Competition
SodaStream’s two major competitors are PepsiCo and Coke, which are the only giants in the soda industry. Coca-Cola can be regarded as a direct competitor to SodaStream, as most of its revenue comes from its soda business. PepsiCo, on the other hand, generates most of its revenue from other product lines, including Frito-Lay, and not from its carbonated beverages.
The reason why SodaStream is getting so popular amongst soda drinkers is because the product is eco-friendly and produces healthier sodas. Purchasing the soda maker is a one time thing, and the company generates a steady revenue from the sales of canisters and flavorings.
PepsiCo and Coca-Cola products are available at almost all retail outlets, while SodaStream products were previously available only at few retail stores. Distribution is one of the things which could have affected SodaStream’s market in the U.S., as previously, the company didn’t have many distributors, especially for the canisters and syrups. However, the soda makers and the canisters are available at most retail outlets and giant stores, including Bed Bath & Beyond Inc. (NASDAQ:BBBY) and Wal-Mart Stores, Inc. (NYSE:WMT)
Future growth and things to be optimistic about
SodaStream recently announced a partnership deal with Ocean Sprays Cranberries . Ocean Sprays is one of the leading names in cranberry beverages and foods. The new partnership will bring Ocean Spray’s popular flavors to SodaStream’s portfolio of various different syrups, including diet cranberry and cranberry-raspberry.
More than 30% of the Ocean Sprays customers prefer sparkling water in the cranberry juice, and the new partnership is the perfect opportunity for consumers to enjoy the classic cranberry juices along with SodaStream’s sparkling water. The new flavorings will hit stores later this year and this is definitely something to be optimistic about in the future.
Another headline is SodaStream’s partnership with electronic giant Samsung. Both the companies, together, have released a new refrigerator which will dispense filtered sparkling water. This is a whole new step for SodaStream after its successful soda maker. The fridge will feature 3 different levels of fizziness, and will use SodaStream’s replaceable C02 canisters. The fridge will be available from next month in North America for under $4000.
Conclusion
SodaStream is a new type of company in the soda industry in the U.S. and many believed that the company would not be able to create a similar impact that it had on the European market. Since its entry into the U.S. market, the company has been growing with the U.S. being its strongest market.
Yes, the company doesn’t pay dividends but this doesn’t mean that it is not a good long term opportunity for investors. If the company can grow in similar fashion for the next couple of years, then it would give a capital gain dreamt by PepsiCo and Coke investors. With its new strategic partnerships to grow even further, there is no doubt that SodaStream is an ideal opportunity for long-term investors.
The article SodaStream Will Not Lose its Fizz originally appeared on Fool.com and is written by Yasir Idrees.
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