Starbucks Can Only Help SodaStream Now

Starbucks Can Only Help SodaStream Now

Starbucks is starting to get busy with the fizzy, and that should be just fine for SodaStream investors.

The premium coffeehouse chain expanded its test of handcrafted soft drinks last week. As the country took in new menu additions and slight price increases, some stores in Austin and Atlanta began to offer up spiced root beer, lemon ale, and ginger ale carbonated sodas.

It's clear that the test that began in select Seattle stores in April is succeeding. The first wave of critiques has been generally positive, and baristas whipping up fresh soft drinks between latte orders are helping broaden the appeal of the chain to those thirsty for more than a coffee, dairy, or tea beverage.

Investors may naturally start to wonder if this will hurt SodaStream, but the more likely scenario is that it will help the fast-growing platform.

Think about it. Folks will be paying roughly $3 for a Starbucks soft drink fizzed up on the fly, nearly twice what they would be paying for a fountain beverage anywhere else in the strip mall. The value proposition will be that fresh sodas -- and customized flavors -- are worth more than what the cola giants can offer. The prestige of freshly carbonated beverages will make SodaStream creations more valuable, and you're naturally not just limited to the three premium flavors at Starbucks.

If that argument isn't enough to soothe SodaStream investors, let's turn to Jamba Juice parent Jamba .

When Starbucks began offering smoothies a few years ago -- eventually followed by most of the fast-food and java-pouring doughnut chains -- the bearish Jamba thesis was that broader availability of blended fruit drinks and drive-thru convenience would kill the chain.

It didn't.

Jamba has been posting positive systemwide comps for the past two years, and the stock hit a multiyear high last week.

Starbucks didn't hurt Jamba. The baron of baristas actually educated the market on the merits of icy fruit beverages, and that's probably the same scenario that will play out this time as Starbucks makes self-carbonated-beverage-making more popular.

SodaStream stands only to gain ground in this move. It also wouldn't be a bad time to strike a deal with Starbucks to make the three flavors available for SodaStream machines at the retail level.

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Longtime Fool contributor Rick Munarriz owns shares of Jamba and SodaStream. The Motley Fool recommends SodaStream and Starbucks. The Motley Fool owns shares of 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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