SodaStream CEO Dismisses New Keurig Kold Machine as Competition

Daniel Birnbaum
SodaStream CEO Daniel Birnbaum. Photographer: Ariel Jerozolimski/Bloomberg

SodaStream International Ltd. Chief Executive Officer Daniel Birnbaum said he’s not worried about competition from the Keurig Kold machine.

That device, which Keurig Green Mountain Inc. plans to release later this year, is mostly for making colas and other sodas, Birnbaum said Monday at a conference sponsored by Beverage Digest. About 60 percent of SodaStream’s customers, in contrast, only use its products to make carbonated water, he said. Seven percent rely on the SodaStream just to create sodas.

SodaStream, based in Israel, is moving away from its earlier stance as a homemade alternative to Coca-Cola Co. and PepsiCo Inc. products. The company is now promoting itself as a maker of sparkling water, which can be plain or lightly flavored. Fifty new SodaStream water flavors will be available in the U.S. in August, helping the company promote the shift.

“We had a strategic error where we positioned ourselves as an alternative to Coke and Pepsi,” Birnbaum said. “That was wrong.”

Birnbaum said consumer preferences have moved from traditional carbonated soft drinks to water. He said he hopes SodaStream’s flavored varieties can serve as a bridge to plain still water, helping consumers increase their water intake.

The Kold arrives at a time when both Keurig and SodaStream are struggling to regain their footing. SodaStream is heading toward a second year of declining sales, something it hopes to reverse with the focus on sparkling water. At Keurig, a slower-than-expected rollout of the Kold has raised concerns about its ability to maintain growth.

Keurig, based in Waterbury, Vermont, didn’t immediately respond to requests for comment.

Water Flavors

SodaStream’s new water flavors fall under five broad categories: fruits, zero-calorie, a vitamin-infused plus line, lightly flavored essence category, and sparkling gourmet flavors designed by Michelin-starred chef Paul Liebrandt. The varieties are exclusive to SodaStream, Birnbaum said.

“This is not Dr. Pete to Dr. Pepper,” he said. “This is not cola to Coca-Cola. These are unique. You will not compare them.”

Birnbaum also sees the home beverage market moving away from single serving sizes -- Keurig’s forte. SodaStream is developing a combined hot and cold beverage machine, Ultimate by SodaStream, that can produce larger amounts of carbonated beverages and coffee at 10 to 35 cents a serving. The product doesn’t have a retail price yet.

The Keurig Kold, meanwhile, will be sold online and in select stores this fall -- ahead of a full rollout slated for 2016. It will make chilled beverages in eight-ounce serving sizes. The Kold is expected to be priced between $299 and $369. SodaStream’s machines typically go for about $80 to $200.

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