Now that the buyout chatter surrounding Sodastream International Ltd (NASDAQ:SODA) appears to be dying down, we can get back to analyzing the strength of the model itself.
One of the things I love about being a Fool is that we encourage opposing opinions. I started the Dueling Fools feature in the mid-1990s on the premise that two educated dissenting opinions are more valuable to an investor than a single bullish or bearish diagnosis.
It’s in that spirit that I enjoyed reading Fool blogger Sam Mattera’s post over the weekend, calling out Sodastream International Ltd (NASDAQ:SODA) as a fad.
I disagree with the conclusion. I wouldn’t be a shareholder if I didn’t. However, I enjoy coming across well-argued perspectives that are different from my own.
Sodastream International Ltd (NASDAQ:SODA) has for years been called a fad, but that argument been debunked by now. Let’s explore some of Sam’s more reasonable points.
He begins by describing how the kitchen-appliance landscape has been unchanged for decades, so why should Sodastream International Ltd (NASDAQ:SODA) break the mold of the ice cream maker, juicer, and waffle iron that’s often banished to the back of the cupboard after the novelty wears off?
Well, reality shows us that even traditional appliances do get disrupted. The toaster is still the toaster, but how many people still replace their drip coffee makers with new drip coffee makers? Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) — a company that often gets compared with Sodastream International Ltd (NASDAQ:SODA), given their somewhat similar razor-and-blades beverage models — has revolutionized the way we view coffee brewers, with its Keurig single-cup systems. It has penetrated just 13% of the domestic households, but its brewers continue to be the industry’s top-selling coffee makers.
In short, kitchen appliances do change.
Comparing Sodastream International Ltd (NASDAQ:SODA) with crepe makers and George Foreman grills is also not fair. Folks consume soda daily. There may be something wrong with you if you’re popping down two or three crepes a day.
Then we get to assessing the faddishness of the Foreman grill or Margaritavilla frozen-drink maker. It’s pretty clear for these gadgets that sales stop happening. SodaStream thankfully provides a wider range of metrics, because it generates revenue with every use. As folks use the machines, we see the metrics of consumables. As long as that’s growing — just as Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s K-Cups — we know that the appliance is gaining in popularity.