SodaStream Wants to Play a Drinking Game
SodaStream (NAS: SODA) is ready to "pop" the question: Was the gifting of home-based soda makers a hit this holiday season?
We'll have our answer tomorrow, when the Israeli-based company behind the world's most popular home-brewed soft-drink maker reports its latest financials.
As one of the market's rare recent winning IPOs -- the stock has more than doubled since going public at $20 in late 2010 -- there's pressure at every quarterly checkpoint.
SodaStream has been around for ages. Hit up YouTube for vintage ads, and you'll pull up a few gems, including the "get busy with the fizzy" U.K. commercial from the 1980s.
However, the company finally lived up to its pop star billing when Daniel Birnbaum stepped in as CEO five years ago. The Harvard MBA that was previously running Nike's (NYS: NKE) operations in Israel updated the product line and beefed up the marketing.
We've seen what Nike has been able to do in creating a premium brand out of something as simple as athletic footwear and apparel. Why can't this work on a manual appliance that turns flat water into sparkling water?
Introducing stylish design elements and getting more global distributors to begin carrying the starter kits, carbonators, and flavored syrups has helped SodaStream become a global sensation. More than 20% of the homes in Sweden now have a SodaStream machine.
SodaStream waited until 2010 to make a new push into the United States. We consume a lot of soda per capita here. The world's two largest cola companies just happen to be American. SodaStream and the U.S. go together like root beer and vanilla ice cream.
SodaStream approached the market from both ends of housewares retailing. Bed Bath & Beyond (NAS: BBBY) began stocking the entry-level system that retails for $100, giving mainstream shoppers a neat way to tap into their inner mixologists. Williams-Sonoma aimed more upscale with a penguin design system complete with stylish glass carafes.
These days you can find SodaStream products at office supply stores, warehouse clubs, cheap chic department stores, and even consumer electronics superstores. Nearly everybody knows about SodaStream, and that's something that certainly couldn't have been said just two years ago.
Flexing those carbonated muscles
Investors often lump SodaStream into the same story stock category as Green Mountain Coffee Roasters (NAS: GMCR) , and that's not really fair to either company.
Green Mountain may have revolutionized the premium java market with its Keurig platform, but SodaStream's beverage-making process isn't as simple as snapping in a K-Cup portion pack.
Green Mountain's strengths over barista-poured brews are price and convenience. SodaStream's selling points over branded pop are flavor customization, kinder environmental impact, and healthier nondiet beverages.
Green Mountain is also growing faster, but this doesn't make SodaStream a slouch. Analysts see SodaStream's top line climbing 26% when it reports its fourth-quarter results tomorrow morning.
It's true that Green Mountain has the better ecosystem. SodaStream may be able to protect its systems and carbonators, but anyone can put out soda syrups. However, SodaStream's growing popularity is giving the company some surprising clout. Kraft Foods (NYS: KFT) revealed last month that it will be teaming up with SodaStream to put out its Crystal Light and Country Time brands as dual-branded syrups this summer.
When Birnbaum assembled his executive team, he did include some seasoned vets from Nike and Kraft, so perhaps it wasn't a surprise to see Kraft playing nice with SodaStream. It's still a juicy example of validation. One can only imagine what deals will be brokered later this year if the company can build on its popularity.
We'll know more about how far SodaStream has come in two days.
Both Green Mountain and SodaStream have beaten the market since being recommended to Rule Breakers subscribers, but this is now a great time to discover the next rule-breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.
At the time this article was published Motley Fool newsletter serviceshave recommended buying shares of SodaStream International, Nike, Green Mountain Coffee Roasters, Williams-Sonoma, and Bed Bath & Beyond.Motley Fool newsletter serviceshave recommended creating a lurking gator position in Green Mountain Coffee Roasters.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Nike. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributorRick Munarrizcalls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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