A SodaStream Partnership Won't Be an Easy Sell

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.

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Read/Post Comments (4) | Recommend This Article (1)

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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.

  • Report this Comment On April 21, 2014, at 7:31 PM, martinitony wrote:

    So, your theses is that to keep the anti-Semites happy you have to avoid a deal with Sodastream.

  • Report this Comment On April 23, 2014, at 2:25 PM, stefaith wrote:

    "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"

    I live in Ma'aleh Adumim , a city in Judea, the same one in which SodaStream operates. There is no country called Palestine, and where I live is not a settlement.

  • Report this Comment On April 24, 2014, at 3:27 AM, Ausrussell wrote:

    There are new protests almost daily against SodaStream in both the US and Europe. And given the momentum of the BDS movement they are not going to stop and will grow to include anyone who deals with SodaStream. It is not racist or anti-Semite to seek justice for Palestinians, just as boycotting South Africa was motivated by the need for justice which politicians weren't providing. SodaStream is breaking the Geneva Convention by profiting from occupation. Giving them money is funding exploitation and apartheid practices.

  • Report this Comment On April 24, 2014, at 8:52 PM, MargaretFell wrote:

    Rich Duprey - gets '0' for geography and D- for research -- the West Bank is not in Gaza -- there are no illegal Settlements in Gaza. The Illegal settlements ( illegal under international law -IV Geneva convention) are all in Palestine ( a State in the UN) also called the West Bank . The Soda Stream oppression products are manufactured in the illegal settlement Mishor Adumim ( the industrial adjunct to Male adumim. Read UNOCHA weekly reports - just Google it ! , for the gross human rights abuses that are perpetrated by the State of Israel and the IDF every day in Palestine - Dear Israeli Settlers living in the illegal settlements -- its easy to ignore the oppression when you are enjoying the benefits.-- but where is your moral conscience. As happened in 1946 -- will you say you didn't know..?.. MF 240414

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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9/1/2015 3:59 PM
SODA $14.37 Down -0.87 -5.71%
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