Samantha Enslin-Payne
Sodastream, the home carbonated soft drink system that is making inroads globally and aiming to regain lost ground in South Africa, is being marketed as a value for money proposition, but the challenge is that the initial outlay is fairly costly.
Guy Rogers, the marketing and brand manager of SodaStream South Africa, said on Friday that the brand had positioned itself as a value for money product, but there was an initial barrier to entry in the R399 price of the machine.
“It doesn’t preclude middle- to lower-income consumers, but it does make it more difficult.”
The system enables consumers to make carbonated soft drinks by combining flavoured syrups and tap water, and then infusing the mixture with carbon dioxide gas via the Sodastream machine. In South Africa, 23 syrups are available.
The brand is positioned for consumers in living standards measure 6 and above.
But Rogers said: “To get the volumes we want we will have to go a bit lower.”
In a pilot project at 20 spaza shops, SodaStream gives each owner a starter pack comprising a drinks maker, gas cylinder, syrup concentrates and accessories and allows them to set their own prices per cup.
The price per litre of soda water made with a SodaStream is R2 and a flavoured drink is R4.50. This compares favourably with the price of pre-bottled carbonated soft drinks such as Coca-Cola.
“It’s going to be a slow process to break into this market. It’s an expensive way to do business. It’s no good being in 20 spaza shops; we need to be in 2 000. The pilot is investigating how we scale up.”
SodaStream is also sold in all major retail stores. Rogers said the brand had been positioned as a smart alternative to store-bought carbonated drinks because it was cheaper and more convenient as heavy bottles did not need to be hauled home.
Globally the environmentally friendly positioning of the brand is holding sway; locally this message is also being pushed, but possibly to less effect, at least for now.
South Africa produces about 140 000 tons of PET waste a year, much of which is plastic soft drink bottles. Only a small portion is recycled, with the rest dumped in landfills.
Rogers said SodaStream’s plastic bottles had a three-year lifespan. “Right from the start our production system does not make as many plastic bottles and so not as many bottles are disposed of.”
SodaStream was popular in the 1980s in South Africa, but fell out of favour by the 1990s because of the huge increase in the variety of beverages that became available.
In the 1980s, the product also represented new technology and was a must-have for many households. But the novelty wore off. Today, about 300 000 households in South Africa have SodaStream machines, down from its heyday. Globally, about 10 million households use SodaStream.
The renewed impetus for the brand came after the Soda-Club group that owned SodaStream was bought by the Fortissimo Fund in 2007 and Daniel Birnbaum was appointed chief executive. SodaStream listed on Nasdaq in November last year.
Last week SodaStream reported a 38 percent increase in revenue to e53.3 million (about R540m) for the three months to June. Net income was e5.1m, up from e2.1m in the same period the year before.