The holiday shopping season is working out well if you were in the market for a carbonated beverage maker. SodaStream (NASDAQ:SODA) and Keurig Green Mountain (UNKNOWN:GMCR.DL) are making the most of the discounting fervor to justify aggressive pricing for their systems, and one has to wonder if the deals will continue beyond Black Friday and Cyber Monday.
The $199.99 sale for Keurig Kold that was only supposed to last through the weekend is now being extended through Tuesday. That's a pretty desperate price for a fizz maker that hit the market just two months ago at $370. However, it's not the only soda maker that's getting a major promotional price cut. SodaStream is also mounting a markdown offensive with its own Cyber Monday sale, offering any of its sparkling beverage makers at a 10% discount. It's also including free shipping and a pair of soda flavors at no additional cost. SodaStream's offer is good through today. Keurig Green Mountain's deal is in play until Tuesday. Both offers are being made directly through their websites, but some of the retailers stocking Keurig Kold are also promoting the $199.99 sale price.
It's clever. This is a time when even the hot brands and products that folks crave are on sale. So, SodaStream and Keurig Green Mountain can hop on that bandwagon as a way to justify a huge discount without admitting their products are failing.
We know that SodaStream is going the wrong way. Revenue clocked in with a double-digit year-over-year decline in SodaStream's latest quarter, and that includes an 11% slide in the Americas. It may be too early for hard figures on Kold, but even Keurig Green Mountain concedes that it's a work in progress.
"We know that the first product we put out in the new technology is never going to be perfect," it told analysts earlier this month in its quarterly earnings call. "Consumers want it to be smaller. They want it to be less expensive. They want to have more sizes of drinks available. They want a broader selection of drinks."
Despite spending heavily on Kold, Keurig Green Mountain sees it selling no more than 100,000 systems in the first year, amounting to an impact of less than 1% in terms of revenue for the near term.
That's pretty weak, but it's why discounting the appliances is so important. SodaStream's new unit sales have been fading for a couple of quarters, but it did sell a record 7 million CO2 refills during the third quarter. Kold's self-carbonating syrup pods are expensive -- folks are expected to pay $1.25 for an 8-ounce serving -- but once they've invested $369.99 or now $199.99 on the beverage maker they are committed to the purchase of pricey consumables.
So, yes, SodaStream and Keurig Green Mountain may be trying to camouflage their failings and desperation in the form of Black Friday and Cyber Monday promotions. If it helps move more of the starter kits it will be a brilliant strategy.
Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool owns shares of SodaStream. The Motley Fool recommends Keurig Green Mountain. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.