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Forget Coke and Pepsi: Is Green Mountain SodaStream's Biggest Threat?

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Look out, SodaStream (NASDAQ: SODA  ) shareholders! Green Mountain Coffee Roasters  (UNKNOWN: GMCR.DL  ) may have your business in its sights.

On Monday, shares of Green Mountain rose more than 6% after a Bloomberg report pointed out that the company recently applied for a trademark on the word "Karbon," which they describe as a machine "for the production of cold water, soda, still, carbonated and sparkling beverages."

Of course, this doesn't exactly mean Green Mountain will be jumping into the at-home carbonation market anytime in the very near future, and Green Mountain representatives, for their part, wouldn't comment on the specific trademark. Instead, they vaguely stated, "As we continue to grow, we are likely to seek any number of trademarks."

Par for the course
So does this mean certain doom for SodaStream over the long term? Hardly.

Remember, late last year, bottled water distributor Primo Water signed a three-year deal with Cuisinart to sell a Cuisinart-branded version of its own sparkling beverage appliances, and that hasn't stopped SodaStream from making a habit of crushing analysts' expectations each quarter since then.

Then again, Green Mountain does know a thing or two about starting small, and one would think that if any company could figure out how to penetrate a high-growth, up-and-coming industry, it'd be the team that popularized Keurig coffee brewers by convincing millions of consumers they couldn't live without one in their kitchens. All in all, that helped early investors in Green Mountain to multiply their money 44-fold over the past decade alone.

That said, shares of SodaStream had also been on a tear in 2013 until just last month, having risen more than 60% through the first half of the year -- and with good reason: With its most recent quarterly earnings beat, we saw SodaStream's revenue grow 34% year over year, thanks to a 78% gain in soda-maker sales as well as solid gas-refill and syrup unit revenue, which rose 101% and 78%, respectively.

Better yet, SodaStream has unveiled a slew of partnerships of its own so far this year, including new flavor partnerships, a deal with Samsung to integrate its carbonation machines into the Korean conglomerate's high-end fridges, and a potentially lucrative agreement with Whirlpool to make KitchenAid-branded carbonation machines based on SodaStream's technology.

Trouble in paradise?
Even so, SodaStream stock has fallen more than 17% over the past month as recent buyout chatter concerning a potential $2 billion deal with PepsiCo (NYSE: PEP  )  has faded.

As fellow Fool Rick Munarriz noted at the time, while SodaStream arguably represents one of the biggest long-term threats to huge traditional beverage companies like PepsiCo and Coca-Cola, it wouldn't make sense for either of the industry giants to acquire the tiny company, especially considering it would not only anger the bottlers who rely on their existing businesses, but also cannibalize their own core canned and bottled beverage sales.

Worse yet, SodaStream's most recent fall occurred after the New York Post reported it had been quietly attempting to market itself to potential suitors for at least the past three months to no avail. Curiously enough, this report even went so far as to clarify there may have been a hint of truth to the previous PepsiCo rumors, but only in that PepsiCo just wanted to acquire SodaStream's lucrative CO2-refilling business and not the actual consumer appliance operations. 

Apart from the obvious worries, then, that nobody would be interested in buying SodaStream's business, this also calls into question SodaStream management's assertions that their machines truly possess the long-term, industry-disrupting potential investors have been hoping for. 

Foolish takeaway
As for now, I'm still impressed by SodaStream's plans to increase annual sales by around 80% to $1 billion by 2016, but would love to hear what the company has to say about the acquisition rumors when they report second-quarter earnings on July 31.

Over the longer term, though, I'm still not particularly concerned over Green Mountain's potential move into at-home carbonation, and see no reason that more than one carbonation system can't thrive in the market. After all, SodaStream has so far only captured less than 1% of the 130 million households in the U.S. -- and who knows? In the end, Green Mountain may just end up validating SodaStream's business model when so many are worried about its long-term staying power.

But remember, SodaStream certainly isn't the only stock in the market with huge growth potential. If you're tired of watching your stocks creep up year after year at a glacial pace, Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

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Related Tickers

12/31/1969 7:00 PM
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **
SODA $26.69 Down -0.04 -0.15%
SodaStream CAPS Rating: **
PEP $107.38 Down -0.11 -0.10%
PepsiCo CAPS Rating: ****