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Executive Summary: SodaStream Case Analysis

INTRODUCTION

SodaStream has been considered by some to be a participant in the Carbonated Soft Drink (CSD)
market,as evidenced by articles identifying SodaStream as a potential acquisition target. The CSD
market functions as an oligopoly (See section 2.5), and market share is heavily concentrated
amongst the big three. SodaStream is attempting to assess performance relative to large CSD
producers on a market share basis.

OBJECTIVE

This report makes recommendations that will enable SodaStream to achieve superior performance
in the US home food preparation appliance sector.

PROBLEMS

1.The CSD is an oligopoly with large prominent international brands, suggesting high margins but
great difficulty establishing a brand that acquires significant market share. (Section 2.5)

2.CSD is showing some potential for negative demand changes due to a trend towards healthier
dietary choices in the US. (Section 1.3)

3.SodaStream has had some difficulty with customers understanding their product use. (Sections
4.0 & 2.4)

RECOMMENDATIONS

1.SodaStream needs to reposition itself primarily as a kitchen preparation appliance. (Section 4.1)

2.SodaStream should rebrand in order to remove “soda” from a prominent position in its identity.
(Section 4.2)

3.SodaStream should create a platform of professionals and DIYs that continually generate more
sophisticated use options. (Section 4.3)

4.SodaStream must align itself with higher-end professionals and consumers. (Section 4.4)

CONCLUSION

SodaStream has the potential to disrupt the CSD market in the US, but it should attempt this
disruption as a kitchen appliance manufacturer rather than as a CSD entrant. It is not clear that an
entrant can rival Pepsi or Coke due to their prominent branding. However, the wave of shifting
consumer preference can provide a growing market in which SodaStream can establish themselves
as a market leader, both in terms of innovation and market share. By aligning themselves with
higher-end consumers, SodaStream can create a higher perceived value.
Executive Summary

SodaStream. a maker of place carbonation machines that allows consumers to do their ain
bubbly drinks. may keep the key in interrupting industry giants like Coca-Cola and PepsiCo.
Their instant drink device combines tap H2O. flavored sirup. and C
dioxide gas in a reclaimable bottle that’s endangering industry leaders. Although at­home
sodium carbonate production began in 1903. SodaStream machines did non get down to sell their
merchandise across Europe until the 1920s. Furthermore. it wasn’t until the company went
public on the NASDAQ in 2010 that SodaStream began to acquire a followers in the United
States. Just a twelvemonth after SodaStream went public. the Israeli company’s market cap rose
from $ 367 million to $ 1. 46 billion. That same twelvemonth. SodaStream had merchandises
placed in 45. 000 shops globally. including 7. 000 retail locations in the United States. The
champagne beverage-maker is now in retail giants including Costco. Wal-Mart. Target. and Bed
Bath & A; Beyond. among others ( Levy, 2014 ).

SodaStream has been able to maintain high net income borders in the last few
twelvemonth but “missed its grade in 2014. ” The company has been faced with falling stock
monetary values. and the world of declining clients looking for better H2O. non soda.
SodaStream is besides confronting revenge of its biggest challenger. Coke. as they plan to
present a new Keurig sodium carbonate machine of their ain. Now the competitory advantage
they’ve had is in danger of traveling into competitory para. The full CSD industry has to
germinate and maintain up with the declivitous tendency of ingestion. So of course SodaStream
has to alter their scheme to maintain their competitory advantage on the market. The company
should look at partnering with PepsiCo to travel up against Coke. and Dr. Pepper’s new trades
with Keurig.

If SodaStream could offer merchandises of one of the large three CSD names. hopefully
they will derive the consumers already loyal to the large trade name. As discussed in this
analysis of the CSD industry and SodaStream. the full hereafter of the company lies within their
determination on how to alter their scheme and go on to be the largest in place carbonated drink
shaper.

SODA STREAM SYSTEM Company

Founded in 1903 by W & A ; A Gibley who marketed the original machines to British
upper-class ( PC 1-2 ) . Now a turning tendency being consumed all across the U. S. every bit
good as Western Europe. Central Europe. the Middle East. Asia. the Pacific. and Africa.

SodaStream is doing the drink industry more convenient for their clients by non holding
to buy and hive away bottles and tins. They are all about authorising consumers by giving them
the control of making a drink to their specific gustatory sensations. SodaStream provides clients
a more cost effectual option to devour drinks. Supplying healthier merchandises with less sugar.
carbs. and Calories than other soft drinks is how SodaStream is advancing wellness and health
consciousness to consumers. The company is besides forcing for clients to travel green. by
utilizing one SodaStream bottle a individual can replace around 10. 000 fictile bottles that are
thrown off day-to-day.

