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Disruptors always have to make sure that they're not being disrupted themselves.
Shares of SodaStream (Nasdaq: SODA ) have more than doubled from their offering price since going public four months ago. The company sells home carbonation systems through some of the country's largest retailers of house wares, profiting even more from the CO2 refills and soda flavor bottles to keep things fizzy.
However, one of last week's biggest winners was Primo Water (Nasdaq: PRMW ) . Shares of the bottled water seller soared 32% higher last week after announcing several compelling developments. Its most eye-catching move -- to me -- was the acquisition of Omnifrio.
On the surface, SodaStream and Omnifrio are angling for the same market. They both make systems that transform tap water into seltzer or flavored carbonated soft drinks.
One of the key differences is that Omnifrio is a closer cousin to Green Mountain Coffee Roasters' (Nasdaq: GMCR ) Keurig. There's a water reservoir to the side of the appliance. They also both rely on small flavor cups -- K-Cups for Keurig, and Insta-Fresh S-cups for Omnifrio -- to fuel their variety of beverages.
I can see why Keurig has the K-Cups. The grounded coffee beans in the small containers are brewed through the system to deliver premium java. I'm not sure why Omnifrio comes in similar portion packs, beyond simply trying to ape the appeal of Keurig or Kraft's (NYSE: KFT ) Tassimo.
The Omnifrio demonstration video raises more doubts. The founder closes the lid, which seems to simply puncture the S-Cup so it drips into the cup before the carbonation kicks in. Why can't the cup just be poured into a seltzer serving? Why is there so much splatter into the thankfully tall glass during the demo process?
I'd kick the tires to check it out myself -- the way I did as a converted skeptic with SodaStream -- but it's nowhere to be found.
"Omnifrio will soon become available through your major retailers," reads the site's "How to Buy" section. "Check back with us for a complete listing."
Is this product even real? It is. It sold through SkyMall a couple of years ago at a stiff $299 suggested retail price.
Primo better be marketing these at lower price points, since it's not going to talk too many retailers into carry this at three times the price of the entry-level SodaStream system.
How about those S-Cups? It's a cleaner -- though not as eco-friendly -- route as SodaStream's syrup bottles that offer the equivalent of 33 12-oz servings for $5. Can Omnifrio get away with selling the S-Cups for more than $0.15 each? Emphasizing premium vitamin waters and energy drinks is a smart call. It's something that I hope SodaStream upsells in the future. However, it's going to be hard for Primo to win shelf space for Omnifrio if it's a lousy value proposition.
Let's see. Maybe there's room for both machines. Green Mountain had no problem growing in a sea of coffee makers. Primo better hope so, because SodaStream has momentum. It sold 712,000 of its namesake carbonation systems in its latest quarter alone! SodaStream is showing up in Bed Bath & Beyond (Nasdaq: BBBY ) circulars, and this week had a product pitch in the circular as large as Keurig got.
Primo is a smart and profitable company with a thick Rolodex of grocery stores stocking its 3- and 5-gallon water bottles. It's going to need it.
Is Omnifrio a real threat to SodaStream? Is SodaStream for real or a passing fad? Share your thoughts in the comment box below.