We have already seen glimpses of Sodastream's approach to sales going forward. Amazon just sold 10,000 jet machines for $20. The initial game of Soda selling to wealthy, early adopters is over. Soda was capacity constrained for the last few years, selling every Soda machine they could make. The new factory changes the game. They can increase capacity by 500%. Soda is now going after mass market with prices that average consumers can afford. Machines will be priced at less than $50. Rebates and incentives will push Play machines even lower. The result: The user base is going to expand exponentially in the next few years. Add more marketing, co-branding and broader grocery distribution and Sodastream is ready to launch. Mass market consumers respond to discounts!
Is GMCR going to sell all of their machines at a loss? Yes. GMCR will be forced to compete on price. They don't even have a product out the door and the game has changed.
So, how is Wall Street going to respond to Soda? Will they prefer revenues or margins? Look at Amazon vs Wal Mart, Google vs. Apple. The picture is very clear, despite lip service given to margins, Wall Street is a slave to revenue growth. Profits come later. However, Soda will soon deliver healthy amounts of both. A billion $ in revenue in two years is conservative. A prosperous New Year to all.
great post and very informative. I would like to add my hopes. Soda was conceived by a pharmacist in the late 1890's. I have suggested to the company's executives to enter into a distribution agreement with one or all of the major pharmacy chains in the U.S, i.e. CVS and Walgeen's to market the machines and flavors as well as the CO2 cannisters. As everyone know,s CVS and Walgreen's sells ample amounts of soda. I see no reason why these pharmacy giants would not welcome the opportunity to allow its customers the abilty to make fresh sodas at the customers convenience. As anyone knows senoir citizens frequent these pharmacies regularly for all sorts of personal needs. If such an agreement was realzed, this would add to Sodastream's market penetration. Yourr thoughts
Margins won't be compromised . Or let me put it a different way margins will not be compromised that much. With the margins being in CO2 and syrups any increase in volume will offset the small amount for any discount on the machine. Also the increased margins with the new factory coming on line is another plus. The promo for the 10000 machines was just a gimick costing little. They just wanted to repeat what gmcr did with their coffee machine. Or they wanted to insure the gain in the machines for the qtr. will be a blowout along with the syrups and co2. I think we will see movement very soon and won't have to wait till earnings