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Israel - Beverage Maker Takes on Soda Super-Giants and Pro-Palestinian Activists

Published on: December 7, 2012 10:51 AM
By: AP
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Israel - An Israeli maker of home soda machines hopes to make a splash in the U.S. soft drink market through a global advertising campaign it will launch during Super Bowl XLVII.

For SodaStream, the advertising push marks a bold - and risky - bet on tapping into the tastes of the world’s largest soft drink market. But opposition from major beverage makers and criticism of the company’s operations in a Jewish settlement in the Israeli-occupied West Bank could hinder SodaStream’s goal of making it big in the U.S. The company has long been a target of pro-Palestinian activists who promote boycotts of settlement products.

The company says it is the world’s biggest manufacturer and distributor of home beverage carbonation systems, which it is trying to position as a cheaper and environmentally friendly alternative to bottled soft drinks. SodaStream says its machines offer a simple and compact, do-it-yourself solution for those who want to carbonate their own drinks.

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“This is the new way to do soda. We’re revolutionizing it,” said SodaStream CEO Daniel Birnbaum. “There exists a smarter way to enjoy soft drinks, getting the bubbles without the bottles.”

He said the world’s soft-drink giants are relying on an outdated business model, and have hurt the environment by generating some 1 billion bottles each day. SodaStream’s drinks can be made one glass at a time, or can fill reusable bottles, then flavored with juices or other mixers.

SodaStream has enjoyed widespread success in Europe. It says 25 percent of Swedish households use its products, and reports similarly high rates in countries like Finland and the Czech Republic.

But in the U.S., the household penetration rate is just 1 percent. Birnbaum is confident that with his publicity blitz, beginning with the Super Bowl, he can gradually bring that number closer toward the European levels.

“We’re talking about revolutionizing consumer habits and behavior, but it’ll happen,” he said.

The company has been in the U.S. for only about four years. To make its machine more desirable, it has formed partnerships to offer a variety of concentrated, liquid flavors that users can squeeze into their water. For example, users can make drinks with Kraft’s Kool-Aid.

The Super Bowl, advertising’s largest showcase, provides a golden opportunity for SodaStream to put itself on the map. Last year, the National Football League’s championship game garnered an estimated 111.3 million viewers, according to Nielsen.

But it comes at a great cost. A 30-second spot costs about $3.5 million, no small sum for SodaStream, which reported net earnings of $27.5 million in all of 2011.

Industry experts remain unconvinced about the product’s true potential and reach.

John Sicher, editor and publisher of the trade publication Beverage Digest, said he was skeptical about SodaStream’s prospects and predicted it could fizzle.

While the product is interesting, he said it would probably remain a niche item. Soft drink volume has steadily dipped in the U.S. by 1 to 2 percent a year since 2005.

“Certainly the cool gadget factor of it and the novelty will attract some users, but people like consuming brands,” he said. “SodaStream is not to be considered a phenomenon.”

Wall Street liked SodaStream’s growth prospects, driving it up to a peak near $80 in mid-2011. The love affair has cooled, and the stock is now trading around $40.

Birnbaum said the naysayers are simply living in the past.

“The bottle and can thing will be illegitimate and uncool one day,” he said. “It’s harmful to people and the environment. It won’t be long until soda companies realize this and start offering do-it-yourself solutions of their own. Or they’ll be behind.”

Skepticism and direct competition aren’t the only challenges.

Pro-Palestinian activists who advocate consumer boycotts of goods produced in Jewish settlements - which are deemed illegal by much of the international community - have encouraged the public to shun SodaStream. The company’s main plant is in Mishor Adumim, an Israeli industrial zone next to the Jewish settlement of Maaleh Adumim in the West Bank.

Pro-Palestinian activists say the company has profited from Israel’s occupation of the West Bank. They say Palestinian workers have suffered from low wages and poor working conditions and criticized the company for receiving economic incentives, including tax deductions, from the Israeli government.

“The new SodaStream publicity blitz has given the U.S. boycott, divestment, sanctions movement a marvelous opportunity to bring our campaigns targeting settlement products to a new, unprecedented level of visibility and success,” said Anna Baltzer, an organizer of the U.S. Campaign to End the Israeli Occupation. “It’s time to burst SodaStream’s bubble. There’s nothing environmentally friendly about military occupation.”

The boycott movement has had a generally limited impact on Israeli businesses, although in 2010, a European Union court said that goods produced in West Bank settlements did not qualify for the same duty free status granted to products made inside Israel. The case involved SodaStream products being shipped to Germany.

