A SodaStream Partnership Won't Be an Easy Sell

Right or wrong, a partner needs to think long and hard before signing up.

Apr 21, 2014 at 4:35PM


After an Israeli daily newspaper reported that SodaStream International (NASDAQ:SODA) was mulling over a partnership with a major beverage company, shares of the stock surged 8% as speculation surged over who the suitor could be. Although it seems inevitable someone would want to hook up with the company, because it's the leader in home-based soda making, SodaStream comes with baggage the Keurig Green Mountain and Coca-Cola pairing never had to contemplate, so I'm not certain lightning's about to strike twice.  

Regardless of whether you think it's valid criticism or not, SodaStream's operations in an Israeli settlement in Palestine are a touchstone for controversy. Actress Scarlett Johansson's appearance in a Super Bowl ad for the DIY soda maker sparked an uproar earlier this year and led her to step down from a major anti-poverty organization that criticized her promo.

Whether you agree the West Bank settlements in Gaza are illegal or not is really beside the point, though it obviously colors your opinion of a company that operates from there or does business with one that is, and it's just that kind of polarization that will make corporate boardrooms skittish. So investors trying to read the tea leaves over which "major beverage company" is planning on partnering with SodaStream, assuming there really is one, also must calculate whether the company will want to be dragged into a debate with all the negative connotations, publicity, protests, and boycotts that will come with it.

Speculation naturally centers around PepsiCo (NYSE:PEP), Dr Pepper Snapple (NYSE:DPS), and Starbucks (NASDAQ:SBUX) as natural contenders, but there are compelling reasons that rule each of them out.

  • Pepsi already has a bottling company in Gaza, the Yazegi Group, but it's owned by a Palestinian family. An association with SodaStream might be seen as harmful to that relationship, and though it could just as easily be seen as a mark of balance, politics and long-standing conflicts have a way of negating such clarity.
  • Dr Pepper, which derives its revenues almost wholly from the U.S. soda market and could benefit from a new product innovation (the failure of its recently added Core 4 TEN line weighs heavily on its performance), might want an international presence, but likely wouldn't want to start off having to defend its decision from controversy.
  • Starbucks also operates numerous stores throughout the Arab world, but several years ago was falsely accused of donating a week's worth of profits to the Israeli army, which lead to numerous protests around the world. It's doubtful it would want to stir up such a hornet's nest, and those memories, again.

Once more, regardless of whether it's right or wrong and no matter where you personally stand, corporations have to take these issues into account, and it seems to me these three major beverage companies in particular would prefer to err on the side of caution than cause a backlash of negativity by becoming a partner with SodaStream.

These picks could bubble up at any time
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Keurig Green Mountain. It recommends and owns shares of Coca-Cola, PepsiCo, SodaStream, and Starbucks and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information