Has SodaStream Met Its Match?
Nov 5th 2012 6:49PM
Updated Nov 5th 2012 6:58PM
There may be some fizz in Flavorstation yet.
Shares of Primo Water (NAS: PRMW) soared today after the distributor of multigallon bottled water signed a three-year deal with Cuisinart. The heart of the agreement is that Cuisinart will start selling Primo's existing line of sparkling beverage appliances and that Primo will supply CO2 cylinders for Cuisinart's new proprietary line.
SodaStream's (NAS: SODA) stock is trading slightly lower on the news, and rightfully so. Flavorstation failed to gain traction because Primo dropped the ball in distribution. Aside from Lowe's (NYS: LOW) -- an odd choice as Flavorstation's lone major retailer, given the lack of repeat visits to a home-improvement superstore chain -- Primo's water-fizzing system never had much of a shot.
Cuisinart should have a thick roster of names of all of the home-goods stores that stock its small kitchen appliances.
However, this isn't just about Primo's Flavorstation and Liberty lines that seemed dead in the flat water this summer. Did you catch the part about Cuisinart's proprietary line? Yes, the kitchen-appliances giant plans to roll out its own sparkling-beverage maker this month.
The good news for SodaStream is that it has experience in tackling competitors in overseas markets. Established rivals, in some cases, have only helped by validating the market and educating the consumer.
SodaStream's market penetration in the U.S. is still low. It's nowhere near as close as it is in Sweden, where one in every four homes has a SodaStream machine. Even if Cuisinart does open new doors for the home-based soda-brewing market, things don't have to end badly for SodaStream. For starters, what if SodaStream syrups become the flavor of choice for rival systems after flat water has been fizzed up?
There should be more clarity when SodaStream reports its latest quarterly report on Wednesday morning. It would be a surprise if the Cuisinart question doesn't come up. However, if history is any kind of teacher, SodaStream will come out of this just fine and fizzy.
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The article Has SodaStream Met Its Match? originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of SodaStream. Motley Fool newsletter services recommend Lowe's and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools don'tt all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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