Why Pepsi’s SodaStream deal goes beyond healthier soda
The acquisition gives cola giant added direct to consumer credibility
On the face of it, the reasons
behind Pepsi’s US$3.2-billion acquisition of SodaStream seem obvious.
SodaStream is a well-known brand, growing quickly because it fits so well with two booming food consumer trends: better for you, and better for the environment—thanks to reduced packaging. Earlier this month, SodaStream reported its best ever quarter with revenue rising 31% to $171.5 million. Acquiring SodaStream gives Pepsi new strength in a burgeoning category at the same time consumers grow more leery of sugary colas and soft drinks.
“SodaStream’s point of view is that they want a healthier, more sustainable planet,” Pepsi CFO Hugh Johnston Pepsi told the Wall Street Journal, adding that Pepsi shares similar goals. “There was a good cultural match here in terms of the values.” The deal comes just a few months after Pepsi launched its own sparkling water brand Bubly.
But, because SodaStream relies so much on e-commerce and Amazon to sell directly to consumers, a few industry experts also see the deal as an important signal for the retail food industry about e-commerce, shifting models and consumer data.
“Large holding companies like Pepsi are going to have more direct relationships with consumers,” Jonathan Smalley, CEO of Yaguara, a data analytics company told Digiday. “The big thing is owning the end-to-end data—even with a company as seemingly small as Sodastream, it’s an opportunity to own that interaction.”
Writing for the British marketing news site Campaign, Rob Sellers, managing director at GreyBase, the brand activation, shopper and experiential arm of ad agency Grey, said the deal was also a response to the rising influence and power grocery retailers have over food companies as they expand their private label businesses.
“CPG brands that rely on the 20th Century business model of physical distribution through third party retail may soon find their margins disappear altogether,” he wrote, adding that SodaStream has a “modern blended retail model” of selling through traditional retailers while using e-commerce to develop relationships directly with its consumers.
“We have seen brands like Nespresso and Harry’s win because of the ability to bypass retailers and go straight to the shopper with category defining results,” he wrote.
“Exploiting SodaStream’s initial success in this space may give PepsiCo those two super important ingredients to almost every modern brand: customer data, and owning the total brand experience.”