Does SodaStream's Razors And Blades Model Hold Up?

Gisli Eyland profile picture
Gisli Eyland

The long thesis on SodaStream (NASDAQ:SODA) is centered around a classic razors and blades business model, by selling the soda makers on the cheap (~35% margin) and thus captivating the consumer with carbon dioxide refills (~90% margin) and syrups (~55% margin). Although finding alternative syrups should not be that hard, bypassing SodaStream with gas refills is pretty much of a hassle (as seen here).

The short argument is centered around SodaStream being a fad and that the soda makers will tend to end up deep in the kitchen cabinet. Management has indicated that the American cumulated attrition rate is 40% after three years of use (see here) and management also states that there are roughly 6 million active SodaStream makers in circulation currently.

In this article we will examine how these statements compare to the reported volume numbers.

Soda makers sales volume

There has been tremendous growth in soda makers sales by using sales over a 3-year period as a proxy for active users. SodaStream has gone from 2,600 units in 2009 to roughly 8,100 units in 2012.

Soda makers 2007 2008 2009 2010 2011 2012
Volume (x 1.000) 730 877 1,057 1,921 2,710 3,499
Change % 20% 21% 82% 41% 29%
3yFleet 2,664 3,855 5,688 8,130

Applying the 40% attrition rate to the cumulative sales volume over the last 6 years would yield results inline with the 6 million active users estimate of management.

Active users (x1.000)
6Y sales (07-13) 10,794
Attrition 40%
Users 6,476

Gas refills

The sales volume of gas refills has been much more modest and given the relative difficulty of bypassing refills through SodaStream due to the proprietary vent, gas refills might be a better proxy for active users than soda maker sales (note that the sales volume is

This article was written by

Gisli Eyland profile picture
Fundamental Finance aficionado. Special interest in marketplace companies, exchanges and other "croupiers".Focus on software and travel industry.

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