Winnipeg Free Press - PRINT EDITION

New city business bubbles up

Home-carbonation units expected to sell strongly

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LAST month, Coca-Cola lawyers in South Africa sent a cease-and-desist letter to officials at Israel-based SodaStream to get the company to shut down its exhibit full of empty soda cans and plastic bottles at the airport in Johannesburg.

But of course, that just made matters worse for Coke. SodaStream put together a cage full of empty Coke cans and set it up near Coke's headquarters in Atlanta.

SodaStream is the world's leading manufacturer of home beverage-carbonation systems, which let consumers convert ordinary tap water into carbonated soft drinks without worrying about waste disposal.

Marta Mikita-Wilson, a Winnipeg businesswoman who owns the exclusive Canadian rights for SodaStream, is proud to have a SodaStream cage exhibit at the Winnipeg airport. She's working on having one at Winnipeg's city hall as well.

"When I got into this business it was not just because of the dollar signs," said the former rehabilitation therapist. "I am so happy to be involved in a product that will do something great for the planet and for people's health."

SodaStream's stylish carbonating systems -- with starter kits selling for $100 to $279 -- are much healthier propositions than the high sugar content of most soda, with an average of 60 per cent less sugar and zero sodium content.

After only two years in the Canadian market, SodaStream's patented carbonating systems, bottles and syrups are in about 1,100 stores.

This week, the product launched in 140 Walmart stores in Canada after last month's introduction of the product in 3,000 Walmarts in the United States.

With just under $10 million in sales in Canada, thanks to prominent shelf space in stores such as the Bay and Sears, Mikita-Wilson's 16-employee Winnipeg operation is looking forward to be in another 1,000 stores by the end of next year.

Canadian sales are doubling every year, in line with the pace of SodaStream's global sales.

SodaStream is deeply entrenched in the European market where it's been for a few decades, and accounts for more than half of the company's total annual sales which are expected to be close to $400 million this year. Its U.S. business is booming.

Mikita-Wilson acquired the exclusive rights to the Canadian market in 2009. It's one of only 16 of the 52 countries in which SodaStream products are available that are not corporately controlled.

"When I went to Israel in 2008, I was a woman on a mission," she said. "At the time, the company was still more concerned about the U.S. market and figured they would let me have Canada and see how it goes."

In a former venture, Mikita-Wilson had the exclusive Canadian distribution rights for the Swiss SIGG water bottle.

She said she believes she's found an even better product with the SodaStream system.

Many others agree. In a recent report, Oppenheimer & Co. analyst Joseph Altobello said he is bullish on the company's performance, which regularly sees better-than-expected results.

The recent rollout in Walmart in the U.S. and Canada is a significant indication of the product's potential for mass appeal.

"It's interesting to note," Altobello wrote, "that this (Walmart launch) marks SodaStream's first rollout at a major U.S. retailer without a trial period, which we believe validates both the category as well as the company's ability to execute."

But, Gary Hemphill, managing director of the Beverage Marketing Corp., New York-based consultants to the $265-billion global beverage industry, sounded a more cautionary note on the product's growth potential.

"Consumers are becoming aware of SodaStream, which has been gaining profile. The environmental benefits of the system may resonate with some consumers. But in general I think consumers want convenience."

Republished from the Winnipeg Free Press print edition July 13, 2012 B4

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