|Debuting this fall, SodaStream Free contains 17 calories per serving without the use of artificial sweeteners or flavors.|
AIRPORT CITY, ISRAEL — SodaStream International, Ltd. is tapping into health and wellness trends to sell more soda makers in the United States, where its performance has slipped in recent quarters. Revenue in the Americas region dropped 14% to $41 million during the second quarter, as efforts to drive demand for the home beverage machines failed to resonate with consumers.
“We believe at this point in our lifecycle that we must hone in on the most compelling consumer benefit, if SodaStream is to take the business from early adopters to the next level and accelerate household penetration in the U.S.,” said Scott Guthrie, general manager for the Americas region, during a July 30 call with financial analysts to discuss second-quarter earnings. “What we found is that health and wellness is top of mind with consumers. And it’s clearly the leading mega trend in the U.S. when it comes to carbonated beverages. You don’t have to look any further than Big Soda to know this is true.”
With volume declines across the carbonated soft drink industry, driven by a steep slide in diet brands, SodaStream said it is well-positioned to promote its products with fewer calories and natural sweeteners.
“We see the results of Coca-Cola and the rest of the beverage industry in the United States, a decline in volume in 2013 of 3%, a decline in volume of the diet in 2013 of 7%,” said Daniel Birnbaum, chief executive officer. “Where more do we need to search to find out what is the right benefit for the American consumer? We are determined to own healthy beverage. And we are best positioned to do it, because we empower the consumer to make it the way she wants.”
In addition to refocusing its consumer messaging on health and wellness, SodaStream is set to launch a new product line called Free this fall. With such flavors as passion mango, cranberry raspberry, kiwi pear, and green tea lychee, the beverage syrups have 17 calories per serving and contain no artificial flavors, colors, sweeteners or preservatives.
“Clearly consumers are fed up with nine teaspoons of sugar per can of soda and the use of artificial sweetener aspartame,” Mr. Guthrie said. “With healthier, more natural, less caloric flavors, SodaStream is a solution, and this will be the main focus of our consumer messaging in the U.S. and Canada in the back half of 2014. We are actively working on launching new flavors that contain healthier ingredients, including natural sweeteners such as stevia, monk fruit and others.”
SodaStream said it expects sales trends for soda machines to remain challenging in the second half of the year, but the company is encouraged by record carbonation refills sold during the quarter, underscoring strong consumption activity among SodaStream users.
“We’re still seeing our gas in great shape,” Mr. Birnbaum said. “We know that our flavors, while they haven’t grown to the degree that we would like, we still see that it’s around messaging. And so we’re absolutely actively trying to engage with the consumer and with the right message. And we believe that will give us the pathway to reinvigorate the machines.”For the second quarter ended June 30, Soda Stream had net income of $12,863,000, equal to 62c per share on the common stock, which compared with $9,243,000, or 44c per share, in the prior-year period, reflecting strength in international markets. Revenue for the period was $132,390,000, down from $141,171,000.