NEW YORK – Israel-based SodaStream International, maker of
at-home soda machines and syrups, is making a splash in the soft drink
industry.
Late last week, PepsiCo squashed reports that it was in
talks to buy SodaStream International. “But maybe Pepsi should think twice
about SodaStream and its fast-growing network of countertop appliances that
turn tap water into fizzy drinks,” writes Bloomberg BusinessWeek.
The news source continues that SodaStream is arguably the
most disruptive force in a soft drink industry dominated by Coca-Cola and
PepsiCo. During the Super Bowl, SodaStream ran an ad that positioned itself as
the alternative to the soft drink brands, and the company repeatedly highlights
the environmental advantages of its reusable containers and cartridges.
Even if the company isn’t making huge waves in the U.S.
market yet, business is flowing for the start-up — SodaStream has averaged
a 33% annual revenue gain in the past five years and posted a profit in each of
those periods. “At a meeting with investors last month, the company said 6.5
million households around the world actively use its machines and set a target
for $1 billion in revenue in 2016,” writes the news source.
Barclays came out with a report that suggests it makes
“strategic sense” for PepsiCo to buy SodaStream, noting that the Israeli
company “has well-protected barriers to entry and is ‘clearly not a passing
fad.’”
The biggest challenge so far for SodaStream is distribution.
It’s now in 15,000 U.S. stores, including Walmart, “but that took years of work
and a lot of marketing dollars,” PepsiCo could help “unlock a lot of value” by
leveraging its vast distribution network.
The news source continues: If Pepsi bought SodaStream, and
DIY soda became a major part of the market, Pepsi would have the No. 1 player
in the game — and even if homemade pop continues to slowly sip at the beverage
market, Pepsi would turn a profit on the business.”