Close Ad

The Spoon

Daily news and analysis about the food tech revolution

Pepsi

The Weekly Spoon: Where’s My SodaStream Fridge?

This is the post version of our weekly (twice-weekly, actually) newsletter. If you’d like to get the weekly Spoon in your inbox, you can subscribe here.

Every now and then a big company makes an acquisition that makes you wonder about the possibilities.

Pepsi scooping up SodaStream is one such deal.

The $3.2 billion purchase clocks in at 33 times forward earnings. The rich valuation is justified in part by SodaStream’s strong growth in the sparkling water market, but also because it puts Pepsi into a new category: home beverage creation.

“SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalyzing our ability to offer personalized in-home beverage solutions around the world,” said Ramon Laguarta, CEO-Elect and President, PepsiCo, in the company’s press release.

Of course, this isn’t the first time Big Drink – including Pepsi – has looked at the in-home beverage market. They launched their Drinkfinity line earlier this year, and competitor Dr. Pepper has most likely at least considered the possibilities of a revamped Keurig Kold post-acquisition.

But at this point, it’s safe to say none of these efforts have been a runaway hit. Will a SodaStream armed with Pepsi’s resources change that? While Chris’s take is that it’s best for Big Drink to stay away from the home beverage machine business, my take it a little more sanguine. I think in-home creation dovetails well with two consumer megatrends that will only pick up more momentum:

-The soda business is shrinking fast, and low-calorie healthy alternatives will likely continue to be the fastest growing category in beverages

-Bottled drinks are bad for the environment, so a growing contingent of consumers will continue to look for more ecofriendly alternatives (like home beverages!).

While a countertop beverage machine may not be for everyone, who’s to say SodaStream couldn’t be built into my refrigerator some day? I just bought a new fridge and, I have to say, I would much rather have a tasty drink spigot on it than a touchscreen (and I’m probably not the only one).

Bottom line, whether built into a fridge or through a small machine on the countertop, I think the stars are lining up for continued growth for the in-home beverage market.

Now if they could make a home Kombucha as easy.

(Ed note: Reader Chris pointed out to me that in 2013 Samsung partnered with SodaStream to add a dispenser to a fridge, but the models have since been discontinued. With sparking water having a moment, I have to wonder if it’s time to revive this idea?)

Speaking of Interesting Drink Trends…

Have you ever had your name printed on a beverage?

We have:

While the idea of images printed on drink foam (whether its coffee, cocktails or beer) may seem like a novelty to some, I would argue drink “printing” could become commonplace in the next few years in restaurants and bars.  My guess is that not only would consumers pay a little extra for a drink printed “selfie”, but brands would jump at the opportunity to get the word out via drink-top messaging. Imagine the value of having your new vodka brand printed on all the drinks served in a bar on a given night.

You can read about the new Ripples cocktail printer announced today (and see a video of The Spoon logo printed on a drink) over at The Spoon.

Delivery Tech Is Hot

Grocery delivery and logistics continue to be one of the hottest spaces in food tech. This week we saw a massive $110 million investment in Boxed (which brings the total invested in the grocery logistics company to $243 million) and news of a successful trial of in-trunk delivery by Delivery.com/Phrame.  As someone who’s skeptical about letting a total stranger into my home, I’m intrigued by the idea of trunk delivery. Amazon apparently feels the same.

If you haven’t caught our the latest episode of The Smart Kitchen Show, I had a great time talking with VineSleuth’s Amy Gross about how AI can help consumers find the perfect wine.  Check it out at The Spoon or subscribe to the show on Apple podcasts.

And if you like my conversation with Amy, she’s just one of many great speakers coming to the Smart Kitchen Summit in just under seven weeks. Make sure to get your tickets today with the discount code NEWSLETTER for 25% off of tickets. 

In the 08/22/2018 edition:

Grocery Logistics is Hot as Boxed Nabs $110 Million Investment from Aeon Group

By Chris Albrecht on Aug 22, 2018 09:16 am
Boxed, an e-commerce company that sells bulk grocery items, yesterday announced a $110 million investment led by Aeon Group, one of the largest retailers in Japan. This minority stake brings the total amount raised by Boxed to $243.6 million and values the company at $600 million.

