When Will Whole Foods Start Stocking SodaStream?


I was in a hurry.

I was quickly rolling out to the Whole Foods Market (NAS: WFM) checkout lanes when some canned sodas caught my eye.

Vevia -- a line of carbonated soft drinks sweetened by the natural plant-based sweetener stevia -- had a couple of different flavors on display.

I had yet to try any stevia-sweetened product, but my curiosity was piqued two months earlier when SodaStream (NAS: SODA) announced that it would be rolling out an all-natural line of soda syrups relying on the popular Latin American sweetener.

I grabbed a six-pack of Vevia cream soda. Why not? It was only after I hit the register that I realized that I was paying $5.99 for six 12-ounce cans of soda.


However, that got me to wondering why SodaStream isn't distributing its sudsy syrups and carbonators through the country's leading organic grocer. Now that SodaStream has been pushing natural syrups to go along with its home-based water carbonation system, shouldn't Whole Foods be all over this?

Sam's choice
SodaStream will broaden its distribution later this month when it begins selling its products through 2,900 Wal-Mart (NYS: WMT) stores.

It's a big deal for SodaStream, even though the Israeli-based company already has its starter kits, carbonators, and syrups selling through several of the country's largest retailers. Houseware specialists, department-store chains, and office supply superstores are SodaStream distributors.

Wal-Mart makes sense, especially as a way for SodaStream to eventually find its way into grocery stores for the ultimate validation.

It's a bit of a surprise that Whole Foods will be stocking an eco-friendly product after the world's largest retailer does.

The whole truth
SodaStream's environmental message isn't necessarily an organic one.

Just because SodaStream claims that a single carbonator makes the soda equivalent of 170 to 310 aluminum cans -- a way to combat not just packaging waste but the pollution caused by the production and transportation of the canned and bottled alternatives -- doesn't mean that it will appeal to Whole Foods shoppers.

The running gauge on SodaStream's website showing that its product has saved 1.7 billion bottles scores it eco points, but that's also not enough to earn organic status.

A company has to earn it on the label, and that's a place where SodaStream is ready for the Whole Foods audience.

SodaStream has already rolled out the Sparkling Naturals syrups that are all-natural in the "better for you" category, and stevia-sweetened all-natural syrups will hit the market this summer.

Don't panic on organic
SodaStream doesn't need Whole Foods. It's growing pretty well on its own. Revenue climbed 50% in its latest quarter, and adjusted earnings are growing even faster. The bubbling pop star has flown past Wall Street's profit targets every time out since going public in late 2010.

This doesn't mean that Whole Foods isn't important.

SodaStream's arrival at Wal-Mart this month -- and cheap-chic leader Target (NYS: TGT) last year -- are big deals. Both discount department-store chains have active grocery departments. As consumers associate picking up carbonator refills and SodaStream flavors with retailers where they can buy groceries, traditional supermarkets will have to follow suit. They can't afford not to. As SodaStream gains traction and the syrups replace the purchase of inefficiently sourced carbonated drinks, more grocers will be compelled to carry SodaStream to be the "one-stop shop" that Wal-Mart and Target have become.

This promises to be a summer of validation for SodaStream. It's not just the stevia line that should make it a shoo-in for organic grocers. Kraft (NYS: KFT) is also teaming up with SodaStream to put out Crystal Light diet drinks and Country Time lemonade. Now that is a strong supermarket brand tastemaker.

It would be a shock if Whole Foods isn't on the SodaStream bandwagon by the time its stevia syrups join the Sparkling Naturals and flavor essences that are already on the market.

If SodaStream is good enough for Wal-Mart, there's no reason why the company's all-natural products shouldn't be found at a Whole Foods near you.

Drink up
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At the time thisarticle was published The Motley Fool owns shares of Whole Foods Market and SodaStream International.Motley Fool newsletter serviceshave recommended buying shares of Whole Foods Market and SodaStream International.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Wal-Mart Stores. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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