PepsiCo announced last week that it will launch Bubly-branded flavor drops for use with its do-it-yourself SodaStream sparkling water appliance. Full distribution of Bubly Drops kicks off in January after a limited rollout starting next month. The launch will include six flavors, including grapefruit and mango, in glass mini bottles. In an interview, SodaStream International CEO Eyal Shohat said he isn’t concerned that the drops will cannibalize the canned version of Bubly, which PepsiCo expects to become its next $1 billion a year brand at retail. “We have some experience from other launches we’ve done in Europe with Pepsi brands,” he said. “What we’ve learned is that offering Pepsi brands on our platform contributes an increase in sales of Pepsi flavors on our platform and ready-to-drink.” Shohat’s boss, Jim Andrew, who is EVP of PepsiCo’s beyond the bottle businesses and chief sustainability officer, agreed. “This is the joining of two great brands and is also a data-informed decision,” said Andrew (who will speak at BD’s Future Smarts 2020 virtual conference on Dec. 7). “Past PepsiCo flavor launches for SodaStream have indicated that both brands benefit from extending onto the SodaStream platform. As with all of our products, we’ll actively monitor to ensure this partnership is a growth opportunity for our business.”
PEPSI BRANDS FOR SODASTREAM COMING TO USA? More than a year ago, SodaStream launched flavor syrups for various PepsiCo brands such as Pepsi-Cola and Mtn Dew in Europe (BD 10/28/19). Markets included Sweden, Norway, Germany and France, where SodaStream enjoys a strong following. Brands also included Pepsi Max, Miranda and 7Up. The flavored syrups are mixed by the consumer into water carbonated by the SodaStream device. Shohat said there are “no concrete plans” in the US for a launch of PepsiCo-branded carbonated soft drink flavors for the SodaStream device. “I hope it will happen in the next couple of years,” he said. When pressed, Shohat would not rule out a 2021 launch. When PepsiCo announced the $3.2 billion SodaStream acquisition in 2018, the company said core brands wouldn’t be part of the offering. Six years ago, PepsiCo tested and abandoned variants of Sierra Mist and Pepsi for SodaStream. In the US, SodaStream sales are growing by a double-digit percentage, said Shohat, who declined to be more specific.
TONING DOWN. Since being acquired by PepsiCo, SodaStream has noticeably pulled back on aggressive sustainability-related marketing tactics calling out PepsiCo for its use of plastic PET packaging. “PepsiCo deserves a lot of credit for this acquisition and allowing us to be pretty much independent,” he said when asked about continued efforts to differentiate SodaStream from ready-to-drink canned and bottled products. “We did tone down a little bit, but we are not abandoning our sustainability message about saving the world from single-use plastic waste. They know it, and it’s fine.” Shohat added that, from his perspective, PepsiCo has become “one of the most vocal voices in the industry with respect to sustainability and single-use plastic waste.” When asked if PepsiCo insisted that he tone down the messaging, Shohat said the shift was a natural evolution that reflected the difference in his personality from former CEO Daniel Birnbaum, who Shohat described as “quite a colorful guy.”
BIRNBAUM ALLEGATIONS. Birnbaum, who stepped back from his CEO duties to become chairman in July 2019 after 12 years at the helm, has been under investigation by Israeli regulators for allegedly providing inside information to a former SodaStream employee for stock trades ahead of the PepsiCo deal. The allegations surfaced after Birnbaum’s transition from CEO, which included Shohat’s promotion from deputy CEO. When asked for any update in the matter, Shohat said he has no personal knowledge of any details of the case. “He’s a personal friend of mine. He’s also my mentor,” he said. “I can only wish that everything will be proven to be false allegations.”
CHINA EXPANSION. SodaStream is “seriously considering” an expansion into China “that could happen in the next couple of years,” Shohat said. Such a move this year is unrealistic, said Shohat, citing Covid-related delays. “Trying to launch a market like China, you need to do it in a proper way.”
PRODUCTION. Most of SodaStream’s appliances and consumables, such as flavors, are produced exclusively at the company’s plant in Israel, according to Shohat. The new Bubly Drops are produced there as well. “We are now in the middle of a project to double the capacity here in Israel to meet the high demand right now and that we foresee coming in the next few years,” he said.
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