SodaStream Thinks It Solved Big Slowdown Problem with New Flavored Water

SodaStream closing down its West Bank facility, launching a new electric soda machine and new line of flavored waters

SodaStream CEO Daniel Birnbaum

In 2014, SodaStream suffered a slowdown due to a dramatic drop in demand in the US, which the company attributes to the healthy-eating trend. The company is also facing new competition from Keurig Green Mountain Inc., in its own playground, the home soda machine.

So SodaStream is seeking a new market share with the increasingly health-oriented consumers.

“The world is attacking sugar, ” said SodaStream CEO Daniel Birnbaum in a news conference to launch its new product line, “We are trying to create a balance between healthier beverages and tastier water.”

SodaStream cut its 2014 revenue and profit forecast in October, and said it would close a controversial factory in the Israeli-occupied West Bank that had sparked calls for a boycott of its products.

“We are not about to relinquish our No. 1 position in the US or anywhere; we are looking forward to healthy competition, ” CEO Daniel Birnbaum said while its competition worms up its engines. Keurig’s coming cold-beverage system in 2015 is being developed with help from Coca-Cola, Keurig’s largest shareholder (16% stake).

SodaStream, was the only player on home soda machines. Its revenue has grown 30% a year on average since 2008, reaching $562.7 million in 2013. In 2014 forecast drop 9%. Its stock on Nasdaq has fallen almost 60% since last April, when it hit a high for 2014 of $47.30, and is now trading at $19.90.

Birnbaum believes that the company didn’t identify quickly enough the change in the market.

“US consumers don’t want better Coke. They want more interesting healthy water.”, he said

US market demand for sparkling water is up 33% to nearly $1.5 billion in 2013. This trend continued in 2014, Birnbaum said. The company In response to all this changes is launching a new electric soda machine and new line of flavored waters,  made of all natural ingredients, have less sugar, no preservatives, only natural flavors, some with no calories and others with added fibers and vitamins.

SodaStream is expanding its partnership with PepsiCo, and will start selling capsules in New Jersey to make at home Pepsi and Sierra Mist sodas, second after Florida where it is already on sale.

The company’s $65 million annual marketing budget would be dedicated to this new line,  Birnbaum said.

More from SodaStream, the company is closing down its contested West Bank facility, and it has received permits to bring to Israel 100 Palestinian workers from that plant to a new factory.

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