SodaStream Debuts at Super Bowl, in Spite of Coke, Pepsi, and Politics
A supermarket parking lot at night. Two deliverymen arrive -- one from Coke (KO), the other Pepsi (PEP) -- and unload their wares, eying each other competitively, while "Dueling Banjos" plays in the background. As the music accelerates, they race to fill their handtrucks and head for the store, struggling to speedwalk behind so much soda.
Just as the man in blue reaches the entrance, the Pepsi bottles on his handtruck explode, spewing cola and stopping him in his tracks. Cut to a well-dressed man in a darkened room, who has apparently activated some sort of countertop detonator. He presses it again, creating a storm of carbonation; the Coke man's handtruck erupts as well.
As the befuddled minions of Big Soda stand helpless, soaked with cola, the well-dressed man enjoys a glass of pop from his mysterious appliance. The remaining inventory in the Coke and Pepsi trucks blows up. The man in red comforts his rival; they are reconciled by mutual defeat.
"With SodaStream," a voiceover intones, "we could have saved 500 million bottles on game day alone. If you love the bubbles, set them free."
That's how SodaStream (SODA) -- an Israel-based manufacturer of do-it-yourself soft drink machines -- wanted to impress the U.S. market, the world's largest consumer of soda: with a $3.5 million ad buy for Super Bowl Sunday, aggressively positioning itself as a relatively green alternative to the brands that have long dominated nonalcoholic American drinking. But SodaStream's confrontational stance, denigrating the competition -- literally exploding their products -- was more than this year's Super Bowl broadcaster was willing to accept. CBS vetoed the ad, reportedly in deference to the big-ticket sponsors SodaStream was dissing. "But SodaStream is still in the game with an older spot we tweaked," said the adman tasked with crafting the company's Super Bowl debut.
Arguably, it wasn't a great commercial anyhow. The connection between the bottle detonations and the SodaSteam machine is unclear at first, and remains confusing. And the contrast between the chubby Coke and Pepsi representatives and the handsome SodaStream user is a cheap shot, although it makes sense in light of SodaStream's claim that beverages made with its system are healthier than sweeter, higher-calorie drinks sold in bottles and cans.
Provocativeness being an engine of publicity, SodaStream is now showing the rejected spot on its website. Online ads invite users to view it with the come-on: "Watch the SodaStream commercial they wouldn't let you see during the big game." At least one writer has been persuaded, declaring himself "shocked that CBS would ban a spot for being too competitive" and asking, "where is the outrage?"
The answer is, elsewhere -- aroused not by CBS's deference to the deep-pocketed, bottle-dispersing behemoths of cola, but rather by SodaStream's ties to the Israeli occupation. The company's main production facility is located in a West Bank settlement; Israeli settlements in the occupied territories have long been considered illegal under international law, a view recently affirmed by a panel of judges working under the auspices of the UN Human Rights Council.
CEO Daniel Birnbaum told the Times of Israel that SodaStream doesn't "strengthen or support the occupation. What we're doing is taking a facility in the occupied territory and giving Palestinians a career and economic benefits."
"I've got to laugh when they think we're on the wrong side of this," Birnbaum said of anti-occupation activists. "We're part of the solution. We build bridges, not walls."
Whether or not SodaStream supports the occupation, pro-Palestinians activists contend that the converse is certainly true. According to a report by Who Profits?, a research project of an Israeli peace group, the company's "success is based, at least in part, on the structural advantages that production in Israeli settlements enjoys": "low rent, special tax incentives, lax enforcement of environmental and labor protection laws, as well as additional government support." And SodaStream pays property taxes that are used to fund "the growth and development" of the settlement that hosts its factory.
The company employs around 900 Palestinians; the use of cheap local labor, where job opportunities are scarce, has long been a source of controversy. Palestinians who've worked for SodaStream have complained of "low wages and poor working conditions, and about 'revolving door' employment policies," Who Profits? reported in January 2011. In an email, Birnbaum said SodaStream pays "full Israeli wages, four or five times the wages common in the Palestinian Authority."
According to Birnbaum, the interactions enabled by SodaStream's West Bank production carry other benefits: they are conducive to an eventual resolution of the conflict, since his workers see a side of Israel other than the settlers and Border Police. "If there were another hundred companies like us extending a hand to the other side, we would have a peace agreement, because everybody wants it, including the Palestinians." He says SodaStream provides its Arab workers "respectable employment opportunities ... We 'even' [sic] purchase medical insurance for them from a private Israeli company, because I am not confident that the money we pay to the Palestinian Authority for such social benefits will actually be used for medical insurance."
With the occupation now more than 45 years old, pro-Palestinian activists aren't persuaded. "Palestinians are not asking for charity," said Anna Baltzer, national organizer of the U.S. Campaign to End the Israeli Occupation. "They are calling for boycott, divestment, and sanctions (BDS) against Israel and companies like SodaStream until they end their complicity with Israel's discriminatory practices. Thousands around the world have joined the campaign to boycott SodaStream, including an exciting new, diverse coalition of Christian, Muslim, and Jewish organizations." Baltzer also noted that people in several countries have created spoof ads highlighting SodaStream's connection to the occupation.
SodaStream has of course known the risks of being a settlement producer. In a 2011 filing with the Securities and Exchange Commission, the company described its West Bank factory as a source of "rising political tensions and negative publicity," which "may negatively impact demand for our products or require us to relocate our manufacturing activities to other locations." Arguing against relocation: the cost of moving, and the loss of tax benefits.
In that same document, SodaStream disclosed that its business strategy focuses on an increased presence in the U.S., which it said "can become one of our largest markets within a number of years." Its products are already sold at Walmart (WMT), Target (TGT), Costco (COST), Bed Bath & Beyond (BBBY), Macy's (M), Williams-Sonoma (WSM), Crate & Barrel, and Wegman's. Americans are not known for their sympathy for the Palestinian cause; right now, potential offense to Coke and Pepsi seems like a larger PR obstacle than any political concern.
Get info on stocks mentioned in this article:
