This Is No SodaStream Killer
Apparently there's a new company gunning for SodaStream's (NAS: SODA) business.
A daily-deals website is offering 20% off on the SodaSparkle starter kit.
The premise is the same. A bottle of ordinary water is fizzed up and flavored. Its price point -- as low as $50 for the basic system -- is compelling. SodaStream machines start at $80.
However, just as Primo Water (NAS: PRMW) failed to gain traction with its Flavorstation, anyone making a run for SodaStream's market is going to face a surprisingly sturdy moat that will be difficult to overcome.
Flavorstation seemed to have a shot a year ago, but when its only material real-world distributor was Lowe's (NYS: LOW) -- the home improvement superstore chain that doesn't exactly inspire repeat visits -- it was easy to see its demise coming. Primo Water has existing relationships with several leading grocery store chains for its flagship water jug business. It could've leapfrogged SodaStream to introduce supermarket distribution of its CO2 refills and flavors, but this never materialized.
SodaSparkle will have an even harder path. SodaStream is that much more entrenched in the U.S., and its distribution reach spans across discount department stores, office supply chains, warehouse clubs, and even consumer electronics superstores.
SodaSparkle is still young and small. Its Facebook page has all of 63 likes. Its YouTube page has generated less than 2,000 views across two clips. The SodaSparkle website is loaded with typos, including a twofer in describing the "recycable C02" chargers.
All of this can be eventually overcome. The company is young enough -- and apparently hungry enough -- to get better. However, the system itself will be a challenge.
Unlike the SodaStream carbonators, SodaSparkle relies on single-use "charges" that need to be replaced after every bottle is carbonated. This may be presented as an advantage over SodaStream, since there are no in-store carbonator swaps required, but the value isn't the same. SodaSparkle sells a box of 50 chargers for $25, resulting in twice the cost for a liter of sparkling water relative to SodaStream. There's also something to be said about the SodaStream carbonators that can go through dozens of liters of soda before fizzing out.
This doesn't mean that SodaStream is infallible, or that the market can't eventually support more than one provider of home-based pop. Green Mountain Coffee Roasters (NAS: GMCR) may have the entry-level market of home-based coffee brewing all to itself with Keurig, but we're now starting to see several companies making a play for the higher end of the market.
We'll have to see where SodaSparkle goes from here. After it gets a major retail distributor or two to begin stocking its system on its shelves, then we can begin to discuss whether it has a shot at disrupting SodaStream's growing business.
Drink up
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The article This Is No SodaStream Killer originally appeared on Fool.com.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool owns shares of SodaStream and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters and short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Green Mountain Coffee Roasters, Lowe's, and SodaStream. 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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