Soda
Source: SodaStream.

The poor performance in shares of SodaStream (NASDAQ:SODA) has disappointed investors who found themselves attracted to the stock because of the early success of its home soda-makers. Over the past year or so, though, SodaStream's growth has come to a crashing halt, and long-term investors have seen the value of their holdings fall by more than 70%. Yet even though you'd expect SodaStream to make some strategic changes in order to try to reverse its falling sales, one move that SodaStream recently made will undo years of marketing and cross-promotional partnership efforts and represents a virtual surrender over a key part of its potential market.

Water, water everywhere?
SodaStream has long held itself out as the smarter answer to large soft-drink producers, heralding the overuse of disposable plastic bottles from single-serve beverage sales and presenting its reusable containers for self-made carbonated water and soft drinks as a more convenient and environmentally friendly alternative. The company went so far as to commission a Super Bowl ad with this theme in 2013, and although that ad never aired, even the attempt generated much-needed publicity for the soda-maker manufacturer.

Yet recently, SodaStream has decided to move away from emphasizing the environmental aspects of its products, instead focusing on health and wellness, which it hopes will fit better with the current priorities among potential U.S. customers. As a result, the company has adopted the motto "water made exciting" and released a survey last month that purported to show that Americans were willing to consider drinking more water. Indeed, SodaStream is counting on being the catalyst toward greater water-drinking, with one company manager saying that "we believe our home carbonation systems that create sparkling water drive consumers to drink more water."

Soda
Source: SodaStream.

An about-face on positioning -- and profits
It's not surprising to see SodaStream grasping at straws in an effort to support its flagging sales. Yet making such a substantial shift is a big gamble, with SodaStream making major sacrifices in exchange for uncertain gain.

First and foremost, even if you take the SodaStream survey at face value, there's not much support for the conclusion that carbonated-sodamakers are an integral part of the water-drinking experience for those surveyed. Only 8% of respondents identified "bubbles" as giving them more incentive to increase their water consumption, and carbonation is obviously the biggest added value that SodaStream products provide.

Soda Kitchen

Source: SodaStream.

Moreover, SodaStream reaps considerable profits from its hard-won portfolio of soft-drink flavorings, and it's unclear how much of that business it would keep if it emphasizes a health and wellness approach. During the third quarter, revenue from consumables, which include both flavorings and carbonation-canister refills, rose 3%, in stark contrast to the 34% plunge in dollar-sales of soda-maker starter kits. Although flavor-units sold dropped 8%, that was still better than the 32% drop in the number of starter kits sold. SodaStream has worked hard to win lucrative partnerships to offer flavors ranging from Country Time and Crystal Light to V8 Splash, and if it can't make money from those partnerships, it doesn't bode well for continuing licensing agreements in the future.

Finally, SodaStream is facing new competition from a rival that has previously focused on hot beverages now moving into the cold-drink market. Without a partnership with a major soft-drink manufacturer, SodaStream could find it hard to keep up with this new offering once it's available on the market. Already, early signs from the holiday season show that investors fear SodaStream is having trouble generating sales to close out 2014, and given last year's weakness, failing to deliver even in comparison to poor 2013 results is far from positive for SodaStream.

When a company's overall strategy isn't working, it makes sense to change things up to see if it can improve on past failures. Yet before a company makes a major transformation to a message it has spent years emphasizing, it should fully understand not only the potential benefits, but also the costs. At least at first glance, SodaStream's big strategic shift risks an even larger failure without any obvious likelihood of driving further sales, and until it does, SodaStream investors are justified in their reluctance to get behind the stock.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.