Sodastream International Ltd (SODA) Is Not a Fad

So how’s that carbonated pet rock and hula hoop doing? SodaStream’s been entrenched in Europe for years, and it’s still mustering double-digit growth. Closer to home, where SodaStream made a big splash in retail distribution three years ago, growth has been even stronger. Stateside unit sales of soda makers, gas refills, and syrups rose 78%, 101%, and 119%, respectively, in SodaStream’s latest quarter.

If this is a 2010 fad, why are starter kits still growing at a 78% clip in this country? If folks aren’t using them, why are the carbonators and flavor bottles growing even faster?

SodaStream also has just 1% of household penetration in this market. Clearly, we’re not at Keurig levels here, but why are we near the ceiling (if this was a fad) instead of the floor (if this isn’t) when SodaStream has had greater success in regions where it’s been doing business longer?

SodaStream has at least 10% of the household markets in four countries, and we consume more soda in this country than anywhere else.

There have been faddish systems in the past that added fizz to flat water, but they never had the retail distribution, whereas most of the leading retailers around the country now sell SodaStream consumables, and many will swap out your empty carbonator at half price.

All washed up
Sam’s final argument is that folks will continue to enjoy canned and bottled soda despite the convenience of home-based carbonated beverages because the bottled-water industry shows that folks are willing to pay up for something as a substitute for something that’s nearly free.

Is that why folks really drink bottled water? No. They consume bottled water because they think it’s better. They don’t trust the rusty water fountain in the office building. You don’t get any fresher than making soda on the spot, and as the SodaStream flavors expand and evolve — just as Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s K-Cup lines have expanded through third-party partnerships with great beverage brands — it will make the argument to buy and use a SodaStream that much more convincing.

SodaStream isn’t the next microwave, but it’s certainly not the next hand-cranked ice shaver.

The article SodaStream Is Not a Fad originally appeared on Fool.com is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz owns shares of Green Mountain Coffee Roasters and SodaStream. The Motley Fool recommends Green Mountain Coffee Roasters and SodaStream and owns shares of SodaStream.

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