For two out of the past three years, SodaStream (NASDAQ:SODA) investors have seen the stock make strong gains over the summer, only to give them up by the end of the year over concerns about lack of sustainable sales growth. 2013 was the worst of these years, seeing this growth-stock only gain a paltry 5%:

SODA Total Return Price Chart
SODA Total Return Price data by YCharts.

Adding insult to this performance is how well the market did -- up 32% -- not to mention seeing its primary competitors Coca-Cola (NYSE:KO)PepsiCo (NASDAQ:PEP)Monster Beverage (NASDAQ:MNST), and even Dr Pepper Snapple all give better returns. Will the future be a lot more fizzy, or should investors get out before they end up worse than flat -- with a portfolio half-empty? Let's take a closer look.

Syrup business not sweet enough
In 2013, much of the gains that were taken back were the product of lackluster syrup sales growth as well as investor fears that this could be an indication that the product wasn't taking hold in the U.S. as well as was hoped:

Source: SodaStream Q3 2013 earnings release.

As you can see in the bottom right-hand column, flavor sales growth for the quarter was only 7%, while Soda Maker Starter Kits (the soda machines) sales grew 27%. Mr. Market's concern is that, while uptake of this relatively new product has been brisk, if existing consumers aren't buying the syrup flavors, it could point to weakness -- aka consumers aren't using their machines -- down the road. And for a "razor and blades" business like SodaStream that is built around sales of its consumables, this is concerning. However, sales of the CO2 refill bottles remained brisk, outpacing sales of the starter kits by a strong margin. This bodes well for continued success. 

Declining overall soda market a positive for SodaStream?

KO Revenue (TTM) Chart
KO Revenue (TTM) data by YCharts.

The soda market has been in a slow sales decline for several years now, as health-conscious consumers shift away from sugary drinks while budget-minded consumers shift from branded sodas to private-label store brands. Not only are the total dollars spent in decline, but the actual amount consumers are drinking is less, with domestic consumption of 38.6 gallons per year in 2013 down more than 3% compared to 2012, according to a study by Nielsen. As you can see from the table above, PepsiCo, Coca-Cola, and Dr Pepper Snapple have all seen their revenues remain essentially flat for the past two years (Q4 results won't be available for several more weeks), while only Monster Beverage and SodaStream have seen sales growth. 

Much of this is, of course, due to the domestic decline in soda sales outpacing growth categories, including those that compete with Monster's popular energy drink products, as well as efforts to expand internationally. PepsiCo's domestic beverage business declined 2% as of the third quarter, even as its foods business -- which includes snack brands like Frito Lay -- grew sales by 5%. However, the company was able to grow operating profits by 6% through what the company calls "productivity savings," which it anticipates will be worth as much as $3 billion in cost savings from 2012 to 2014. 

Coca-Cola, which doesn't operate outside of the beverage business, has seen sales decline 2% for the first nine months of the year, accelerating to a 3% decline in the third quarter. However, while PepsiCo saw earnings improve on the back of those productivity gains, Coca-Cola's earnings are declining, partly due to some restructuring efforts that are yet to pay off. 

While the big brands stagnate, SodaStream's offering of a more convenient product that doesn't require lugging home gallons of pre-bubbled and sweetened water, or the waste of all of those bottles and cans, seems to still be pretty enticing to many consumers. Add in the aspect that people can make their own flavor combinations, add fruit juice, or even just have bubbly water -- all a powerful draw for both flavor- and health-conscious consumers --  and all for a lower price than the less convenient name brands, and there's still strong potential here. 

Final thoughts: Know your niche
Monster Beverage has been successful by carving out a niche and keeping its consumers happy. Even Coca-Cola has realized this, and is a partner with Monster, bottling and distributing its products (just look at Coca-Cola's "brands" section of its website) to take advantage of the growing energy drink market. SodaStream is in a tremendous position to do the same thing, both with the slowly declining soda market as well as in growth markets like energy and "better-for-you." 

While the dip in syrup sales may have left you feeling all sticky, it's just one metric that, compared to CO2 sales, isn't that concerning in the long run. As long as CO2 sales are strong, the future's pretty bubbly for SodaStream investors.