Dive Brief:
- SodaStream reported higher-than-expected revenue and earnings for the second quarter Tuesday.
- Quarterly revenue jumped 17.2% to $119.2 million over last year's $101.7 million, while profits soared 120.8% to $7.8 million over $3.5 million in last year's second quarter.
- SodaStream CEO Daniel Birnbaum attributed growth to the company's rebranding as a sparkling water maker and said in a statement that the quarter's results "reinforce our confidence in the strategic course we have set for the Company."
Dive Insight:
Another contributor to SodaStream's confidence is undoubtedly the exit of Coca-Cola-backed competitor Keurig from the at-home cold beverage maker market. In June, Keurig announced it was discontinuing its first-generation Keurig Kold system, which debuted last September. For Keurig to pull Keurig Kold wasn't all that surprising, as its high price tag hindered sales from the outset.
SodaStream didn't wait for consumers to come around to its product on their own. Instead the company capitalized on Keurig's announcement by launching a limited-time promotion that enabled Kold owners to receive a free SodaStream sparkling water maker. Consumers received a promo code for the free SodaStream device after sending a selfie of themselves with the Kold and all required information to SodaStream.
Keurig's announcement was also a relief to SodaStream investors. In the short term, SodaStream's stock spiked intra-day the day Keurig announced it would discontinue the Kold and subsequently lay off 130 employees.
But longer term, SodaStream shares are up nearly 49% year to date compared to a 6.2% increase for the S&P 500 Index. That includes a 13.6% pop in pre-market trading Tuesday after SodaStream announced the earnings beat and an even higher rise in share price after the company announced positive first-quarter earnings in May.
After failing to compete in the soda industry against companies like Coca-Cola and PepsiCo, SodaStream's new approach pits the company against those same competitors in a new way. It is a better-for-you alternative to the very product it once primarily promoted — and is still contained in the company's name.
Sparkling water sales have surged in recent years as producers position the beverage as a health-conscious but still bubbly replacement for soda. Last year, Birnbaum called sparkling water "the future of beverage."