PepsiCo Expands Partnership With SodaStream
September 11 2015 - 8:40AM
Dow Jones News
PepsiCo Inc. is deepening its U.S. distribution deal with
home-carbonation company SodaStream International Ltd., as the cola
wars head to the kitchen counter.
Caps filled with Pepsi and Sierra Mist to flavor water
carbonated by SodaStream machines will be sold on SodaStream's
website and at about 50 Bed Bath & Beyond Inc. stores across
the U.S. The expanded trial follows a smaller retail test in
Florida late last year.
The move comes as Keurig Green Mountain Inc. prepares to launch
a countertop cold-drink machine this fall featuring brands from
Coca-Cola Co. and Dr Pepper Snapple Group Inc., PepsiCo's chief
soda rivals. Coke has built up a 16% equity stake in Keurig since
last year.
The three soft-drink giants are hoping make-it-at-home
appliances will help boost U.S. soda industry volumes, which have
fallen for 10 straight years. The downturn has been fueled partly
by health concerns, as consumers scale back on sugary drinks and
drink more bottled water.
Israel-based SodaStream also is seeking a lift after its revenue
fell 27% to $190.2 million in the first half of 2015 from a year
earlier, including even steeper declines in the U.S., where a big
retail push fizzled. The world's leading maker of carbonation
machines has struggled to sign up big-name soda brands, and its
U.S. household penetration remains below 2%.
In a statement, PepsiCo said it "is exploring multiple
technologies in this area and SodaStream is one of several
companies we're talking to about potential ideas." PepsiCo declined
to name the other companies. It also declined to say whether it
would take an equity stake in SodaStream.
Keurig, known for its single-serve coffee brewers, last month
said sales of its carbonated cold-drink machine would begin on its
website in late September or early October, followed by stores in
select cities later this year. It has said it expects the machine,
called Kold, to be on shelves nationwide by the 2016 holiday
season.
A handful of other companies are targeting home carbonation,
including Canadian startup Bonne O, which began shipping its
machines to U.S. stores in May. Unlike SodaStream, Keurig and Bonne
O machines don't require consumers to exchange carbon-dioxide
cylinders.
Under SodaStream's deal with PepsiCo, each cap of Pepsi
HomeMade, Pepsi HomeMade Wild Cherry or Sierra Mist HomeMade will
make half a liter of soda. They are sweetened with sugar and stevia
and have about half as many calories as regular soda. A four-pack
of caps will sell for $3.49, and SodaStream machines cost $80 to
$200.
Keurig is betting its alliance with Coke and its machine's
technology—including flash-chilling—will give it a leg up. But the
Kold machine will also cost more, selling initially for at least
$300. The Kold pods, which make 8-ounce servings, initially will
cost at least $1.
Write to Mike Esterl at mike.esterl@wsj.com
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(END) Dow Jones Newswires
September 11, 2015 09:25 ET (13:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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