SodaStream targets growth in exiting markets

LONDON (Reuters) – SodaStream International, whose stock has risen by more than 300% in 18 months, is aiming to boost sales of its fizzy-drink-making household devices in existing markets.

The Israel-based company, which used to market SodaStream with flavors, has switched to focus on turning tap water into sparkling water, which it says is more on trend with young, health-conscious consumers.

SodaStream is marketing itself as an environmentally friendly rival to the bottled-water businesses of Nestle, Coca-Cola and PepsiCo.

It has a relatively strong presence in Nordic countries such as Sweden, where about 24% of households have one of its namesake devices. But other big markets still offer a lot of room to grow, such as Canada, where penetration is only about 5%, and the United States, which is around 1.5%.

“Our focus is to grow our own core business organically because we’re just at the beginning,” chief executive Daniel Birnbaum told Reuters in London on Monday.

The company has also developed another device called SodaStream Ultimate, which can make single servings of hot and cold drinks using purified water.

The product was developed in case Keurig Kold – a project by Keurig and Coca-Cola – took off. But that product’s failure last year means SodaStream Ultimate has not yet had to launch.

“It’s ready to launch, but we have enough growth right now in our existing business model that we chose to wait on that machine right now,” Birnbaum said. “I think the market is not ready for it yet. I don’t think single-serve is what consumers need.”

While the main focus is on organic growth, SodaStream is open to possible acquisitions, and it could gain scale by adding other appliances or water-related devices, Birnbaum said.

“We’re young in the process,” he said. “It’s not like we’re on an aggressive hunt.”

SodaStream was in the spotlight several years ago when critics were calling for a boycott over a factory it had in the West Bank. The company has since closed that factory, relocating to a new, much larger facility in the South.

The new factory employs some 80 Palestinians, who were given Israeli work permits, and Birnbaum said he would ask the government for more permits as the business expands.

“It depends on how quickly we grow the business,” he said. “It’s a matter of need.” He estimated SodaStream could employ 150 Palestinians by the end of 2018.

The company’s 2017 forecast calls for annual revenue to grow 10% to about $524 million, excluding currency moves.