SodaStream Steals a Play Out of Keurig's Playbook

KitchenAid begins putting out SodaStream systems.

Mar 19, 2014 at 10:05AM

SodaStream (NASDAQ:SODA) has found someone new to paint its fence.

Just as Tom Sawyer tricked his friends and neighbors into fulfilling his punishment of whitewashing a fence, SodaStream is getting somebody else to do the most unsatisfying part of doing business. Whirlpool's (NYSE:WHR) KitchenAid introduced the Sparkling Beverage Maker yesterday, incorporating SodaStream's in-home carbonation technology into the kitchen appliance icon's product line. The two companies had announced this alliance nine months ago, but it's now hitting the market after missing the original rollout date ahead of last year's holiday shopping season.  

KitchenAid's machine is gunning for the high end of the market. The countertop soda maker, with its all-metal design emulating the curved look of its popular stand mixer, carries a suggested retail price of $250. By contrast, SodaStream's namesake machines can be had for as little as $79. 


Source: KitchenAid.

This is a big win on many different levels. At the most basic tier it's incremental business for SodaStream. KitchenAid's association will help expand awareness of the in-home carbonation market. It will also validate the platform. Keurig Green Mountain (NASDAQ:GMCR) has never had a problem pushing its namesake coffee brewers, but the market really started to take off in 2010 when it teamed up with Mr. Coffee, Cuisinart, and others to put out similar coffeemakers that feed off its K-Cup portion pack ecosystem.

This brings us to the second argument in favor of this deal, and that is that starter kits are low- to no-margin items for both SodaStream and Keurig Green Mountain. Keurig makes the lion's share of its profits from licensed K-Cup sales, just as SodaStream relies on pre-made syrups and CO2 refills to bring home the bubbly bacon. Getting someone else to make the razors so it could profit from the blades is a genius move.

Then we get to the third argument, and this one applies solely to SodaStream. The holiday quarter was brutal on the bottom line. SodaStream was able to grow its revenue at a healthy 26% clip with impressive double-digit growth across all three product categories, but it barely broke even as a result of problems allocating its starter systems. It overstocked some stateside retailers, taking a hit as it redirected excess inventory to direct channels and even shipping many units to Canada. SodaStream will hopefully learn from these mistakes, but the beauty of having Whirlpool's KitchenAid on board is that it has someone else to deal with the inventory and allocation issues.

SodaStream should never give up on its namesake systems. Keurig Green Mountain remains its own biggest brewer maker. However, having KitchenAid putting out premium countertop soda makers and Samsung rolling out refrigerators with SodaStream dispensers is huge to a company that was a little incompetent this past quarter in terms of forecasting regional demand and packaging preferences.

The more buckets of whitewash that it can pass around now, the less fiscal whitewashing later.

Carbonated drinks are just one form of energy source
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Keurig Green Mountain and SodaStream. The Motley Fool owns shares of SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers