SodaStream Doesn't Have to Fear Starbucks' Fizzio

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Things are about to get fizzy around here.

Starbucks is filing a trademark application for a beverage maker called Fizzio. Right away, it's easy to see why SodaStream investors could be getting nervous. You don't incorporate the word "fizz" in your moniker if you can't create carbonated beverages, and this is a market that SodaStream has all but cornered with consumers since making its stateside push three years ago.

However, there's more to this Fizzio application than meets the eye.

For starters, last week's filing indicates that the machine is initially targeting restaurants and coffeehouses. In other words, it's an institutional beverage maker.

The appliance also isn't just about carbonating water to make seltzer that could be flavored into soda. Fizzio will supposedly make milkshakes, fruit juices, coffee, tea, and chocolate drinks. This will be an all-purpose beverage maker aiming at the food-service market. Coca-Cola and PepsiCo are the ones that should be worrying if Starbucks intends to roll out a platform that could threaten their fountain sales through restaurants and coffee chains. 

SodaStream may have dreams of penetrating the institutional market, but for now it's really just Fizzio taking on the two soda giants. Things will get interesting if the machine really does effectively make a wide assortment of quality beverages.

Now, it isn't really a surprise to see Starbucks target a broader range of beverages. It expanded its test of handcrafted soft drinks this summer to two different cities. With every menu-expanding step, Starbucks is widening its appeal beyond java sippers.

However, even if Starbucks eventually shrinks down the Fizzio to the point where it's a feasible consumer contraption, it would be silly to think SodaStream would be killed off. For starters, we don't know what kind of market penetration SodaStream will have achieved by the time Starbucks does enter the consumer market. In a few years it may very well be too late. Heck, it may even already be too late.

SodaStream investors can look to Green Mountain Coffee Roasters  for comfort. Starbucks seemed to be taking a big shot at the single-serve coffee market when it introduced Via instant coffee packets several years ago. It even rolled out its own single-serve brewer with Verismo. However, Green Mountain just kept growing, and Starbucks eventually lined up as a partner. 

If Starbucks ever envisions a play for the consumer market in homemade soft drinks, it would certainly make more sense to either partner with SodaStream -- as it did with Green Mountain -- or buy it out altogether. 

Either way, SodaStream will likely come out ahead as Starbucks gets busy with the Fizzio.

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The article SodaStream Doesn't Have to Fear Starbucks' Fizzio originally appeared on

Longtime Fool contributor Rick Munarriz owns shares of Green Mountain Coffee Roasters and SodaStream. The Motley Fool recommends Coca-Cola, Green Mountain Coffee Roasters, PepsiCo, SodaStream, and Starbucks. The Motley Fool owns shares of PepsiCo, SodaStream, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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