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SodaStream International Ltd. (SODA) Message Board

  • goldenseth@ymail.com goldenseth Mar 6, 2013 10:50 AM Flag

    My Takeaways

    Partnership with Hamilton Beach announced solidifies the category as a whole is growing and SodaStream, as discussed with clients, views Hamilton Beach as a healthy competitor with pricing that doesn't deteriorate the category which is what has happened in European regions in the past. Healthy competition is warranted in the category.

    The company will look to acquire another distributor this year, this IS highly beneficial and necessary if you want the stock to appreciate over the next 12 months. Please read into what I'm indicating here: As an investor you do not want cash on SODA's balance sheet, even though it will be there, but hopefully to a minimum. If that affects the stock price near term so be it.

    Gross margins will be higher upon completion and integration of the factory, even more so than initially discussed with analysts and as I expected. They discussed with us a reasonable expectation of around 56-57% gross margins, but I outlined for clients something between 58-62% feeling that its not just about operational improvements but about maturing markets as well. Daniel indicated that gross margins could actually bee more than 200 basis points higher on the presentation.

    Business is strong, wherever you look for them. The product is accretive to the consumer in so many ways that it is proven to be value added. Although the company will be lapping some powerful pipelines, they have material deals taking place and same store sales growth plans already taking place. Q2 and Q3 will be highly scrutinized quarters with bears and bulls wagering bets on both sides. I would expect many in and out trades via institutions during these two quarters respectively. Citigroup 4 times in 2012, Goldman Sachs 3 times, Jefferies times, Credit Suisse 3 times and the list goes on and on.

    Thanks for the kind words to all on the latest article. Good luck, off to a Wal-Mart warehouse!

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    • agreed Seth. Hamilton deal shows the interest from the other vendors, and using co2 from Sodastream also recognized sodastream's dominate position in this category. other vendors will follow the suit. look how GMCR developed the single serve category, you need more and more vendors to join this. look how Apple OS failed competing with Windows OS in PC field, open system always win.

    • Seth...In your opinion, what is the logic behind the Hamilton Beach deal?

      The biggest moat that SODA has is their extensive CO2 exchange network so why offer that to a competitor?

      I understand that SODA will make money from selling the CO2 and that competition in the category "legitimizes" the category but why make it easy for someone else to enter the category and potentially steal machine and flavor sales?

      • 3 Replies to theburgh
      • Having a competitor using your consumable isn't really a competitor--they are a partner.
        Expansion of the machine base is beautiful if you supply the CO2 and more importantly you shave bradned flavors on the shelves...Kraft, Ocean Spray, etc...
        If they buy a HB machine over SODA you lose $30-40 today in profits but you get a long term customer who will get reills and syrup of $100 profit/year. BEAUTIFUL.

        Sentiment: Strong Buy

      • goldenseth@ymail.com goldenseth Mar 6, 2013 11:25 AM Flag

        Burgh, there is no deep analytical reason that needs to explored. The category is so incredibly small and hasn't even touched the populous to ANY significant degree. If Hamilton Beach comes in with their own respectable product, powered entirely by SodaStream and does so with their own A&P spend then you reach that many more people. The argument that they could steal machine sales and flavor sales simply doesn't hold water when you think about the multitude of new consumer awareness for the category. In this sense, the fact that it's not a coffee maker actually benefits SodaStream. It's simply too small a category to say cannibalization is a consideration, no where near that type of market penetration imo.

      • I'll answer that Burgh,

        Soda is now the default operating system. Sell as many PCs as you want Microsoft gets paid for the operating system. Multiple machines vendors using Soda's system means vendors must carry Sodastream CO2. If they are carrying their CO2, then they will carry other Sodastream consumables as well.

    • Sounds to me like the gas canisters are king money maker. No protection on the concentrates and let everyone make flavors. Eboost mostly for the spokesmodel.

    • everything looking good on the Company side but the stock is in for another 'Battle Ground' year.
      hope my ticker can take it...............

    • Yea, he knows nothing, right Ricky? Thanks Seth for EVERYTHING!!!! One of kind-which we have in common:)

      Sentiment: Strong Buy

 
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