It's not just AquaBar -- a high-end and plumbed-in drinking water solution -- that SodaStream (NAS: SODA) introduced at a design exhibition in Milan earlier this week.

SodaStream unveiled SodaCaps and Source, two product lines that the company behind the popular namesake carbonated beverage plans to roll out in time for this year's holiday shopping season.

Source is a stylish update on the traditional starter system inspired by designer Yves Behar. Soda sippers may not be overly concerned about the way that a water carbonator system looks, but Source does make things easier with bottles that simply snap on instead of having to twist into place like the current models.


The more intriguing product is SodaCaps, which will essentially be capsules that contain just enough syrup to flavor an entire one-liter bottle. If one argued that SodaStream is trying to duplicate Green Mountain Coffee Roasters' (NAS: GMCR) success with its K-Cups in the soft drink realm, it would be hard to argue against it.

SodaCaps can be a game changer, of course. My one lament as an otherwise satisfied SodaStream user for two years is that the syrup-pouring process can be messy once in a while. SodaCaps addresses this with a capsule that attaches to the bottle. A simple push releases the sweet flavoring into the bottle.

However, it would be silly to compare SodaCaps to the empire that Green Mountain achieved with its K-Cups, even as Green Mountain's patents on the coffee pod technology are about to expire.

  • Syrup capsules for soda aren't new. When Primo Water (NAS: PRMW) acquired Omnifrio as the basis of its rival flavorstation platform, it used individual Insta-Fresh S-Cups as flavoring capsules. There has to be a reason Omnifrio never took off.
  • How economical will these SodaCaps be? Logically it will cost more per serving than the syrup containers that are good for 12 liters. Using the bottled syrup, the SodaStream equivalent of a can of soda costs $0.25 between syrup and carbonation. That's already in the ballpark of what house brands typically sell for at a supermarket or store. Name brands retail for a bit more. SodaStream doesn't want to price itself out of the market here. Green Mountain K-Cups aren't cheap, but they're a bargain compared to barista-brewed coffee.
  • Will SodaCaps eat into the company's environmental message? SodaStream claims that the SodaCaps containers will be recyclable, but the same can be said of the cans and bottles that it rallies against. SodaStream is aiming to make SodaCaps 100% biodegradable, but it would send the wrong message if it can't figure that out in time for the launch.

There's plenty at stake if SodaStream can overcome these objections. SodaCaps would make the process even more convenient and open the market to those that are spoiled by K-Cup simplicity. However, the obstacles to clear before getting to that finish line won't be easy to overcome.

Drink up
SodaStream is one of the many dynamic recommendations made to Rule Breakers subscribers over the years, but this is now a great time to discover the next Rule-Breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.

At the time this article was published The Motley Fool owns shares of SodaStream International. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters and SodaStream International. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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