Why Is Coca-Cola Gunning for SodaStream?

Coca-Cola (NYSE: KO  ) apparently doesn't like to see its trash getting trashed.

The undisputed cola king is getting litigious about a SodaStream (Nasdaq: SODA  ) promotional exhibit in South Africa.

In order to show the damage that soda cans and bottles do as waste, SodaStream has set up several displays it calls "the cage" across the world. SodaStream collects thousands of discarded cans and bottles from dump sites and landfills, uses them to fill up a huge cage, and then makes its point: "1 Family. 5 Years. 10,657 bottles and cans."

SodaStream's message is effective. Its home-based soda maker means an end to cans and bottles that often don't go recycled. The landing page on its website has a perpetually updated counter, showing that its system has spared drinkers of sparkling water and soft drinks from going through nearly 1.8 billion bottles and cans.

Despite having several of these cage displays around the world, the company is getting a cease-and-desist letter from Coca-Cola tied specifically to a display at a South African airport. Coke's letter argues that the display is infringing on the beverage giant's trademark rights, opening the door for possible legal action.

Obviously this is the kind of attention that SodaStream was craving all along, setting the Israeli company up for the perfect response.

"If they claim to have rights to their garbage, then they should truly own their garbage, and clean it up," SodaStream CEO Dan Birnbaum says, according to Forbes. "We find it incredulous that Coke is now reclaiming ownership of the billions of bottles and cans that litter the planet with their trademarks. In that case, they should be sued in the World Court for all of the damage their garbage is causing."

Investors have mistakenly lumped SodaStream with Green Mountain Coffee Roasters (Nasdaq: GMCR  ) as two companies with simple appliances that make beverages at home that consumers typically have to buy elsewhere.

However, while Green Mountain is often razzed for the environmental damage of its K-Cup portion packs -- something that the Keurig parent is working on improving -- SodaStream has always been on the eco-friendly end of its niche.

It remains to be seen what Coca-Cola stands to gain here. Pointing attention to its trademarks in public garbage displays is really only helping SodaStream make its point even clearer -- and louder to a larger audience.

Drink up
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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 SodaStream. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of SodaStream International and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, SodaStream International, and Coca-Cola. 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.


Read/Post Comments (4) | Recommend This Article (7)

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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 June 19, 2012, at 2:30 PM, SackDiesel wrote:

    Rick, article - fantastic. Story headline? Misleading. False. Influential. There is no "lawsuit". They are not "suing". They sent a C&D letter. Nothing more. Stating otherwise can influence long investors to get spooked and bail, or shorts to pile on a lie. This should be corrected right away.

  • Report this Comment On June 19, 2012, at 4:28 PM, SackDiesel wrote:

    Excellent. Thanks for updating the headline. Now it's perfect. ;-)

  • Report this Comment On June 20, 2012, at 12:02 PM, MusiCali wrote:

    I think the disclosure at the bottom is wrong. Rick owns GMCR but not SODA. At least according to his info. page.

  • Report this Comment On June 20, 2012, at 6:20 PM, TMFBreakerRick wrote:

    MusiCali, that is correct. I do own GMCR and not SODA. Let me try to get that fixed.

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