In this segment of MarketFoolery, host Chris Hill is joined by Hidden Gems' Abi Malin to consider the latest surprising addition to the beverage industry, a SodaStream (NASDAQ:SODA) product that contains alcohol. How much potential does this new niche have for the company? Fundamentally, that'll depend on the taste.
A full transcript follows the video.
This video was recorded on Nov. 28, 2017.
Chris Hill: Exciting news from the beverage industry. SodaStream has unveiled a new drink mix called Sparkling Gold, and it literally turns water into wine.
Abi Malin: This is exciting news.
Hill: This is. This is only available in Germany at the moment -- do I have that right?
Malin: Yes, only available in Germany.
Hill: What do you think about this? Do you have a SodaStream device?
Malin: I do not have a SodaStream device. I think it's interesting. This was a longtime Fool rec, very long, way back when. We had high hopes for it. We had high projections. It didn't exactly pan out. I think this could be a potential new market for them, and something interesting, a new revive.
Hill: I have a SodaStream device in my house. I don't drink sparkling water, but several people in my home do. We don't use it for any mixes or anything like that; it's just the carbonated water. So, Sparkling Gold, I'm reading directly from the announcement from the company, Sparkling Gold contains 10% alcohol by volume. And this is the key point, ladies and gentlemen, when prepared using the recommended mixing ratio of one part Sparkling Gold concentrate to five parts sparkling water. Which of course means, if you want a little bit more kick to your sparkling wine, you just reduce that amount of sparkling water that you're putting in there.
Is this going to come to the United States? I've never been more interested in SodaStream as a business than I am right now, because if this works...
Malin: It has a huge potential.
Hill: It has a huge potential.
Malin: I think it'll be interesting. I don't particularly follow this company, so I'm not sure what their strategic initiative with starting in Germany was or why. But I agree. I think it could be big if it's good.
Hill: I know your colleague at Hidden Gems, Seth Jayson, he'll do a sparkling wine now and then if he's in a celebratory mood. Do you ever?
Malin: I drink champagne, but not sparkling wine.
Hill: I don't know; I think that's really bears watching. In terms of the stock, shares of SodaStream have almost doubled over the past year. And any time we talk about restaurants that serve alcohol, that's a high-margin business.
Hill: If this works at all, I think this could be huge. And one of the things I was thinking about when I was reading through this story was, a few years ago, I got the chance to interview Nassim Taleb, who wrote The Black Swan. And he was here, in the office. I don't do many face-to-face interviews for Motley Fool Money like that. And I was doing some last-minute prep with Taleb, and I basically picked up two bits of information about his personality and his non-literary life, and one is that he appears to be a pretty serious guy and does not hold the media in high regard, so that made me a little nervous. And the other is, he's something of a wine connoisseur.
So I sit down with him, and he wasn't mean or rude or anything like that, but he was very serious the whole interview. So the last question I asked him was about wine. And up until that moment, everything had been about the book, and his views on the economy and that sort of thing, his latest book at the time. And the last question I asked him was, "This weekend, I'm going to a friend's house for dinner. I don't know what he's going to be serving at this dinner party, but I'd like to bring a bottle of wine. What do you recommend?" And he just stared at me for a second, and a couple of seconds, I thought, "Oh, God, I have horribly played."
Malin: Missed the mark.
Hill: "I have totally missed the mark and he might take a swing at me." And then he got very animated and broke into this big smile, and he's basically like, "OK, here's what you're going to do!" And his main point was, never spend more than $15 for a bottle of wine, ever, because all of these tests that have been done about really expensive wine compared to your basic wines and experts that can't tell the difference, and that's apparently part of the research that informed what SodaStream has done. So for anyone who's a wine snob thinking, "Why would I ever drink this?" I don't know.
Malin: Yeah. If you read down on some of these analyst feedback or commenters, I don't even know if they're analysts, but people are pushing back that the company was making this champagne celebratory drink and comparing it in taste tests to that. But it's made from Riesling grapes, so it's actually more of a sparkling white wine. So I don't know that this is necessarily going to attract that group of people. But it's interesting to watch.
Hill: Every once in a while, I make a request of our dozens of listeners, and this time specifically --
Malin: Someone in Germany needs to try this.
Hill: We need someone in Germany to try this out. We need someone. Because I think this could work, but I think you also don't want to be in a position with this where you are preparing it in front of your guests. That's going to be a little bit of a buzzkill. I think you want to prepare it, put it in a different bottle, and then serve it from a decanter of some sort.
Malin: Put your SodaStream wine in a decanter and then serve it?
Hill: Or something. I don't know. Clearly, I haven't thought this through entirely. But would you agree with me, at least for my presentation standpoint --
Malin: Making it in a SodaStream is a little declasse? [laughs]
Hill: [laughs] Yeah, I don't think that's the move.
Abi Malin has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. The Motley Fool owns shares of SodaStream. The Motley Fool has a disclosure policy.