Consumer Products

As SodaStream Gets Into Beer: More Than Meets the Eye -- or Less?

SodaStream International Ltd. (NASDAQ: SODA) went from a high-growth niche domination company to a company that had a harder time growing. Now the company is seeking to cash in beyond flavored sparkling waters and custom soft drink beverages. SodaStream wants to capitalize on the home-brew craze of beer lovers. Where things get tricky is how and where SodaStream is starting out.

On Monday came news that SodaStream was releasing its new home beer system, appropriately named the Beer Bar. The company aims to help people make quality home-crafted beer using sparkling water and a unique beer concentrate.

American beer makers will not be getting this beer-making system immediately. SodaStream said in its press release that it has chosen to first launch the Beer Bar in some of Europe’s beer capitals — available in SodaStream Germany’s online store and at leading retailers in Switzerland.

The company’s press release indicated that the Beer Bar is expected to launch in other markets in late 2016 and 2017.

The Beer Bar is said to enable consumers to concoct crafted beer in seconds. It was unveiled with a light beer named Blondie, which is made by adding Blondie concentrate to sparkling water.

This new beer is not exactly one of the high-octane craft beers that have taken many beer drinkers to the next level. Blondie contains 4.5% alcohol by volume.

SodaStream said that a one-liter Blondie bottle yields approximately three liters of beer. A visit to the German online store showed that each liter of the Blondie concentrate sells for €2.99, or roughly $3.34 in conversion today.

Launching in Germany before the United States is perhaps a minimizing event, but the beer markets are quite different. Most U.S. beer-focus sites ask readers to confirm that they are 21 years or older. The site in Germany asked readers to confirm that they are 16 years or older.

Daniel Birnbaum, chief executive officer of SodaStream, said of the Beer Bar launch:

We are excited to launch a brand dedicated to serving the global growing trend of home crafted beer. Our core carbonation technology and distribution infrastructure provide a great platform for us to extend our business into this emerging category, and we choose to do so with a dedicated beer brand.

One consideration here is not just whether the beer venue takes off. After all, people have used SodaStream to make their own beverages and then added alcohol. Other home-brew kits already have started being released in the United States by smaller players, which are targeting close to the instant-beer market — above and beyond the traditional home brew kits that take days to weeks to brew your own.

SodaStream shares were up 5.4% at $20.57 on Tuesday afternoon, versus a consensus analyst price target of $19.40 and a 52-week trading range of $11.40 to $24.38. The last time SodaStream shares were north of $20 was July 2015.

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