If you were CEO of KO and you were aware of the 25% penetration of SODA in Sweden, would you blow off SODA as nothing to be concerned about?
We all know KO and PEP are giants that will not likely be slated, but even if you are a giant you will watch over your shoulders for any stones that might be flung at you.
Do I think the CEO of KO is aware of SODA? Yes.
Do I think he is concerned about SODA? NO.
The population of Sweden is about the same as the poplulation of North Carolina so I don't think that the fact that 25% of Swedes owning a SodaStream is keeping him up at night. Keep in mind that per SODA's last ER, the average SodaStream owner purchases less than 1 Flavor per quarter so owning a SodaStream is very different then using it regularly.
Pick up a copy of Beverage World and look at the unbelievable number of new beverages that are introduced weekly. I'll bet there are hundreds of beverage companies that you've never heard of...all competing for a share of PEP and KO's market share. Some of them pretty sucessful with sales in the $50-100 million range. PEP and KO have tons of competiton coming at them from every angle and they take note of all of them...but they're not losing sleep over them.
SODA is a better investment IMO. The USA market will follow what is happening in Europe for KO. A majority of Sodastream's user base is in Europe. When Sodastream get's to 5% of households for the USA KO will have a bigger problem.Just tough to grow with Sodastream taking share... Even if its tiny as of now but growing every day.
During the quarter, the Europe Group maintained volume share and gained value share in still beverages. In a quarter marked by declines in the overall beverage industry in Europe, our sparkling beverage volume in Europe declined 5% in the quarter and our still beverage volume declined 3% as a result of continued weak consumer confidence, adverse weather and aggressive competitive pricing. For the year, we leveraged integrated marketing campaigns centered on holiday activation, our 2012 Olympic Games partnership and Coke with Meals programming. Germany volume declined 5% in the quarter, cycling 9% growth in the prior year quarter, and grew 1% for the full year, cycling 6% growth in the prior year. Performance for Germany during the year was driven by strong commercial campaigns such as our 2012 Olympic Games partnership and the Coca-Cola Christmas Truck Tour, music-themed integrated marketing campaigns, a continued focus on low-calorie and no-calorie sparkling beverages and packaging segmentation to drive recruitment and household penetration. Volume in the Central and Southern Europe region declined 3% in the quarter and 1% for the full year, with share gains in sparkling beverages supported by strong brand health scores and growth in Coca-Cola Zero, up 15% in the quarter. Volume in the Northwest Europe & Nordics region declined 5% in the quarter and 3% for the full year, and the Iberia region declined 8% in the quarter and 1% for the full year
Since they maintained volume share, the decrease in Europe speaks to the macro conditions and nothing more. As mentioned by another poster, SODA can have a nice relatively small niche market in the US and the stock will perform. SODA is the fly on the rear end of the elephants (KO & PEP). If it becomes a bother, a tail swat would do the trick.