Is Green Mountain Going After SodaStream?
Nov 21st 2012 6:00PM
Updated Nov 21st 2012 6:04PM
The market applauded Green Mountain Coffee Roasters hiring Coca-Cola executive Brian Kelley as its new CEO yesterday, sending shares as much as 11% higher before settling with only a modest gain.
Kelley -- expected to head up Coca-Cola's North American refreshment business in January before accepting Green Mountain's job offer -- brings years of beverage business and brand building experience to the company behind the Keurig single-cup coffee brewers.
Should SodaStream be worried?
After all, SodaStream has been taking shots at Coca-Cola this year. Can't Kelley fire back now?
No. That's just not going to happen.
Let's get into the important distinction between Green Mountain and SodaStream. Investors love to throw the two companies into the same basket. It's not unusual to see one stock rally just because the other is on the move.
The sympathy plays have never made any sense. Yes, both companies make small kitchen appliances that make beverages. The similarities end there. Green Mountain is a brewer. SodaStream is a carbonator.
That's important. We can't draw the line at hot and cold anymore. Green Mountain has been building up its "Brew Over Ice" line of K-Cup options. It started with iced tea and lemonade that are brewed hot but served over ice to chill out. Green Mountain turned heads last month when it teamed up with Dr. Pepper Snapple Group to introduce Snapple K-Cups, offering a broad line of fruity tea drinks with a recognizable brand. For its part, SodaStream also offers lemonade and fruit drinks through its partnership with Kraft Foods for co-branded Crystal Light and Country Time syrups.
Yes, the beverage options are starting to meet in the middle, but one can never forget that SodaStream's versions of these drinks are carbonated. Turning tap water into sparkling water is what the SodaStream machine does. There's a material difference between traditional lemonade and carbonated lemonade. Iced tea and a fruity carbonated beverage are entirely different refreshments.
It's true that SodaStream and Green Mountain can work toward the same cause in promoting the convenience and occasionally eco-friendly nature of making one's own beverage. Both companies are doing well in the education process going by recent growth rates. However, they don't truly compete with one another -- and probably never will.
Brew ha ha
Want to learn more? There's a premium report on Green Mountain, exploring the Keurig champ's challenges and opportunities. A free year of updates is included, so click here to get up to speed on the java heavy.
The article Is Green Mountain Going After SodaStream? originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz owns shares of SodaStream and Green Mountain Coffee Roasters. The Motley Fool owns shares of SodaStream and has the following options: short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters, and long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Green Mountain Coffee Roasters, The Coca-Cola Company, and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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