Business scheme:

SodaStream’s chief vision is to extinguish fictile bottles from landfills for good ( PC 1-6
). The company has taken notice to consumer concerns about wellness and the alteration in
demand from Colas to “flavors” ( PC 1­6 ) . They stress the cost benefits to consumers in puting
in the SodaStream machine.

The machines range in cost of $ 80- $ 200 and clients earn a return on that investing by
extinguishing the cost they would usually be passing each month on bottled or canned drinks.
SodaStream is presently working on deriving more partnerships by increasing their consumer
range. heightening category credibleness. and turning the gross revenues of sodium carbonate
shapers and consumables. Sodastream sought out partnerships with drink trade names such as
Country Time and Crystal Light. Besides forged a relationship with Samsung to make a line of
iceboxs incorporating sodastream machines built-in. Companies in the U. S. are working more at
selling schemes to do SodaStream more mainstream. In three old ages their selling attempts have
produced 40 % of unaided trade name consciousness. The company has their really ain famous
person planetary embassador. Scarlett Johansson. who has been a consumer for 5 old ages. As of
their 2014 counsel update they were anticipating their 2014 gross to increase by 15 % to increase
by 11 % . and a net income addition of 3 % .

To look for altering tendencies such as: increased involvement in “green” merchandises.
wellness concerns. and society’s altering attitude towards frugalness. ? “?
Revolutionize the drink industry - authorising people with simple. originative. merriment ways to
do and bask better­for­you. bottle­free bubbly drinks. ” Goals for 2015: 1 ) New packaging and
consumer message. 2 ) Operational betterments aboard and increase in fabricating capacity. 3 )
Streamline distribution lines.

What is the construction of the US carbonated soft drink market? As of 2011. 66 % of the
carbonated soft drink ( CSD ) market was dominated by Coca-Cola. PepsiCo. and Dr. Pepper
Snapple Group. These three groups held the top 10 trade name names. every bit good as a big
part of the market portion. Coca-Cola and Pepsi have been in strong competition for many
decennaries. Dr. Pepper Snapple Group chose to take clasp of the spirit section of the market
alternatively of traveling head-to-head with the other two in the so called “cola wars.”

How has the construction of the industry changed in recent old ages?

For the last decennary. consumers have become more concerned about issues associating
to their wellness and the environment more so than they had in the yesteryear. This brings
several issues into drama for the CSD industry. For one. many of the sodium carbonates are
packed full of sugar and empty Calories. Obesity is a major concern countrywide and the
statistics are reeling for both kids and grownups.

Adult fleshiness rates have doubled since 1980. from 15 to 30 per centum. while
childhood fleshiness rates have more than tripled” (TFAH, 2015).
Another wellness concern is diabetes. once more from the high sugar content in most of these
sodium carbonates. “? The Container Recycling Institute ( CRI ) estimates that 36 billion
aluminium tins were landfilled” ( U. S. Environmental Protection Agency ) . Also mentioned in
1-6 about the rise in monetary values taking to a diminution in ingestion of CSD.

What do the alterations in industry construction suggest about the likely profitableness of the
industry in the hereafter?

Even though net incomes have been easy worsening over the last several old ages due to
dwindling ingestion. carbonated soft drinks still account for approximately 25 % of drink
ingestion daily for most Americans ( Barney & A ; Hesterly. 2015 ) . In add-on. the three taking
CSD companies have invested in other popular drinks such as flavored Waterss. athleticss
drinks. juices. tea. and java. This non merely helps keep net incomes. but besides keeps them in
competitory places.

Is SodaStream a riotous pioneer of the carbonated soft drink industry?

Bulls do experience like Sodastream will do traditional sodium carbonates disused. Bears
feel like there are still jobs sing the easiness of entry for rivals. A premier illustration would be
SodaStream’s newest competition, the Keurig Green Mountain at-home soda machine.
Harmonizing to SodaStream’s CEO Daniel Birnbaum., they missed the grade in 2014 because
consumers were looking for better H2O, non-better sodium carbonate ( Cohen. 2015 ) . Because
the company failed to nail this demand, its stock on Nasdaq has fallen about 60 % since last
April. when it hit a high for 2014 of $ 47. 30. and is now merchandising at $ 19. 90” ( Cohen.
2015, hypertext transfer protocol: //www. mediapost.
com/publications/article/182491/disruptive-innovation-will-sodastream-d o-to-soft. hypertext
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