Keurig Green Mountain Inc is recalling about 7.2 million single-serve brewing machines, the coffee company announced on Tuesday, warning that the machines could overheat and injure users by spraying hot liquids on them.
Keurig's shares fell 2.5 percent to $136.29 in morning trading, as investors worried the recall would sow doubt about the brand as the company tries to roll out new brewers and expand beyond the single-serve coffee business.
The company said the machines could malfunction especially if used to brew more than two cups in quick succession. The recall affects 6.6 million machines in the United States and 564,000 in Canada.
"We believe the earnings impact specifically from the recall is unlikely to be material but that it could hurt brand perception, negatively impacting future brewer sales," Mark Astrachan, an analyst at Stifel, Nicolaus & Co said in a note.
The affected machines are Keurig Mini Plus brewers made between December 2009 and July 2014 with the model number K10 and serial numbers starting with 31, the company said on its website.
Astrachan called the timing of the recall "notable in that it is two days before Christmas." He recalled that in November, the company had noted a problem with the brewers on its earnings call about its fourth quarter ended Sept. 27. He said company officials on the call disclosed a $22 million impact on sales related to returns of Mini Plus brewers.
Keurig has received about 90 reports of injuries caused by hot liquid escaping from the machines, the U.S. Consumer Product Safety Commission said.
Health Canada said Keurig had recorded 17 incidents of minor burns in Canada.
In a November filing, Keurig said that it had informed the Commission and Health Canada about a potential issue involving certain Mini Plus brewers. The company said that after accounting for expected insurance claims, it had recorded a net charge in its fiscal year 2014 of $10 million to remediate the issue.
The company is working to establish how many of the reports in the U.S. and Canada are related to problems associated with the recall, spokeswoman Suzanne DuLong said in a statement.
The Keurig Mini Plus is a single-serve brewing machine that is used to prepare hot beverages such as coffee, tea and cocoa. The brewer retails for about $100 and is sold through retailers, departmental stores and Keurig's website.
DuLong said that the company "recently identified the issue and took immediate action."