Kitchen Gadget Companies are Riding High

Jacob Harper  |

Most companies that truck in a single gimmicky product don’t last long. For a consumer goods company to have staying power, they have to establish a product that is, or at least becomes, an essential. This is a tricky thing to do, and especially tricky for the makers of kitchen appliances.

Counter space is a limited commodity, and justifying your product’s place on it is a difficult undertaking. For two separate, (fairly) new kitchen appliance companies to both find success in the same year is pretty astounding indeed.

Of course, their ultimate staying power is still up for debate. But SodaStream International Limited (SODA) and Green Mountain Coffee Roasters (GMCR) are for the time being are both flying high, and look to have justified their flagship products look to have justified their place on the consumer’s counter.

Though SodaStream’s roots go back to 1903, the Israeli company as we know it came to become what we know much later, in 1999, and went public in November 2010.

The company is based entirely around one product: the SodaStream home carbonator. Off this one product, the company has become a smash in Europe, where 20 percent of Swedish households own a SodaStream. A few years ago, the company began branching aggressively into America as a stand-alone product, and now SodaStream units are even featured in some US-sold refrigerators.

SodaStream encountered a problem after turning public. Right in their name is “soda,” and although this certainly could also mean soda water in most consumers minds this meant soda pop, and all the negative health connotations that carried with it.

SodaStream countered this by pushing all the various things that a SodaStream can be used to carbonate beyond the soft drinks that rot your teeth and make you fat. Consumers can use the SodaStream to carbonate anything the please: water; cola syrup; milk if they’re feeling particularly weird (though SodaStream does actually produce a SodaStream variant called the Milkstream).

SodaStream is up 43.87 percent on the year to hit $63.64 a share.

As their name implies, Green Mountain began as a coffee roasting company, and found niche success in the high-end coffee business. But what elevated Green Mountain from a penny stock to a major player doing $4 billion as year in sales was their purchase of Keurig and their “K-Cups.”

Green Mountain began investing heavily in Keurig in the late 90s, and completed the buyout in 2006. Keurig makes one relatively simple machine that’s proven wildly popular: a machine that brews one cup of coffee at a time. Keurig machines and their single-serving containers, the aforementioned K-cups, have sold astronomically well over the last few years, becoming popular in both homes and offices.

From Mar. 2009 to July 2011, Green Mountain’s stock soared over 1,000 percent, from under $10 to a high of $103.95 a share. Following this unprecedented rise, the stock tanked, falling below $20 amid reports the K-cups didn’t sell as well as anticipated. The tech had gotten overhyped, and the company was in a dire position. The expiration of the Keurig patent also didn’t bode well for the company.

But brand loyalty can be very strong, and in the case of the Keurig and the K-cup, the technology itself is probably forever inextricably linked to the company. So no matter where the technology goes, a K-cup will always be a K-cup.

After the crash Green Mountain began slowly climbing back up throughout 2012, and was further bolstered by a massive earnings beat in the first quarter of 2013.

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Interestingly, Green Mountain’s next move might be against SodaStream. On July 16 the company trademarked the word “Karbon,” leading to speculation that they’d be taking on the rival gadgeteer.

Green Mountain is up a whopping 98.76 percent on the year to hit $83.95 a share.     


(image of Keurig courtesy of Flickr; image of SodaStream courtesy of Wikimedia Commons)

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