Ripple PM Prints a Selfie on your Cocktails

By Chris Albrecht on Aug 22, 2018 06:00 am
We are all used to the idea of Instagramming our cocktails, but the new Ripple Maker PM, made by Ripples, lets you place your Instagram-worthy photos directly on the foam of your favorite boozy beverage. To customize a cocktail, users upload selfies, logos, or other images to the WiFi-enabled appliance using a Facebook Messenger app.

Buttermilk Co’s Microwaveable Indian Meals Merge Authenticity and Convenience

By Catherine Lamb on Aug 21, 2018 01:15 pm
Founder Mitra Raman got the idea for Buttermilk Co. because of a craving for rasan: a tomato-y South Indian stew and her favorite food. Raman’s mother gave her the ingredients in a bag — all Raman had to do was add water and boil.

Hitachi to Use AI to Analyze Hospital Food Leftovers and Improve Patient Recovery

By Chris Albrecht on Aug 21, 2018 11:14 am
We often write about artificial intelligence (AI) being used on food before it gets to you: inspecting the supply chain, making sure your burgers are cooked, etc. But a new unit of Japanese company Hitachi is applying AI to food leftover on the plate after people are done with it.

Phrame and Delivery.com Partner for In-Trunk Delivery

By Chris Albrecht on Aug 21, 2018 08:16 am
Is your car trunk the new post office box? It could be if a new service from Phrame and Delivery.com catches on. The two companies announced today the conclusion of a successful pilot that saw deliveries made directly into car trunks in an attempt to provide a new method of convenience for grocery shoppers.

No More Lukewarm Coffee: How Heating Tech will Disrupt the Kitchen

By Catherine Lamb on Aug 20, 2018 02:27 pm
The ability to apply precision heat to food and drinks is a quick-evolving — and pretty darn exciting — area of the digital kitchen innovation. And no one is pushing more boundaries in this space than Clay Alexander. He’s the founder and CEO of Ember, a company which makes smart mugs which can exactly control and […]

Coca-Cola Should Stay Out of the Home Device Business

By Chris Albrecht on Aug 20, 2018 11:51 am
After I wrote up the news this morning about PepsiCo buying SodaStream for a bubbly $3.2 billion, a commenter got me thinking about what rival Coca-Cola’s next steps should be. Spoon reader “James” asked: So now that Pepsi has Sodastream and Dr. Pepper has Keurig, what consumer hardware company is Coke going to buy?

PepsiCo Buys SodaStream for $3.2 Billion

By Chris Albrecht on Aug 20, 2018 08:21 am
PepsiCo said today that it will buy SodaStream, makers of the countertop carbonation system, for $3.2 billion. The move not only pushes the sugary drink giant further into the healthy beverage market, but it also moves the company into more of a hardware space, which opens up new lines of recurring revenue.

Podcast: The AI Powered Sommelier With Amy Gross

By Michael Wolf on Aug 19, 2018 08:07 am
A decade ago, Amy Gross was enjoying a glass of wine with her husband when she noticed how the same wine tasted different to different people. From there she began to think about how technology could be used to make personalized wine recommendations, and it wasn’t long before IBM and others wanted to learn more […]

Food Tech News Roundup: Plant-Based Starbucks, Google’s Wearable Meal Plan, and Grocery Innovation

By Catherine Lamb on Aug 18, 2018 06:00 am
What a week for food tech fundraising! From DoorDash’s $250 million to a hefty raise for cellular aquaculture company BlueNalu to not one, not two, but three fundraising rounds for food waste startups, it’s been a doozy.

PepsiCo Buys SodaStream for $3.2 Billion

PepsiCo said today that it will buy SodaStream, makers of the countertop carbonation system, for $3.2 billion. The move not only pushes the sugary drink giant further into the healthy beverage market, but it also moves the company into more of a hardware space, which opens up new lines of recurring revenue.

Soda sales have been on the decline in recent years, with Pepsi soda brands in particular struggling to rebound. On the contrary, sparkling water sales have surged, driven in large part by millennials and their quest for new flavors and healthier ingredients. To capitalize on this trend, Pepsi launched its own line of colorful sparkling waters earlier this year called Bubly which has actually experienced strong growth since launch.

