Evolving into a kitchen fixture
Sodastream International Ltd (NASDAQ:SODA)’s business model depends on people buying its soda-makers and then the subsequent future purchases of consumables and CO2 refills. However, Sodastream is not content with merely waiting for more people to take the plunge and decide to purchase its soda-makers; It has gone into partnerships with Samsung to install Sodastream built-in water carbonators in new Samsung refrigerators.
Sodastream has also recently partnered with KitchenAid a brand of Whirlpool Corporation (NYSE:WHR) to create its own version of an at-home carbonation machine. This has the potential to turn home soda-makers into a kitchen fixture similar to the microwave, coffee maker, and toast maker. If that were to happen, Sodastream would undoubtedly be the leader in this space for decades to come, as it has already invested in and built a distribution network that is not easy to replicate.
Future product and geographic expansion
Sodastream keeps on announcing new partnerships, new flavors, and new products; this is likely to continue in the future. One such recently launched product is Soda Caps which is a patent pending flavoring system which functions as a single serve disposable capsule that can be used to instantly flavor a Sodastream carbonating bottle. In other words you can use cap of the bottle to flavor your carbonated water on the go.
Sodastream also had success on the distribution front. One of the greatest triumphs of Sodastream was making it onto the shelves of US giant Wal-Mart Stores, Inc. (NYSE:WMT) last year. The company isn’t done with its expansion plans though, and has plans to expand into grocery stores and drug stores in 2014.
Sodastream still has some ground to cover to catch-up to the geographic distribution of its larger rivals which are almost present on every country on earth. Sodastream is currently only available in 38 counties out of 198 and still has not entered the giant population centers that are India and China.
Conclusion
Sodastream International Ltd (NASDAQ:SODA) has a lot going for it, but there are also causes of concern. We will look at these issues in part 2 where I’ll discuss the weaknesses and the threats facing the company.
The article The Bullish Case for This Beverage Company originally appeared on Fool.com and is written by Mohammed Shaaban.
Mohammed Shaaban has no position in any stocks mentioned. The Motley Fool recommends The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NYSE:PEP), and SodaStream. The Motley Fool owns shares of PepsiCo and SodaStream. Mohammed is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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