Is Starbucks' Fizzio a Nail in SodaStream's Coffin?

Starbucks is about to roll out a new personalized carbonation machine called Fizzio, which has some important and unique features that separate it from SodaStream.

Jun 27, 2014 at 5:30PM

The handcrafted cold-beverage war is heating up. A few months ago, soda king Coca-Cola (NYSE:KO) announced a sizable investment in at-home coffee-brewing-system maker Keurig Green Mountain (NASDAQ:GMCR). At the time, the partnership represented a serious shot across the bow of SodaStream (NASDAQ:SODA), the pioneer in personalized cold-beverage machines.

Apparently, there's room for one more. Coffee giant Starbucks (NASDAQ:SBUX) has entered the fray with its own product called Fizzio, which it will use to make handcrafted cold beverages in its retail stores. The lineup will include handcrafted sodas as well as Teavana  Shaken Iced Teas and will come in a variety of flavors.


Source: Starbucks website

Starbucks' strategy taps into consumers' growing desire for healthier carbonated beverages without artificial flavors or high-fructose corn syrup. But before you assume this is just one more entrant in a product line that is quickly becoming saturated, it's worth noting that there's one key feature to the Fizzio that could separate it from the competition.

A three-way battle
Coca-Cola initially invested $1.2 billion to acquire a 10% minority stake in Keurig Green Mountain. Together, the two companies will prepare the launch of the Keurig Cold beverage platform as part of a 10-year agreement. The deal creates obvious synergies, as Coca-Cola will have the potential to get its products to customers through an innovative new system. And Keurig now has the ability to tap into Coca-Cola's world-class brand and massive distribution capabilities.

Coca-Cola increased its investment in Keurig just last month, to 16%, and is now Keurig's largest shareholder. Clearly, Coca-Cola sees the at-home beverage platform as a compelling opportunity.

The investment is a fairly low-risk proposition for Coca-Cola. It could strike gold if the technology is universally adopted, and considering shipment volumes of sparkling beverages are stagnant in the United States, it's certainly an idea worth pursuing. Plus, Coca-Cola's investment is essentially a drop in the bucket for the company, as it collected $1.6 billion in profit just last quarter.

Things aren't getting easier for SodaStream
Pressure is now on SodaStream to pursue a partnership of its own, and there's a reason why. SodaStream's growth is decelerating. Its revenue growth declined by almost half last year, from 55% in 2012 to 29% in 2013. Net profit actually fell 4% last year, and SodaStream's stock price is following suit. Shares are down roughly 25% just since the start of this year.

The competitive landscape is starting to chip away at SodaStream, and it's only going to get more difficult now that Starbucks has tossed its hat into the ring. Importantly, Starbucks' Fizzio machine has a unique feature that distances it from SodaStream.

Unlike existing at-home carbonation products, the Fizzio machine carbonates finished beverages. This means that every ingredient receives the same amount of carbonation, whereas SodaStream simply carbonates the water, with flavors added afterward.

Starbucks will also offer a more customized experience. Customers will be able to adjust the amount of carbonation in each beverage. You can also add the "fizz" to an existing beverage offering for just $0.50.

The Foolish bottom line
Even though SodaStream held first-mover status in personalized cold-carbonated beverages, it's quickly losing ground. Coca-Cola and Keurig Green Mountain are teaming up to develop an at-home carbonated-cold-beverage machine. This holds great promise considering Coca-Cola is one of the biggest companies in the world with the financial strength and distribution to do just about anything it wants.

In addition, things are getting even more complicated because Starbucks is now getting involved. Going forward, it's rolling out a new product called Fizzio in select markets. The Fizzio will allow users to carbonate beverages at Starbucks stores. In addition, the product offers a different experience that separates it from  from SodaStream because it carbonates the entire beverage, including the flavors, and not just the water.

As a result, while Keurig Green Mountain and Starbucks are developing unique features, SodaStream is quickly looking like a thing of the past.

Leaked: This coming consumer device can change everything
Imagine the multi-billion dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  


Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, SodaStream, and Starbucks. The Motley Fool owns shares of 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.

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