Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is Starbucks Getting Ready to Attack SodaStream?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Last year, Starbucks (NASDAQ: SBUX  ) sent a warning shot across Green Mountain Coffee Roasters'  (UNKNOWN: GMCR.DL  ) nose with the introduction of the Verismo brewing system. As the latter's K-Cup patent expired and generics flooded the market, investors ran for the hills with the idea of do-no-wrong Howard Schulz moving his company in direct competition. Now, another home-brew innovator may be shaking in its boots as Starbucks has begun offering a new product in select stores. Should SodaStream (NASDAQ: SODA  ) investors fear the Seattle juggernaut?

Starbucks soda?
Most are aware that Starbucks has branched out beyond the typical coffee and espresso offerings. The company offers energy-infused fruit beverages, smoothies, and a full line of accessories in thousands of locations. It's part of the reason that Howard Schulz may be the most beloved CEO in the country. At least, his shareholders think so.

It looks like that product expansion isn't slowing down, either. The company has rolled out new products in some stores, including an artisanal root beer, and ginger and lemon ales. They are only available at approximately 10 stores in the Seattle area, but a Starbucks blog quoted in BusinessWeek used language such as "crazy good" to describe the root beer. Given that Starbucks clearly has the ability to offer quality home brewers to its loyal customer base, are we going to be able to make Starbucks soda in the comfort of our homes?

The Verismo has been a moderate success for Starbucks, but not really an issue for Green Mountain. The machine bridges a gap between traditional Nespresso-style machines and the Keurig, but it isn't really intended to replace either.

If the soda products test well, and I would be willing to bet they will (given the summer months are upon us), brace for a nationwide rollout of these tasty beverages. Will the company move into a home soda machine a la SodaStream? It's certainly possible. Should SodaStream investors be worried? I don't think so. The company's sales grew 50%  last year and it is the de facto name in the segment. Starbucks may be able to steal some market share, but I think it will be negligible to SodaStream's business.

Now, admittedly, this is merely speculation. There are a variety of paths the company can take -- including partnering with SodaStream, but given the tremendous ambition of Starbucks, it's far from fantasy.

Investors in SodaStream have little to worry about at this time. The company has hit 1% market penetration in the U.S. -- an incredible feat, but leaving much room to grow. On a forward-looking basis, the company is even cheaper than the soda giants, Coca-Cola and PepsiCo. You may soon be seeing tasty carbonated ales at a Starbucks near you, but don't let it spook your portfolio.

More about SodaStream
SodaStream's carbonation technology sounds simple, but this razor-and-blade company offers an intriguing opportunity for growth that could very well disrupt the soda industry. The Motley Fool premium report on SodaStream explains the opportunities as well as the risks in the company. The report comes with a year's worth of updates, so just click here to get started.

Read/Post Comments (1) | Recommend This Article (4)

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 23, 2013, at 2:43 PM, njphotog wrote:

    You have to take into account the most difficult part of the system which is the carbonation. Other companies have tried and failed to replicate a safe way to do this. Sodastream's patented method is a significant and underestimated barrier to entry.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2377810, ~/Articles/ArticleHandler.aspx, 9/30/2016 8:17:35 AM

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...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
SBUX $53.45 Down -0.53 -0.98%
Starbucks CAPS Rating: ****
SODA $26.34 Down -0.35 -1.31%
SodaStream CAPS Rating: **
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **