attack.

Still, Green Mountain has lost some market share to purveyors of private-label coffee pods. Mr. Kelley, a former Coca-Cola Co. executive who became CEO in December, has pledged to expand beyond Green Mountain’s core K-cup business.

The move to soup will require consumers to adjust. Keurig’s core customer base has been adult women of middle- and upper-middle-class, the company has said. That demographic is moving toward fresh foods, and away from packaged and canned options. It could be tough for shoppers to find the soup, because it is expected to be offered in the coffee aisle with other K-Cups, rather than the soup or canned foods sections of grocery stores.

Mr. Kelley said the soup is meant to be a low-calorie afternoon snack, which will be attractive to existing customers. The convenient soup cups could also appeal to college students—a substitute for the ramen noodles ubiquitous in college dorms. Green Mountain is becoming more accessible to younger consumers with its miniature Keurig machines; the prices of older models are coming down as new brewers go on the market. Green Mountain and Campbell said their research shows 84% of Keurig users are also Campbell’s soup customers.

Campbell Chief Executive Denise Morrison said the deal gives Campbell’s soup access to new retail outlets, like department stores where many K-Cups are sold. Campbell has been trying to heat up sales of soup by increasing convenience and portability.

Ms. Morrison said Campbell will also benefit from working with Green Mountain on research and development.

Jerman Velasquez, 30, said he’s hesitant to brew soup in his coffee machine, because “coffee has a tendency to have a pretty lingering effect, and those tastes wouldn’t work well together.” But if it tastes good, the New York resident added, it could be a good option for office dwellers who want a quick bite.

Leslie Hancock, 43 years old, lives in Austin, Texas, with her husband, two children and three Keurig brewers. She said the soup would be great for her 10-year-old to make as an after-school snack, and might work well for her older son if he brings one of the brewers to college. The issue will be price, she said. Campbell Soup “can charge more than the other cups of ramen noodles, but the quality will have to be better,” she said.