But with the SodaStream purchase, PepsiCo is also getting into a hardware solution for beverages. In addition to selling the machine itself, SodaStream also sells replacement CO2 cartridges and a wide variety of flavor concentrates. Its numbers over the last year have been good, with second quarter year-over-year revenue increasing 31.3 percent to $171.5 million.

Pepsi already has a line of product that is similar to SodaStream’s. Though the drinks aren’t carbonated, the Drinkfinity system lets users flavor their own water with special pods that are popped on the tops of a proprietary bottle design.

The SodaStream deal is also reminiscent of the Keurig Kold device, which was a pod-based home soda maker that actually had Coca-Cola as a partner before fizzling out after just ten months on the market in 2015. Earlier this year Keurig Green Mountain bought the Dr Pepper Snapple Group for $18.7 billion, but so far there have been no rumblings of a resurrected Kold-type device.

I’m curious about the long-term prospects for this PepsiCo/Sodastream deal and the overall home carbonation market in general. I bought a SodaStream a long time ago and used it pretty religiously for about a year. Then as seltzer water became more popular and more available, it was just easier to grab a six-pack and keep them in the fridge rather than refilling bottles, keeping them cold, blasting air (loudly) into them and remembering to exchange empty CO2 canisters at my local drug store. Yes, I realize that I’m abandoning the more eco-friendliness of SodaStream’s re-usable components, but — actually I don’t have a rebuttal to that. I just want convenience.

Now there are even more seltzer brands offering a wider range flavors that are available just about anywhere I go in the day. Will seltzer’s ubiquity beat SodaStream’s refillability?

Roundup: CPGs Are Exploring Foodtech Through Startup Incubators

There’s no shortage of news about foodtech startups and the incubators that hatch them. Of late, though, an old player has entered this relatively new space: the CPG.

Huge corporations like Kraft and General Mills are struggling to stay relevant and maintain market share. According to one recent study, U.S. food and beverage sales for the top 25 food manufacturers declined from 66 percent in 2012 to 63 percent in 2015. And we don’t need a report to know that artificially flavored cereals and processed cheese are in direct conflict with recent shifts in the way consumers eat.

It makes sense, then, that these CPGs are associating themselves with startups through foodtech accelerators and incubators. Some simply invest, while others actually run their own programs or partner with programs.

Here’s a rundown of just some of the CPGs tapping into the world of emerging foodtech startups.

Springboard

Kraft Heinz just announced a new platform called Springboard, which will partner with and nurture up-and-coming brands focused on one of the “four pillars” of food: natural and organic, specialty and craft, health and performance, and experiential options.

Springboard also announced an incubator program for pre-valuation-stage companies in Chicago (date TBA). Selected participants will get $50,000 funding upon acceptance, with the chance to raise up to $50,000 more. They’ll also receive guidance on research, development, and networking. And in case you wondered if this was just another way for Kraft Heinz to snag ideas, participating companies will be encouraged to stay in charge of their organizations, with the CPG playing a more mentor-like role.

Springboard is accepting applications for the incubator through April 5.

Chobani

Greek yogurt maker Chobani runs one of the more well-known startup incubators. This past week they announced the Spring 2018 class for the program’s third installment. According to a press release, participants were “hand selected by Chobani CEO Hamdi Ulukaya.” The lucky ones include an organic baby food company, a startup making superfood smoothie packs, a handful of organic-snack companies, and a tea maker.

Participants receive $25,000 in grants, opportunities for mentorship, and access to Chobani’s network. The class will run from April through July at Chobani’s sales and marketing offices in NYC.

Nutrition Greenhouse

You wouldn’t automatically pair edible insects and tortillas made from beets with the maker of one of the most sugary drinks on the planet. But that’s what you’d find at Pepsi’s Nutrition Greenhouse incubator. The drink company has been very clear that its incubator is focused on emerging health and wellness brands.

The first installment, which focused on companies catering to European consumers, has already wrapped. Eight companies took part in the program, with all of them receiving €25,000 as well as assistance with growing their business throughout the six-month program. Plant-based food company Erbology won the grand prize, a €100,000 grant.

