Comment - SodaStream: Time to Get Busy with the Fizzy, Again
SodaStream - It's back, Back, BACK!!!
Richard Corbett is in a reminiscing kind of mood this month. Let the fogs of time clear, and hear him discover a drink maker from his youth that could be due a comeback some time soon.
I am sure that, if I were to rummage through the cupboards of the family home where I grew up, amongst the ageing Action Man, the unsolved Rubik’s Cube, the Star Wars figures and the Charles & Diana commemorative mug, I would stumble across an old SodaStream machine. It was an iconic piece of machinery that was so prominent in UK homes in the 1970’s and '80’s and provided what seemed like an almost unlimited amount of refreshment. In fact SodaStream has been around a lot longer: It was actually invented in 1903.
The SodaStream self-carbonation machine has never gone away and the company have been relatively active in recent times: It has just bought back the Nordic and Baltic distribution rights to its business from distributor Empire AB and has been notably innovative in the US signing a co-branding deal with Kraft Foods for the use of the US firm's flavours in its soft drinks machines. SodaStream has also introduced its range of 12 flavours sweetened with stevia. This last move could be very appropriate in Europe now that Stevia has been given the go-ahead in this influential part of the world.
Following its listing on the NASDAQ in November 2010 you can even buy shares in the company. The listing illustrates that the company remain as ambitious as they were in my childhood. So, would you invest?
To look at, the machines are every bit as contemporary today as they were yesteryear. The company has teamed up with Swiss designer Yves Behar to give them even more of an edge. The look is right, and that is an important place to start.
The SodaStream concept is also very green and that too makes the product relevant today. It is also an important theme running through the company's marketing strategy. Green is the new black and DIY drinking is undoubtedly more environmentally-friendly, coming without the packaging side-effects of beverages bought out of the home. It was actually environmental concerns that triggered a dramatic boom in one particular market in Europe. Sweden provides plenty of clues as to the future prospects for SodaStream in the rest of the world.
In 2011, the company sold its millionth machine in Sweden, a startling achievement when you think that there are less than 10m Swedes. However, last year was not the peak of the success: That probably came in 2007 when self-carbonation machines were the vogue Christmas present of the year. Bottled waters had come under the scrutiny of the media, and producing your own fizzy water became the ethical way to drink plain sparkling water instead of bottled sparkling waters. It was not so much children that were the driver behind the success but young professionals and the dinner party set. In Sweden, of course, the company’s syrups gained a retail presence and proved popular, but it was the sparkling water segment that saw sales plummet and the big water brands and private label that took the brunt of the hit.
Four years on from the peak, and research does show that self-carbonation machines are still being used regularly by a small percentage of Swedes. There has been the inevitable George Foreman grill syndrome, though – a great product and we’ve all got one in the cupboard but it rarely sees active service. The gas canisters run out and consumers are often slow to replace them. Despite this, if SodaStream was to replicate even some of the success it has enjoyed in Sweden on a bigger global stage, then buying shares in the company would represent a very shrewd investment indeed. Already SodaStream boast of being available in over 40 markets.
Making your own fizzy drinks is relatively timeless; today’s children will enjoy doing it, just as we did. SodaStream is greener than Bono and a very economical way to source your refreshment. I believe that it is a concept that could well be ripe for a revival. Any sizeable comeback will, of course, have implications for some of the big name, packaged soft drink brands. After all, if consumers are making their own drinks, they are not buying them in the supermarkets.
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