Will Coca-Cola (NYSE: KO) ever put out SodaStream (Nasdaq: SODA) syrups?
It's a question that I've heard more than once. The answer is easy: No way! Coca-Cola would never upset its bottlers and consumer-facing retail partners by marketing its secret sauce directly to soda sippers. It would also be validating SodaStream as a model, and that would be disastrous on many different levels.
Even if Coca-Cola were to offer its syrup on its own -- since there wouldn't be much of a reason to go through SodaStream the way Kraft (NYSE: KFT) will this summer when it puts out SodaStream-partnered Country Time and Crystal Light flavors -- SodaStream would make a killing on carbonator refills alone.
However, Coca-Cola is probably lending SodaStream a hand with the growing popularity of its Coca-Cola Freestyle machine -- the Coke king just doesn't know it.
Coca-Cola Freestyle is a self-serve soda fountain solution that allows consumers to mix their own flavor combinations. There are more than 100 flavors available, all dispensed from the same nozzle. Raspberry Diet Coke? Cherry Sprite? Dasani with peach? These are just some of the flavor offerings that one may never find on store shelves.
How can this backfire on Coca-Cola? Well, the machine was hard to find when it was introduced three years ago. It went from theme parks to high-end movie theaters to gourmet burger joints. However, the machine gained even more momentum when Burger King began testing them out at select locations. As part of the company's recent makeover (which includes ripping off McDonald's (NYSE: MCD) in some cases and outdoing the Golden Arches in others), Burger King is now encouraging its franchisees to order the high-tech beverage dispenser.
We live in a copycat world. If Burger King -- which recently slipped to third in the burger war -- begins to gain traction partly on the success of Coca-Cola Freestyle, you can be sure that McDonald's will have to pay attention.
However, what will it mean if folks come to expect exotic flavors they can't find in bottles or cans? How many "aha" moments will consumers have as first-time mixologists at a Freestyle machine, realizing that it would be pretty cool to invest in a simple beverage system that allows them to make and mix their own carbonated soft drinks at home?
You're awakening a sleeping monster, Coca-Cola. You just don't know it yet.
Drink up
SodaStream is one of the many dynamic recommendations made to Rule Breakers subscribers over the years, but now is a great time to discover the next Rule-Breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.