There’s no word yet on the next set of dates, or if that focus will expand to include other parts of the world.

301 INC

General Mills doesn’t have an emerging brand incubator; it has an “emerging brand elevator.” 301 INC works with up-and-coming foodtech brands who already have a compelling product and are looking to turn it into a viable business and gain access to capital. Right now, Rhythm Superfoods, Beyond Meat, and plant-based food company Kite Hill are all partners.

301 INC is slightly different from other incubators in that there’s no stop and start date for participating companies. Instead, members work with the 301 team on an ongoing basis (although they do hold events from time to time). Interested companies should contact 301 through the program’s website.

VEB

Similar to 301 INC, Venturing and Emerging Brands (VEB) is a unit within Coca-Cola that fosters emerging brands on an ongoing basis. In this case, Coca-Cola is focused on beverage-specific brands who fall within one of the company’s four phases: experimentation, proof of concept, pain of growth, and scale to win. How much the CPG invests in each startup is determined by where that emerging company is in the four phases.

Coca-Cola notes that a successful brand “eventually graduates from VEB to join one of The Coca-Cola Company’s key business units.” Which is a fancy way of saying participants can eventually expect to become a cog in their machine. Whether that’s good or bad for innovation is up for debate.

That question might be true for all these programs. As CPG-driven accelerators and incubators are still a fairly new concept, it remains to be seen how these startups will change and grow once they have corporate capital and involvement. Call me overly optimistic, but I think this trend will end up doing more good than harm, giving emerging companies the ability to bring healthier lifestyle choices to the average consumer.

 

PepsiCo’s Drinkfinity: Bad Name, Tasty Beverages.

The inescapable feeling I got upon receiving my Drinkfinity package was that its parent company PepsiCo was trying too hard. Drinkfinity feels like your dad spinning a baseball cap backwards and suddenly beatboxing in some misguided attempt to connect with you on the way to soccer practice.

Which is too bad because independent of that, Drinkfinity is actually pretty good.

Basically, it’s a way to create flavored drinks. You buy a special “Vessel” (ugh) that comes with a piercer on top. You then buy special flavor pods that you press down on the piercer to transform your water into a colorful beverage.

You can see why PepsiCo is trying this out. Soda sales are declining as people turn away from sugary drinks and a raft of natural upstarts like LaCroix are taking market share.

The company is also really pushing a conscious capitalism type of message with Drinkfinity. The pod-infused drinks range from 30 to 80 calories (though some still contain 11 to 17g of sugar). PepsiCo says the reusable vessel and smaller sized pods use up to 65 percent less plastic than a 20 oz. ready-to-drink bottle, and you can recycle the pods via mail.

I ordered the “One for Me” bundle, which came with the Vessel plus four flavor packs (each containing four pods) for $35. Fill the Vessel with water, pick your flavor, push the pod down on the top of the bottle and shake. I tried Pomegranate Ginger Flow and Oatberry Flow, and of the two, Oatberry Flow — which includes whole oat flour — tasted better. Additional four packs of pods cost between $5.95 and $6.50 (so roughly $1.50 per drink).

But it’s when you examine the flavor pods that you can start to see Pepsi turn its hat backwards and slide in the Biz Markie cassette. Flavors are grouped into modes like “Charge,” “Flow,” and “Chill” depending on whether you want to energize or relax or, one presumes, hang with Poochie.

Popping the flavor pod, you can almost hear the Pepsi marketing department say “millennials love to chill.”

Then there is the name, Drinkfinity. I can’t won’t bring myself to say it out loud.

Again, this is too bad because, despite all the over marketing, I kinda like Drinkfinity. The water bottle’s a good size, and features a magnetic holder to keep the lid in place. The two pods I tried were pretty tasty. And I like the idea of having a bunch of drink choices taking up a small footprint in my pantry.

But then again, I’m a bit older (and a dad), and this product is clearly not aimed at me. Which is fine, though perhaps I’ll re-up my initial flavor pod order when I’m done with this set. Beatboxing can leave you pretty dehydrated.