SodaStream Takes a Page From the Green Mountain Playbook

The validation of SodaStream (NASDAQ: SODA  ) continues.

Whirlpool (NYSE: WHR  ) is teaming up with SodaStream to jointly develop a carbonation system that will be available in time for this year's holiday shopping season. The soda maker will hit the market under Whirlpool's KitchenAid brand, but the packaging will make it clear that the new appliance is "powered by SodaStream."

It's a win-win deal.

SodaStream will benefit from third-party hardware manufacturers. It's a similar situation to when Mr. Coffee and Cuisinart began putting out single-serve coffee brewers fueled by Green Mountain Coffee Roasters' (NASDAQ: GMCR  ) Keurig brand a couple of years ago. It's a move that helped extend the visibility of the brand and accelerated marketplace acceptance.

It's also a nice bonus that SodaStream and Green Mountain sell their starter systems essentially at cost. They make the money on the consumables. Green Mountain banks on K-Cup portion packs. SodaStream's thickest margins are made on the sale of carbonator refills and flavored syrup. Having trusted kitchen appliance makers working on the hardware ultimately increases overall margins.

Whirlpool also has plenty to gain here.

Sales slipped slightly at Whirlpool last year, and analysts see a mere 2% in top-line growth this year after kicking things off with a flattish first quarter. A KitchenAid carbonator may not necessarily move the needle. We are talking about a company with more than $18 billion in annual sales. However, it will be incremental.

This will also be a boost in the perceived innovation at KitchenAid. A quick peek at the assortment of countertop appliances offered at KitchenAid offers the same collection of toasters, food processors, and mixers that folks have been using for decades. Pushing home-based carbonators will literally and figuratively add some fizz to a seemingly flat company.

Green Mountain's market penetration spiked after its hardware partners began coming through as Keurig ambassadors. Now that SodaStream has Samsung recently introducing a "powered by SodaStream" refrigerator that dispenses carbonated water, and KitchenAid months away from flexing its distribution muscle, it's well positioned to grow its presence in the world's largest market when it comes to soda consumption.

Take a sip
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's 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.


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  • Report this Comment On July 16, 2013, at 7:42 PM, SGJames wrote:

    LOL @ "disrupt the soda industry." Yeah, they'll make a small blip in the soda industry for the next 2 years before the novelty of it wears off. Single serve coffee makes sense, because, even though coffee only costs 79 cents per cup at some places, you need to have it hot when you get it. You're not going to want to get in your car every time you want a single cup of coffee. Soda can be stored, and 2 liters costs about $1. Even without this machie, I don't have to go to the store every time I want a single glass of soda. Why go through the hassle of buying a machine, CO2, syrups, and bottles and then make the drinks, clean the machine, and so on when I can get a week's or more worth of soda for $1 without any hassle at all? SODA is a fun fad.

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