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Giving SodaStream Another Look

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I apologize for the lack of articles lately. I've been deluged with legal documents and requirements related to some of the companies mentioned in my GofundMe: Consumer Advocate Sued Into Silence posting.

That kept me busy up until a short family vacation where we went to the smallest city in the smallest state. They really have that book for everything, right?

Today's topic is SodaStream, a product, company, stock, and savings tool, that I've written about a lot in the past.

For example:

The last one is particularly interesting because I wrote about how I considered Facebook a bargain at $20, but not at $57. As I publish this, the stock is almost exactly twice that $57 number trading at $114. What a difference a couple of years makes!

While I was convinced I had picked a winning product on the upswing, it turns out I was wrong. The stock continued to tank even after it had dropped significantly. This is often called "catching a falling knife" in investing circles.

This is why, last week, I wrote that you shouldn't necessarily invest in what you know. Typically we know products and we may even love them, but companies and their execution can be mysteries. In extreme cases you may find yourself investing in the next Enron disaster where few people really knew what was going on.

This is all in the past. I sold most of my SodaStream stock when it had a brief bump on an acquisition rumor. I kept a very small amount simply because I still believe concept of making sparkling water at home for pennies.

That brings us to last week, where I read an interesting article on LaCroix sparkling water on Vox. It seems like this is the newest fad. The strange thing is that the flavored sparkling water has been around 30 years.

Why is it so popular? As the article says:

"Over the past decade, Americans have done something that would have once seemed downright un-American: They've given up soda. And when you’re craving a can of pop, LaCroix is a decent substitute. Unlike tap water, it has carbonation and a little flavor... Close your eyes, wrap your hand around the perspiring aluminum can, and you could be holding a Coca-Cola. LaCroix is succeeding as methadone for the soda addict."

In other words it's the right product at the right time. However, there's more to it:

"The secret behind LaCroix’s rise is a mix of old-fashioned business strategy and cutting-edge social marketing. When Americans wanted carbonated water, LaCroix was positioned to give them them fizzy water. Then, sometimes by accident, LaCroix developed fans among mommy bloggers, Paleo eaters, and Los Angeles writers who together pushed LaCroix into the zeitgeist."

It also has great marketing. It's easy to see why the right product at the right time with great marketing would be a winner. And I thought I had that with SodaStream.

I cut out one sentence in the first quote:

"Unlike a countertop SodaStream, it's cheap, readily available, and portable."

I'd argue that SodaStream is cheaper... especially if you use your carbonation as I do. I'd also say that it's just as portable... you can bring 500ml or full liters with you easily. I'd argue that it's readily available (it's at home and portable), but I could concede that point.

While SodaStream doesn't produced flavored carbonated water directly, it's easy to add a True Lemon, True Orange or True Grapefruit packet... or maybe a dash of cranberry juice for flavoring.

A strange thing has been going on with SodaStream's stock the last few months. You could have bought in at around $12 a share, but today it trades at more than $21. They had a great quarter that surpassed expectations. I don't know if they can continue to execute or not, but right now it looks like it's bubbling up nicely (terrible pun intended).

This experience has made me wonder if timing really is everything. Is it possible that I was just too early? Or is it that SodaStream had bad execution and is just now getting it figured out?

If anyone has answers or thoughts, I'm all ears. Hit me up the comments.

Posted on June 29, 2016.

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One Response to “Giving SodaStream Another Look”

  1. ROBYN A. WEINBAUM says:

    i love sodastream. we bought it, partly on your recommendation, about 4 or 5 years ago. i consider it so eco friendly: we have fizzy any time, we don’t have to lug bottles from the store, we take fizzy with us in reusable bottles, we add mango or cranberry juice for a kick. or a splash of rum. as for the product falling out of fashion, i don’t understand that.

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