SodaStream Steals Green Mountain's Playbook

It's not just AquaBar -- a high-end and plumbed-in drinking water solution -- that SodaStream (Nasdaq: SODA  ) introduced at a design exhibition in Milan earlier this week.

SodaStream unveiled SodaCaps and Source, two product lines that the company behind the popular namesake carbonated beverage plans to roll out in time for this year's holiday shopping season.

Source is a stylish update on the traditional starter system inspired by designer Yves Behar. Soda sippers may not be overly concerned about the way that a water carbonator system looks, but Source does make things easier with bottles that simply snap on instead of having to twist into place like the current models.

The more intriguing product is SodaCaps, which will essentially be capsules that contain just enough syrup to flavor an entire one-liter bottle. If one argued that SodaStream is trying to duplicate Green Mountain Coffee Roasters' (Nasdaq: GMCR  ) success with its K-Cups in the soft drink realm, it would be hard to argue against it.

SodaCaps can be a game changer, of course. My one lament as an otherwise satisfied SodaStream user for two years is that the syrup-pouring process can be messy once in a while. SodaCaps addresses this with a capsule that attaches to the bottle. A simple push releases the sweet flavoring into the bottle.

However, it would be silly to compare SodaCaps to the empire that Green Mountain achieved with its K-Cups, even as Green Mountain's patents on the coffee pod technology are about to expire.

  • Syrup capsules for soda aren't new. When Primo Water (Nasdaq: PRMW  ) acquired Omnifrio as the basis of its rival flavorstation platform, it used individual Insta-Fresh S-Cups as flavoring capsules. There has to be a reason Omnifrio never took off.
  • How economical will these SodaCaps be? Logically it will cost more per serving than the syrup containers that are good for 12 liters. Using the bottled syrup, the SodaStream equivalent of a can of soda costs $0.25 between syrup and carbonation. That's already in the ballpark of what house brands typically sell for at a supermarket or store. Name brands retail for a bit more. SodaStream doesn't want to price itself out of the market here. Green Mountain K-Cups aren't cheap, but they're a bargain compared to barista-brewed coffee.
  • Will SodaCaps eat into the company's environmental message? SodaStream claims that the SodaCaps containers will be recyclable, but the same can be said of the cans and bottles that it rallies against. SodaStream is aiming to make SodaCaps 100% biodegradable, but it would send the wrong message if it can't figure that out in time for the launch.

There's plenty at stake if SodaStream can overcome these objections. SodaCaps would make the process even more convenient and open the market to those that are spoiled by K-Cup simplicity. However, the obstacles to clear before getting to that finish line won't be easy to overcome.

Drink up
SodaStream is one of the many dynamic recommendations made to Rule Breakers subscribers over the years, but this is now a great time to discover the next Rule-Breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.

The Motley Fool owns shares of SodaStream International. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters and SodaStream International. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (3) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 19, 2012, at 2:21 PM, TheDumbMoney wrote:

    Rick,

    Funny story. I emailed them in September or October of last year and told them they needed to do individual servings.

    A lot of people, including me, neither want to drink twenty liters or whatever of one flavor, nor want ten syrup bottles sitting around. Also, it might be difficult for some people to pull the trigger on an entire bottle of syrup with no ability to try a sample first. The single serving addresses all of that.

    What you get in return for (no doubt) paying a bit more is greater variety. And among other things, the company likely will drive further sales of a larger variety of syrup bottles, because people who have now actually been able to try a new soda flavor will be more likely to buy some of the more unusual flavors in larger bottle form.

    I would also like to seem them come out with smaller syrup bottles, and more flavor essence flavors.

    One of the many things I like about this company is that if one emails the investor relations of this company, they respond with an email! However, I also asked them to fix the way their then-existing samples product was displayed on Amazon.com (you can't see the actual individual flavors), and they have not done that: http://www.amazon.com/SODASTREAM-USA-SodaStream-Sodamix-Vari...

    www.dumbmoney.tumblr.com

  • Report this Comment On April 20, 2012, at 11:30 PM, Edeskimo wrote:

    the environmental benefits are still there because of the marked savings in transportation between these little tablets for flavor versus those for the soda sold in stores.

  • Report this Comment On May 03, 2012, at 6:05 PM, Feritq wrote:

    do these things even taste good? or do they taste like the cheap crap they sell at dollar stores?

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