Why SodaStream Can’t Compete with Coke and Pepsi

Jonathan Leibson/Getty Images for PMC(NEW YORK) — While Americans hunger for both convenience and brand-recognition, it seems as if SodaStream just can’t pop Coca-Cola and PepsiCo’s bubbles.

SodaStream announced Tuesday that its sales were lower than expected — sending its stock plummeting more than 21 percent to $21.63 a share by the afternoon.

The Israeli company said it hasn’t attracted new American households as it had hoped, and its carbonation-creating products are only in about 1 percent of U.S. homes. In Sweden, SodaStream products, for example, are in as many as 25 percent of households, the company said.

“Our U.S. business underperformed due to lower than expected demand for our soda makers and flavors which was the primary driver of the overall shortfall in the third quarter,” SodaStream CEO Daniel Birnbaum said in a statement.

SodaStream did not respond to a request for comment.

There may be two reasons why SodaStream hasn’t taken a bigger gulp of the two global soda kings’ empires, according to Adam Fleck, Morningstar equity analyst.

“One, their brand names are extremely powerful,” Fleck said. “[Americans] know the brands and like the brands.”

SodaStream has partnered with brands like Kool-Aid, but not soda giants.

“When consumers want soda, which admittedly is in a declining environment, they want Coke or Pepsi,” he said.

The second reason why more Americans haven’t jumped on the SodaStream bandwagon is they don’t yet buy the benefits of making your own bubbly concoctions.

“As seen by SodaStream’s rather minimal but notable penetration, there are consumers interested in healthier benefits of carbonating your own soda at home and convenience and not having to lug around cans. But we’ve seen given that minimal concentration, that consumer is few and far between,” Fleck said.

The popularity of Keurig “K-cup” systems shows that consumers are willing to pay for convenience. Keurig machines and individual coffee ground cups are noticeably more expensive than the traditional home or office brewing system.

And, Fleck says, let’s face it, the take-home alternatives of branded soda products are convenient: opening a can from your fridge.

“Consumers are willing to pay for convenience. And at the end of the day, you can infer that SodaStream wasn’t as convenient as it needs to be,” Fleck said.

There’s more bad news for SodaStream.

Keurig, in which Coca-Cola has a sizable stake, plans to roll out its own soda-making system next year.

Follow @ABCNewsRadio
Copyright 2014 ABC News Radio