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Sodastream International Ltd (SODA): The Bullish Case for This Beverage Company

Published on July 1, 2013 at 3:45 pm by The Motley Fool in News
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Sodastream International Ltd (NASDAQ:SODA)Sodastream International Ltd (NASDAQ:SODA) is an interesting company — no doubt.

This small company from Israel is challenging two titans The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP). Coca-Cola and Pepsi may be, in the words of Steve Jobs, only sugar water, but the companies behind them are so large and influential that they have become globally recognized icons of American culture and have been featured on the Fortune 500 for decades. Coca-Cola also happens to be in the Dow Jones Industrial Average which consists of companies that are believed to be bellwethers of the economy. In fact, Warren Buffett himself was quoted as saying “If you gave me $100 billion and said, ‘Take away the soft-drink leadership of Coca-Cola in the world’, I’d give it back to you and say it can’t be done.”

So does Sodastream International Ltd (NASDAQ:SODA) actually have what it takes to challenge these giants or even threaten their very existence the same way that Amazon.com, Inc. (NASDAQ:AMZN) did to Borders and Barnes & Noble, Inc. (NYSE:BKS)? And could it turn Coca-Cola’s and PepsiCo, Inc. (NYSE:PEP)’s huge bottling and delivery apparatuses that were a source of competitive advantage in the past into their Achilles Heel in the future?

Well, its too early to tell for sure, but we can gain better foresight by appreciating Sodastream International Ltd (NASDAQ:SODA)’s current Strengths, Weaknesses, Opportunities, and Threats (SWOT), performing what is called a SWOT Analysis.

In this article we’ll look at the Sodastream’s strength and opportunities; in part 2 we’ll look at the weaknesses and threats.

Strengths

Marketing aptitude
In an Industry where marketing matters, Sodastream International Ltd (NASDAQ:SODA) has shown that it can play with the big boys. in 2010, Sodastream launched a guerrilla marketing campaign called Cages.  It featured exhibits showing thousands of empty plastic bottles and cans representing the garbage of bottled beverages and cans a household generates over 5 years.
A subsidiary of Coca-Cola in South Africa  in 2012 issued a Cease and Desist ordering Sodastream International Ltd (NASDAQ:SODA) to remove Coke bottles from its exhibitions. Sodastream used this as ammo against Coca-Cola and capitalized on the situation to bring more attention to its campaign thus garnering as much free publicity as possible.  Sodastream refused to comply with Coca-Cola’s request, its CEO Daniel Birnbaum quoted as saying “it would take more than a letter to shut me up.” Sodastream also announced that it will bring the Cages exhibition to The Coca-Cola Company (NYSE:KO)’s home town of Atlanta, Georgia.
Birnbaum went on to say “If Coca-Cola claims to still own these bottles, then they should clean up their own garbage. Approximately 1 billion bottles and cans end up in our parks, rivers, oceans and garbage dumps every day worldwide — almost 400 million in America alone.” All of this noise resulted in a win for Sodastream International Ltd (NASDAQ:SODA) and PR nightmare for Coca-Cola.
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