There's a cola war brewing in New York City, and SodaStream (Nasdaq: SODA ) had better be paying attention.
Mayor Michael Bloomberg is moving to ban the sale of sugary soft drinks in sizes larger than 16-ounce servings throughout New York City restaurants, movie theaters, and event venues.
The move has been blasted from both the political right (Fox News) and the left (The Daily Show's Jon Stewart blasted the hypocrisy of the proposal), though health advocates are on board.
There will be exceptions. Milk-based beverages won't factor into the ban, even if milkshakes and Frappuccinos are more decadent in calories and sugar. Places like convenience stores will be surprisingly exempt, so it's not as if the Big Gulp is going away at 7-Eleven.
There will be losers
If the proposal passes, this will naturally be a big blow to the booming fountain sales of both Coca-Cola (NYSE: KO ) and PepsiCo (NYSE: PEP ) , especially if other cities and states follow suit. It's also going to sting the restaurant chains that rely on larger drink sizes to deliver big margins.
McDonald's (NYSE: MCD ) is already going on the offensive.
"We trust our customers to make the choices that are best for them," the world's largest restaurant chain tweeted on Friday.
That's a lie, of course. Mickey D's retreated from actively promoting super-sized meals after the Supersize Me documentary became popular. More recently, the burger-flipping giant succumbed to groups battling childhood obesity by adding apple slices to Happy Meals and shrinking the serving size of fries.
Forcing consumers at eateries, sporting arenas, and local multiplexes to order smaller drinks -- or going through the embarrassment of having to order two or three sodas -- may force venues to mark up other concessions.
Coke and Pepsi may not take much of an initial hit with the proposal as global juggernauts, but the ramifications are huge if consumers begin viewing non-diet soft drinks as unhealthy enough to be regulated in the city that never sleeps.
There could be a surprising winner here, but only if SodaStream acts quickly.
Check the label
SodaStream is rolling these days. Revenue soared 50% in its latest quarter, and adjusted earnings grew even faster.
The secret to SodaStream's success is that it appeals to consumers on many different levels. Some owners of the home-based beverage system are wooed by the convenience of not having to haul out a bunch of plastic cans and bottles from stores. And eco-friendly soda sippers appreciate the positive environmental impact from eliminating the need to manufacture, transport, and dispose of canned and bottled pop. A gauge on SodaStream's website shows that the system has now saved 1.7 billion bottles worldwide. There are also value advocates who point to the cost savings of SodaStream's fizzy beverages over the major brands. And finally, plenty of fans argue that soda made fresh at home is tastier than the stuff cranked out weeks or months earlier at regional bottling plants.
However, one argument in favor SodaStream that doesn't receive a lot of publicity is the nutritional advantage over store-bought fizz.
Let's go over the labels of 8-ounce servings of Pepsi, Coca-Cola, and SodaStream's cola.
A 48-ounce serving of SodaStream cola would have the same caloric, carbs, and sugar -- and less sodium -- than the 16-ounce servings of Coca-Cola and Pepsi that Bloomberg is advocating.
SodaStream should be shouting this point from the rooftops. Now is the time to make a point that will stick with consumers before they begin classifying all non-diet sodas as bad. SodaStream needs to get in front of this debate by setting itself apart from the big boys as health advocates start to take target practice.
Go ahead. Play up how SodaStream, while not good for you, isn't as bad for you. Obviously, you don't want to push 16 ounces of Coke or Pepsi against 48 ounces of SodaStream cola, but there's a bigger point to be made by pitting 16 ounces of SodaStream cola against 5 or 6 ounces of brand-name cola. Now also wouldn't be a bad time to cash in on the Dr. Oz segment two years ago where he advocated SodaStream based on its benefits.
Bloomberg's attack on soft drinks is the mother of all opportunities to educate consumers on the labeled advantages of SodaStream. Speak up now, SodaStream, or risk having consumers assume the worst.
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