Dive Brief:
- SodaStream had another banner quarter, with revenue increasing 9.6% to $130.6 million compared to a year ago, according to the sparkling beverage maker's latest earnings report.
- Net income had an even larger jump, increasing about 84% to $14.4 million — compared to $7.8 million a year ago.
- CEO Daniel Birnbaum trumpeted the results in the report. "Financially, the significant improvement in profitability underscores the benefits of our enhanced manufacturing and expense structure and the power of our business model," he said. "We are confident that we are moving ahead with a balanced approach to increasing global household penetration and user retention, both generating greater shareholder value."
Dive Insight:
As soda's popularity wanes, SodaStream has soaked up market share and profits. The Israel-based countertop sparkling water machine's earnings have been nothing but good news for investors in recent quarters.
The company has seen growth across the board in almost every global sector. The largest increase — and the company's most lucrative region — is Western Europe, with a total of $81.6 million in revenues during the quarter compared to $74.4 million in its second quarter of 2016. Those figures would have been higher, the report notes, if not for negative foreign currency exchange impacts. In the Americas, revenue grew to $28.1 million from $26 million.
Health trends are helping to drive SodaStream's success. While the machines were initially marketed as a way to make sodas at home, more consumers are using them to make healthier plain sparkling water. Sales of refill CO2 cartridges — which allow consumers to use their machines to carbonate more water — were up 10% to an all-time record of 8.3 million. Meanwhile, the company's sales of water flavorings — allowing consumers to make their own soda — were down almost 11% compared to last year.
As a company, SodaStream may have started out targeting soda manufacturers — its trading symbol is SODA — but the latest earnings show it's doing more to close in on its newer target: bottled water companies. An ad campaign last year, titled "Shame or Glory," advocated that consumers cut down bottled water waste by instead using tap water to make sparkling beverages at home.
The campaign irked the International Bottled Water Association, which sent a cease and desist letter — which was ignored — to the carbonation company. Last month, the ad campaign won a gold award for integrated marketing at The Holmes Report's 2017 SABRE Awards EMEA. The company's newest ad campaign, featuring a time-traveling Mayim Bialik, also highlights the wastefulness of plastic water bottles commonly used now.
Some activists and manufacturers are agreeing with SodaStream. According to statistics from anti-bottled water group Ban the Bottle, disposable plastic water bottles use more than 17 million barrels of oil a year to make. Several water manufacturers are getting more eco-friendly, packaging the beverage in recyclable boxes and cartons.
As long as the movement away from soda and toward more sustainability continues to gain steam, it's likely SodaStream will continue to sparkle for investors.