So long SodaStream? Not yet.

Photographer: Mike Coppola/Getty Images for SodaStream

Friday Food Post: Keurig Takes On SodaStream

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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I've been a longtime advocate of SodaStream, which lets you cheaply make seltzer at home and on demand, rather than storing massive bottles of the stuff around the house. The company has basically owned the home carbonation market. But now the Wall Street Journal reports that it's going to have some competition.

The biggest threat comes from Keurig, which has been talking about a cold beverage machine for a while, and now seems set to release a product this fall. Obviously, Keurig's manufacturing and marketing muscle is formidable, but the real reason this is such a big deal is that Keurig is partnering with Coke and the Dr Pepper Snapple Group, giving it the ability to produce your beloved brand-name beverages at home for the first time. (SodaStream sells soda syrups you can pour into the bottles, but they are not close enough to, say, substitute for my avid Diet Coke habit.)

I've been excited about the prospect of the Keurig for a long time; I'd certainly love to be able to dispense with storing cans around the house. But it looks as if when it comes out, the SodaStream will still have one key advantage over the Keurig: price.  The Journal reports that the new Keurig Kold machine will cost $300 and produce drinks for $1 a serving. Considering that Sodastream machines start at $80 and produce drinks for as little as 8 cents per serving, that's a big step up. For that matter, Peapod will sell me Diet Coke for around 50 cents a can. Why would I invest in a Keurig machine that's going to be more expensive than that?

Storage is one answer: The Keurig machine actually chills the drinks to 38 degrees Fahrenheit, will presumably look better on your counter than a 20-pack of soda, and will allow you to have more variety of beverages in a small space. There's also the gee-whiz factor of having a machine that dispenses soda on demand. Still, that price point is a heavy lift even for a gadget freak like me, who has been avidly waiting for this machine since she first heard rumors of its existence.

Keurig has won people over with its single-serve coffee makers, even though the per-serving price is higher than just brewing a pot of coffee at home. But single-serving pods for coffee actually do offer a value proposition: They make cleanup easier, and they allow you to make a single cup of coffee instead of a whole pot. Neither of those two considerations really applies here, comparing to cans of soda.

On the other hand, technologies are always expensive at the beginning, their price falling as bigger volumes allow them to move down the per-unit cost curve. If that happens here, the product looks like a blockbuster. I'd certainly consider shelling out for a machine just for the storage benefits and the instant cold beverage, if the price per drink was something closer to the cost of a can. And I doubt that I'm alone.

So the real question is: Will Keurig be able to get the cost down to something that folks like me would consider? There's only one way to find out, and that's to wait for the company to release it this fall and then iterate a few times. If that succeeds, SodaStream will be in trouble. If not, I expect that the company will continue to own the market for quite some time.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Philip Gray at philipgray@bloomberg.net