In comparison, Coca-Cola’s 3% growth in America shows the saturation level of the market. Developing economies such as Thailand and India, along with mature markets like Latin America, showed the company’s highest growth percentages. Currency devaluation has affected the revenue figures of both Coca-Cola and Pepsi, as each saw just a 1% growth.
Sodastream International Ltd (NASDAQ:SODA)’s homemade soda machines require CO2 tanks to convert water into soda water. Like propane, CO2 tanks need to be refilled—and close to 40% of the company’s revenue comes from refill sales. If customers don’t continuously refill their tanks, overall sales could suffer along with their share price. The gas exchange has become less of a problem for US in the last quarter, however. “Consistency” is the key word here as Soda Stream has continuously meets the expectations of its stakeholders for the past few years, as implied by the company’s increasing earnings-per-share figures. In a short time span it has been able to match up with the giants of the highly concentrated beverage industry.
Distribution and marketing
Soda Stream’s products are now available at more than 60,000 retail stores in 45 countries around the world, including 15,000 retail stores in the United States. The company looks to further develop its presence in the retail network in the remainder of the year by expanding its association with Wal-Mart Stores, Inc. (NYSE:WMT) and plans to launch campaigns on both QVC and the Home Shopping Network as well. The recent partnership with Samsung to incorporate carbonation technology into high-end refrigerators could also help to drive growth for consumers who don’t want a separate appliance in their kitchens. Samsung has already launched its new refrigerators at Best Buy Co., Inc. (NYSE:BBY) and will widen its launch in coming days. This will allow SodaStream to extend its shelf space in a country where almost 70% of the market is occupied by Coca-Cola and Pepsi.
Unique and creative marketing will be guiding the company’s revenues in the current year, including having celebrities talk about their passion for the product and partnering with companies like Kraft Foods Group Inc (NASDAQ:KRFT). Strong sales were seen during the Super Bowl and the company intends to create further awareness during the holiday season. Competing with this, Coca-Cola has adopted a worldwide “Crazy for Good” campaign as well as promotions centred on “Coke with Meals.”
Parting thoughts
Sodastream International Ltd (NASDAQ:SODA) is looking at the long run and aims to replace the drinkers of Coca-Cola and Pepsi with its soda brands. It looks forward to selling more soda machines even though the product has less gross margin than the company’s competitors. Nothing can stop it from penetrating a once-impenetrable market and set its stock soaring high.
The simple carbonation technology, natural soda, two-thirds fewer calories and an extensive marketing campaign offer an intriguing opportunity for growth that could very well disrupt the soda industry. This is a game changing company that is here to stay!
The article How Much Fizz Is There in SodaStream? originally appeared on Fool.com and is written by Rahul Chattaraj.
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