Exclusive: Sodastream CEO Talks Keurig, Beer Bar, And Strength In Europe

Benzinga recently had the chance to chat with Sodastream International Ltd SODA CEO Daniel Birnbaum. The stock has rebounded over the last month, now trading around the $21.60 area.

Below is a transcript of the interview.

BZ: What were the global trends/themes SodaStream saw that got the company excited about building a product related to craft beer? What is the opportunity SodaStream sees in the global craft beer market?

Dan: SodaStream is always looking for ways to improve consumer experiences through innovation. The growing popularity of beers created at home represented a creative space previously untapped.

BZ: Which companies does SodaStream view as competitors to the Beer Bar and how is the Soda product differentiated from those competitors?

Dan: The Beer Bar system is unique, the first of its kind. Traditional at-home brew systems require the user to steep ingredients for a long time. The SodaStream Beer Bar concentrate is produced in a well-regarded brewery in Italy. To make beer the "SodaStream way," users simply make sparkling water with any our machines, and then add the Beer Bar concentrate—for a cold brew in a matter of minutes.

BZ: Sodastream in Germany did not perform as well as expected. In what ways does the craft beer market differ from the soda market, which would allow for Beer Bar to succeed in a market like Germany?

Dan: SodaStream's strongest markets are in Europe. Germany continues to be a high performance market for SodaStream with double-digit growth. The Beer Bar system has been met with great enthusiasm in the markets where it has launched, including Germany.

BZ: In the Q1 earnings press release, you highlighted results of recent initiatives -- specifically a rebranding toward sparkling water -- as starting to "take hold." What were the consumer trends SodaStream management noticed which predicated this move away from soda?

Dan: We identified three trends that led us down this path:

• 1. The trend toward consuming healthier beverages started a number of years ago with the decline in consumption of sugary carbonated drinks. While sugary, sweetened soda consumption continues to decline there has been strong growth in both plain and sparkling water. The sparkling water category continues to gain momentum as consumers want something fizzy without the calories, sugar or artificial sweeteners.
• 2. Environmental awareness continues to grow. SodaStream provides consumers a healthy alternative for enjoying sparkling water using their tap water. More than 1.4 billion plastic bottles and cans are produced daily; a single reusable SodaStream bottle is equivalent to 8,000 cans and bottles. Based on this, we believe SodaStream prevents millions of plastic and glass bottles from going to landfills each year.
• 3. The need for convenience is as strong as ever. In many places, ‘schlepping' heavy cases of sparkling water from the store to your home is burdensome, and SodaStream provides a simple solution to the lugging challenge.

BZ: Can you discuss the next steps in the company's growth plan? What parts of the plan are you personally excited about?

Dan: SodaStream continues to increase our household penetration in sparkling water—where there is significant untapped opportunity. We will continue to focus on this market with SodaStream's convenience and environmentally friendly benefits. SodaStream is already the no. 1 sparkling water brand globally, and we are building on this success.

BZ: Keurig pulled the plug recently on it's similar Kold system. Does this create opportunity for SodaStream? What do you think Keurig did wrong which SodaStream could improve on?

Dan: SodaStream is dedicated to making sparkling water accessible to consumers with strong hydration, environmental and convenience messages. The other company focused on a declining market segment with a solution that was not environmentally friendly, provided little convenience and questionable value. At Sodastream, we offer the growing sparkling water segment a convenient product that is very environmentally friendly and economically friendly. To go one step further, we've invited disappointed Kold owners a free SodaStream so that they can continue to enjoy sparkling water for years to come. Owners of the Kold need only to send us a selfie in front of their Kold machine (along with their contact info and the Kold machine's serial number), and they will receive a code to redeem online for a free SodaStream Fountain Jet sparkling water maker.