As Americans spend less on sugary drinks, investors betting on beverage giants Coke and Pepsi are finding their portfolios rather parched.
During the last year, shares of Coca-Cola and PepsiCo trail the Standard & Poor’s 500 Index — and with total US soda sales down in each of the past seven years, a combined drop of about 13 percent, re-igniting revenue retro-rockets seems a long shot.
It’s quite a different story at Israel-based SodaStream, the small but fast-growing maker of at-home soda and seltzer machines.
The company’s shares have soared 38 percent over the past 12 months, far outdistancing Coke’s 11.9 percent gain and PepsiCo’s 8.7 percent increase over the same period.
Now SodaStream, after beating the two titans in the equities markets, is looking to beat them on the marketing front.
SodaStream announced yesterday it will advertise for the first time during the 2013 Super Bowl — going head-to-head against the two for the hearts and wallets of American consumers.
With SodaStream’s recent success — it sells more than 10,000 machines a day, with each buyer more likely to buy less Pepsi and Coke product going forward — some think it is only a matter of time before Pepsi and Coke are forced to enter the growth area.
In fact, sources in the beverage world say Pepsi and Coke are quietly eyeing the at-home market — although neither is close to jumping in.
Within the last three months, SodaStream has been exchanging phone calls and e-mails with soda executives who are trying to learn more about its operations, said one source, who declined to name the executives.
Coca-Cola and PepsiCo also declined to comment.
SodaStream CEO Daniel Birnbaum said he could not comment on what discussions he might be having.
However, he predicted that the major soda manufacturers would eventually offer home machines also, saying, “Coke and PepsiCo will follow us.”
“I know PepsiCo is trying to find a way to create carbonated consumption at home,” said one source who advises soda companies.
One reason that PepsiCo is reluctant to enter the at-home sector is that it is concerned about consistency and wants to ensure that its brand-name soda always tastes the same, one source said.
It is hoping to offer a machine — on its own or through SodaStream — that automatically controls the syrup levels, said one source familiar with the company’s thinking.
A source close to PepsiCo refutes that, saying the company currently has no plans to enter the market and is working with retailers and bottlers to promote consumption.
Dr Pepper Snapple, maker of 7Up, Canada Dry and Dr Pepper, is getting on board, though not with SodaStream. It has announced that early next year it will be offering K-Cups for Snapple teas to fit Keurig brewers.
Roth Capital analyst Anton Brenner said, “I think a good indication this is a market with traction is Cuisinart is looking to enter the market” with a home soda machine.