Market Overview

SODA Pops as Kraft gets Busy with the Fizzy

SodaStream (NASDAQ: SODA) has signed a contract with KraftFoods (NYSE: KFT)to sell drinks based on brands like Country Time and Crystal Light.

According to Market Beat, “SodaStream International Ltd. will soon be adding bubbles to Kraft Foods Inc.'s Crystal Light and Country Time Lemonade. Under a licensing agreement, SodaStream will add the two Kraft brands to its portfolio of more than 120 flavors that can be made into carbonated drinks at home using SodaStream machines, sales of which have boomed recently in the U.S. The company's shares surged 9.3% to $41.25 premarket.”

In fact, at the time of writing, SODA had popped 30 percent. Crain's Chicago Business said that, “Initially, Northfield-based Kraft will make available brands such as women's diet beverage Crystal Light and lemonade brand Country Time. This will be the first time that Kraft Foods flavors will be available specifically for use in a carbonated beverage.”

One has to wonder how many other Kraft products Sodastream will attempt to turn into carbonated syrup. How about Mac & cheese flavored pop? Ritz cracker pop? Nutter Butter? A1 sauce?

"The carbonated market is an exciting segment for us," stated Doug Weekes, Vice President, Beverages, Kraft Foods, to PR Newswire. "We're delighted to be working with SodaStream to help bring these terrific brands to consumers who prefer their beverages carbonated. It's a perfect marriage of our iconic brands and SodaStream's breakthrough technology."

"We are excited to welcome these delicious Kraft drink mixes into our SodaStream portfolio," stated Daniel Birnbaum, CEO of SodaStream. "Adding our sparkle to these popular flavors should attract a new audience to both Kraft and SodaStream, and increase awareness of the soda making category."


ACTION ITEMS:

Bullish:
Traders who believe that both sides will benefit from this move might want to consider the following trades:
  • Kraft really cannot fail here. The risk is all SODA's. At best though, there is extra exposure for a lot of products.
  • Sodastream could do well if the flavors translate to the carbonated drinks market.
Bearish:
Traders who believe that the move will be a flop may consider alternative positions:
  • Coca-Cola (NYSE: KO) will hardly be cowering because of Sodastream's contract with Kraft. A giant is a giant.
  • Pepsi-Cola (NYSE: PEP) will also be feeling safe.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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