Pepsi and SodaStream Test-Drive a New Relationship
It's shaping up to be a very limited trial. According to industry watcher Beverage Digest, the 10-week test will feature a half-dozen flavors sold at Bed Bath & Beyond (BBBY) and Walmart (WMT) stores in select Florida cities.
Beverage Digest's source claims that the flavors will be exclusive to the SodaStream platform: Pepsi Homemade, Pepsi Homemade Vanilla, Pepsi Homemade Wild Cherry, Sierra Mist Homemade, Sierra Mist Homemade Peach and Sierra Mist Homemade Cranberry. How different Pepsi Homemade will be from Pepsi remains to be seen, but labeling all the products "homemade" is probably so PepsiCo doesn't upset its bottling and retail distribution partners.
PepsiCo and SodaStream Need Help
Neither company is at its best right now. SodaStream reported horrendous quarterly results on Wednesday morning, particularly in the U.S., where the market's showing signs of tiring of the carbonated beverage maker.
SodaStream's third-quarter revenue declined 13 percent to $125.9 million from the prior year, fueled by a 41 percent plunge in the Americas. The weakness that SodaStream began experiencing late last year has carried over into 2014, and the soda-sipper indifference is starting to accelerate.
PepsiCo is also seeing its pop sales go the wrong way. Its carbonated-soft-drink volume declined 1.5 percent in North America in its latest quarter. It had posted a somewhat similar year-over-year decline during the previous quarter. Consumers are turning away from sugary sodas, a trend that has been playing out for nine years, according to Beverage Digest.
So PepsiCo is in a bad spot, but the same can't necessarily be said about its bigger rival.
Coke Is It
Coca-Cola (KO) held up only marginally better than PepsiCo when it comes to soft drink sales in this country. Its volume declined 1 percent in its latest quarter. It was helped by the Share a Coke campaign, which featured cans personalized with first names and terms of endearment.
However, Coca-Cola has also managed to stay ahead of PepsiCo in terms of moves made this year to increase its reach into beverage categories that are holding up better than carbonated soft drinks. It made 10-figure investments for stakes in energy drink speedster Monster (MNST) and single-serve coffee leader Keurig Green Mountain (GMCR).
Its deal with Keurig Green Mountain also includes support for the upcoming Keurig Cold machine that will let consumers make carbonated beverages at home. PepsiCo has been slow to embrace the trend, settling for a deal earlier this year with Bevyz, a multidimensional maker of hot and cold beverages that has yet to be introduced in the U.S. market. With SodaStream, PepsiCo latches on to the industry leader in at-home carbonation with deep market penetration in a handful of overseas markets.
Motley Fool contributor Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, Monster Beverage, PepsiCo and SodaStream. The Motley Fool owns shares of Monster Beverage, PepsiCo, and SodaStream and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Want a sweet deal? Check out our free report on our favorite high-yielding dividend stocks.