It was the next big thing that never was.
In 2010, SodaStream International (NASDAQ: SODA) splashed onto the IPO market with a huge marketing push to put its countertop soda machines in homes across the U.S. The company teamed up with retailers big and small, even buying a Super Bowl ad, and signing Scarlett Johannson as its ambassador.
For a while, things were good. Revenue growth peaked above 50%, profits were growing even faster, and investors hoped the company would be the next Keurig Green Mountain -- a sleepy Vermont coffee roaster turned juggernaut thanks to the Keurig single-cup brewing system. SodaStream's success was spawning imitators: Primo Water launched the FlavorStation, Cuisinart partnered with Bevyz to introduce its own DIY soda machine, and Keurig began working on its own soda-maker, the Kold, scoring investment and partnership from Coca-Cola (NYSE:KO) in the process.
It's a Kold, Kold world
Fast forward a few years and SodaStream stock has been decimated, forcing the company to rebrand itself as a sparkling water maker. Primo ditched the FlavorStation back in 2014, and Keurig pulled the plug on the Kold just this week after less than a year on the shelves.
The Kold, coming with a $2.4-billion investment from Coke, may be the biggest bust of them all. The $370 machine proved to be too expensive for most Americans, and purchasers complained that it was unwieldy and took too long to reach temperature. The price point for soda pods, at more than $1 for an 8-ounce drink, also made it uncompetitive with grocery store purchases.
In addition to discontinuing the device, Keurig is offering full refunds to customers who purchased the machine, as it will no longer make pods to support it. The company also laid off 130 employees on the Kold team.
Keurig was taken private by JAB Holdings earlier this year for $13.9 billion, relieving Coke of its investment with a small profit, but the result leaves the soda giant with a once-promising growth channel that now seems dead. Back in 2014, Coca-Cola CEO Muhtar Kent had called the Kold a "real, game-changing" innovation; this week a Coke spokesman said the company had learned "valuable consumer insights" from the Kold experiment, and plans to pursue further innovation.
Pepsi (NASDAQ:PEP) has been more cautious with the at-home soda industry, testing the waters through a partnership with SodaStream last year to make flavor pods for SodaStream's machines. Still, Pepsi CEO Indra Nooyi has expressed skepticism about the industry, saying that consumers are unlikely to spend 45 seconds to make a fizzy beverage when it takes three seconds to pop open a bottle or a can.
SodaStream, the pioneer in the industry, has been clearly pivoting away from soda to healthier beverages like sparkling water. CEO Daniel Birnbaum told CNBC at the time of Kold's launch, "The consumer has to decide what they want. Do they want Coke at home, or do they want healthy sparkling waters at home?"
Is there a future for fizz?
After the stock collapse over the last two to three years, SodaStream shares have finally begun to show some life -- the company announced a better-than-expected earnings report, and the release of an at-home beer maker in Germany and Switzerland. In addition to focusing on sparkling waters, SodaStream also seems to be betting on alcohol, as it's developing a machine that can carbonate spirits and other alcoholic beverages.
Despite its decline, soda still remains one of the most popular beverages in the U.S. and around the world. The problem with at-home soda-creation seems to be making it price-competitive and as convenient as buying it from the grocery store. As Coke, Keurig, and the other soda giants continue to innovate, the lesson from the Kold appears to be just that. We may one day see another attempt to make at-home soda-making fashionable, but I wouldn't expect it until the technology exists to make it more affordable, convenient, and appealing, than simply buying it at the supermarket.