Starbucks Can Only Help SodaStream Now

Starbucks (NASDAQ: SBUX  ) is starting to get busy with the fizzy, and that should be just fine for SodaStream (NASDAQ: SODA  ) investors.

The premium coffeehouse chain expanded its test of handcrafted soft drinks last week. As the country took in new menu additions and slight price increases, some stores in Austin and Atlanta began to offer up spiced root beer, lemon ale, and ginger ale carbonated sodas.

It's clear that the test that began in select Seattle stores in April is succeeding. The first wave of critiques has been generally positive, and baristas whipping up fresh soft drinks between latte orders are helping broaden the appeal of the chain to those thirsty for more than a coffee, dairy, or tea beverage.

Investors may naturally start to wonder if this will hurt SodaStream, but the more likely scenario is that it will help the fast-growing platform.

Think about it. Folks will be paying roughly $3 for a Starbucks soft drink fizzed up on the fly, nearly twice what they would be paying for a fountain beverage anywhere else in the strip mall. The value proposition will be that fresh sodas -- and customized flavors -- are worth more than what the cola giants can offer. The prestige of freshly carbonated beverages will make SodaStream creations more valuable, and you're naturally not just limited to the three premium flavors at Starbucks.

If that argument isn't enough to soothe SodaStream investors, let's turn to Jamba Juice parent Jamba (NASDAQ: JMBA  ) .

When Starbucks began offering smoothies a few years ago -- eventually followed by most of the fast-food and java-pouring doughnut chains -- the bearish Jamba thesis was that broader availability of blended fruit drinks and drive-thru convenience would kill the chain.

It didn't.

Jamba has been posting positive systemwide comps for the past two years, and the stock hit a multiyear high last week.

Starbucks didn't hurt Jamba. The baron of baristas actually educated the market on the merits of icy fruit beverages, and that's probably the same scenario that will play out this time as Starbucks makes self-carbonated-beverage-making more popular.

SodaStream stands only to gain ground in this move. It also wouldn't be a bad time to strike a deal with Starbucks to make the three flavors available for SodaStream machines at the retail level.

There's money to be made in buying the right retail concepts at the right time
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

 


Read/Post Comments (0) | Recommend This Article (3)

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.

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: 2524508, ~/Articles/ArticleHandler.aspx, 8/22/2014 3:00:43 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...


Advertisement