PepsiCo Makes a Big Move Toward a Rival Market

Company buys SodaStream as consumers turn away from sugary soda to sparkling water
By John Johnson,  Newser Staff
Posted Aug 20, 2018 1:15 PM CDT
Updated Aug 20, 2018 1:25 PM CDT
Pepsi's New Purchase Continues a Shift
SodaStream products are seen at the SodaStream factory near the Bedouin city of Rahat, Southern Israel.   (AP Photo/Dan Balilty, File)

PepsiCo has just made a big investment in a future that sees consumers more likely to reach for a bottle of water than a sugar-filled soda. The company agreed to buy SodaStream for $3.2 billion as a part of a shift toward healthier products, reports the Wall Street Journal. SodaStream is best known for its countertop device that allows people to convert tap water into carbonated water in their own kitchens with reusable bottles, reports USA Today. SodaStream, based in Israel, has seen its stock surge over the last few years as it shifted its primary focus to homemade sparkling water, reports CNN Money. Prior to that, it billed itself as a maker of homemade soda (consumers can add flavored syrup to the water if they wish).

"The transaction is likely the first of several other initiatives to re-orient PepsiCo's beverage portfolio towards healthier, on-trend categories," wrote BMO Capital Markets analyst Amit Sharma. "While SodaStream products are sold through 80,000-plus retail locations in 45 countries, it has significant geographic expansion opportunities." The deal meshes with market stats: Americans bought more bottled water than carbonated sodas for the first time in 2016, and the gap widened to 13.7 billion gallons vs. 12.3 billion gallons last year, according to Beverage Marketing. What's more, sales growth of sparkling water in particular far outpaced the growth of bottled water overall. The move follows PepsiCo's February launch of its Bubly sparkling waters. (More PepsiCo stories.)

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