Is Green Mountain Going After SodaStream?

The market applauded Green Mountain Coffee Roasters (NASDAQ: GMCR  ) hiring Coca-Cola (NYSE: KO  ) executive Brian Kelley as its new CEO yesterday, sending shares as much as 11% higher before settling with only a modest gain.

Kelley -- expected to head up Coca-Cola's North American refreshment business in January before accepting Green Mountain's job offer -- brings years of beverage business and brand building experience to the company behind the Keurig single-cup coffee brewers.

Should SodaStream (NASDAQ: SODA  ) be worried?

After all, SodaStream has been taking shots at Coca-Cola this year. Can't Kelley fire back now?

No. That's just not going to happen.

Let's get into the important distinction between Green Mountain and SodaStream. Investors love to throw the two companies into the same basket. It's not unusual to see one stock rally just because the other is on the move.

The sympathy plays have never made any sense. Yes, both companies make small kitchen appliances that make beverages. The similarities end there. Green Mountain is a brewer. SodaStream is a carbonator.

That's important. We can't draw the line at hot and cold anymore. Green Mountain has been building up its "Brew Over Ice" line of K-Cup options. It started with iced tea and lemonade that are brewed hot but served over ice to chill out. Green Mountain turned heads last month when it teamed up with Dr. Pepper Snapple Group (NYSE: DPS  ) to introduce Snapple K-Cups, offering a broad line of fruity tea drinks with a recognizable brand. For its part, SodaStream also offers lemonade and fruit drinks through its partnership with Kraft Foods (NASDAQ: KRFT  ) for co-branded Crystal Light and Country Time syrups.

Yes, the beverage options are starting to meet in the middle, but one can never forget that SodaStream's versions of these drinks are carbonated. Turning tap water into sparkling water is what the SodaStream machine does. There's a material difference between traditional lemonade and carbonated lemonade. Iced tea and a fruity carbonated beverage are entirely different refreshments.

It's true that SodaStream and Green Mountain can work toward the same cause in promoting the convenience and occasionally eco-friendly nature of making one's own beverage. Both companies are doing well in the education process going by recent growth rates. However, they don't truly compete with one another -- and probably never will.

Brew ha ha
Want to learn more? There's a premium report on Green Mountain, exploring the Keurig champ's challenges and opportunities. A free year of updates is included, so click here to get up to speed on the java heavy.


Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

DocumentId: 2123144, ~/Articles/ArticleHandler.aspx, 4/18/2014 9:55:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement