SodaStream Can't Follow Green Mountain into Retail Yet


Keurig parent Green Mountain Coffee Roasters is opening its first stand-alone retail location in November. SodaStream will probably have to wait to follow suit.

It's easy to see why Green Mountain is opening a dedicated location in Massachusetts' Burlington Mall in time for the pivotal holiday shopping season. The first Keurig Store will allow the company to show off its growing line of single-cup brewers and the even wider assortment of K-Cups that are available. There may be some friction with the other mall tenants that stock Keurig brewers, but it's not as if the presence of official Disney, Apple, or Nike storefronts has sent merchant partners scrambling to new suppliers.

Besides, Keurig has the market of low-pressure one-cup brewers all but cornered. Where would other stores turn for serving this growing market?

SodaStream would seem to be in a similar position. There is no viable silver medalist in home-based soda making. The increasing number of retailers stocking SodaStream machines, carbonators, and syrups count on repeat visits to their stores as consumers run out of carbon dioxide and flavors.

Just as Keurig is raising the bar with new brewers, SodaStream also continues to find new ways to ensure its system that turns still water into sparkling soda doesn't make itself vulnerable to potential competitors. A dedicated store to woo new customers and show existing buyers its latest technology would be a no-brainer.

However, here is where we get to the thorny and controversial issue that has dogged SodaStream from time to time.

As an Israeli company with a production facility in the disputed West Bank settlement, SodaStream has made itself a magnet for protests both here and abroad. Is SodaStream right? Is SodaStream wrong? That's immaterial to the controversy. There are activists out there, and they're not afraid to picket. Protests would likely organize at stand-alone stores. Heck, they have even popped up at retailers just because they stock the product.

This would all naturally go away if SodaStream moved its production facility. Even if that would ironically cause trouble for the hundreds of Palestinians who rely on the West Bank facility for employment, anything the company could do to scale back the venom would come in handy. SodaStream is a fast-growing company with a widening geographical footprint. It is opening new facilities around the world. Surely it could skirt controversy that can result in calls for international boycotts.

SodaStream can always counter that the protests calling for boycotting its products are going unheeded. Revenue soared 29% in its latest quarter, and that includes a 55% pop in the Americas where the concept of stand-alone stores would be welcome into malls. However, SodaStream would have to rethink following the Keurig Store model if that would prove a magnet for protests. Opening stores to show off its popular beverage system could backfire if it draws more awareness to the divisive issue.

A SodaStream store makes perfect sense. It just doesn't make sense right now.

This could be bigger than making soda at home
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Longtime Fool contributor Rick Munarriz owns shares of Walt Disney, Green Mountain Coffee Roasters, and SodaStream. The Motley Fool recommends Apple, Green Mountain Coffee Roasters, Nike, SodaStream, and Walt Disney. The Motley Fool owns shares of Apple, Nike, SodaStream, and Walt Disney. 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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