The Palestinians want to establish a state in the West Bank, Gaza and east Jerusalem, territories Israel occupied in 1967. Israel withdrew from Gaza in 2005, but continues to control access. Last week, the U.N. General Assembly recognized a state of Palestine in these boundaries as a non-member observer.

Aside from political backlash, last month the United Kingdom banned a SodaStream TV advertisement saying it disparaged other soda manufacturers. In the 30-second advertisement, soft drink bottles simultaneously combust as people use the machine at home to happily carbonate their drinks.

Birnbaum, meanwhile, defended the company’s West Bank presence. He called the anti-Israel activists a “confused bunch” and said he is providing jobs for Palestinians.

“We don’t strengthen or support the occupation,” he said. “What we’re doing is taking a facility in the occupied territory and giving Palestinians a career and economic benefits. I’ve got to laugh when they think we’re on the wrong side of this. We’re part of the solution. We build bridges, not walls.”


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Read Comments (11)  —  Post Yours »

1

 Dec 07, 2012 at 11:19 AM bored Says:

hatzlacha rabba! i've been pushing off getting one of these but now that i know it supports settlements past the green line i will definitely put it on the shopping list

2

 Dec 07, 2012 at 11:41 AM PMOinFL Says:

I just ordered one. Why?

1. I love the idea of eliminating a lot of plastic bottles.
2. The reviews are spectacular.
3. The cost isn't prohibitive (although it needs to get more competitive).
4. It is made in ISRAEL.
5. Just having it on my countertop will infuriate the terrorist sympathizers.

It is just about everything I look for in a product!

3

 Dec 07, 2012 at 12:25 PM honestbroker Says:

"Pro Palistinian activists say the company has profited from Israeli Occupation of the West Bank.They say Palistinian workers have suffered from low wages and poor working conditions".
Really??
Perhaps they should go back to Gaza and seek work. There is a great demand for suicide bombers , tunnel diggers, and arms smugglers. Kidnapping is a burgeoning profession as well. If you happen to have a particular fondness for bloog and gore, there is a future for you in the" slitting-baby's-throats" field. Those with even a modicum of conscience need not apply

4

 Dec 07, 2012 at 12:59 PM green vs palestinians Says:

I would like to see how this plays out. This pits all the liberal do gooder greens vs do gooder liberal pro Palestine. Should be interesting.

5

 Dec 07, 2012 at 01:32 PM Butterfly Says:

Good luck!!

6

 Dec 07, 2012 at 02:45 PM oygevault Says:

This looks fantastic. I will be getting one after Shabbos.

7

 Dec 07, 2012 at 03:44 PM ChachoMoe Says:

These "Pro Palestinian's Kooks are totally wacked and paranoid! I won't be surprised if its actually Leftist Self-Hating Jews (the likes of Norman Finkelstein) behind it!

Here you have a growing Co. providing work for all these unemployed Palis. and all they can do is try to eliminate that too. (I guess Bomb Straps are more of a productive workforce in Gaza!)

All this clearly indicates, it is NOT a PRO-Palestinian movement, rather an ANTI-Israel movement.

8

 Dec 08, 2012 at 08:02 AM The-Macher Says:

This is very overpriced. Someone in Asia will clone it (or buy the company for the song that it is worth) and then make improvements to it, and Soda Stream will be swallowed by a river.

9

 Dec 08, 2012 at 03:22 PM chaim Says:

Zaits matzliach und brengts moshiach!!!

10

 Dec 08, 2012 at 05:46 PM Canadian Says:

We have one we use for Pesach and use it a lot!!! I think u can use it Shabbos.

11

 Dec 09, 2012 at 03:30 AM Yawvous Says:

Regardless of the pro or con Palestine issue, the considerations to purchase one of these gadgets are:
1] The level of carbonation in the seltzer is monitored by the consumer. You can really gas it up there and feel those bubbles churning in your tummy later.
2] No need for storage space for seltzer bottles.
3] No salt or additives inside. You put in the HCO and that's it. Of course, it will be more refreshing with cold water than lukewarm water. But ice water isn't homogenous with the gas-doesn't mix well. So cold,but not freezing.
4] The gas cartridges sometimes are faulty- you can screw in the cannister and all the gas can stream out-you'll be needing than a new cannister.Sometimes you purchase a new one and...they're empty.
5] after a certain time,you will be instructed by the company to purchase new bottles,as the old ones with time may be worn and be insecure to the pressure when applying the gas.

12

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