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Americans Sink SodaStream Shares

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Actress Scarlett Johansson, SodaStream’s celebrity spokeswoman.

On Tuesday October 7, SodaStream shares fell 21% to an all-time trading low, following the company’s reveal of ill-fated preliminary results for the third quarter.

The reason for the sink of the home carbonation machine maker is said to be a great decrease in Americans purchasing SodaStream’s products.

In a press release, SodaStream’s CEO Daniel Birnbaum said, “While we were successful over the last few years in establishing a solid base of repeat users in the U.S., we have not succeeded in attracting new consumers to our home carbonation system at the rate we believe should be achieved.”

This year the stock is down over 55% and currently trades around $21 a share, which is barely above its $20 IPO price in 2010. At this time last year, Soda Stream was trading around $60 after hitting a record high of close to $80 per share in August 2011.

Things were just becoming brighter for SodaStream, when the bad news hit. A 6% increase in second quarter revenue was reported by the Israeli-based manufacturer, and over the summer the stock popped on rumors that it was in discussion to go private or join with a company like Pepsi (PEP).

The decrease in the consumption of soda by Americans is one of the major damaging factors. In a July Gallup Poll, 63% of Americans claimed to keep soda out of their regular diet. That is a stark increase from the 41% of non-soda drinkers in 2002.

On Tuesday, the company said that it has “begun a strategic shift of the SodaStream brand towards health & wellness, primarily in the U.S., where we believe this message will resonate more strongly with consumers.”

However, Anton Brenner, an analyst at Roth Capital Partners believes SodaStream’s troubles go beyond Americans’ changing preferences. In a research note Tuesday, he described the firm’s advertising as “unfocused.” He pointed out that a “major portion” of SodaStream’s marketing budget went to its 2014 Superbowl commercial. “This was entertaining…but ultimately failed to generate many new users,” he wrote.

Brenner also called the company’s product lineup “cluttered,” and old models remain on the shelves despite the release of newer products. He said, “So even when a consumer intends to purchase a soda maker, they are presented with a diverse lineup of products without any clear explanation of the attributes of each, and, we believe, often walk away confused and empty handed.”

SodaStream may also have duress from Keurig Green Mountain (GMCR), which has been planning on creating a soda maker for home use. Coke (KO) owns a 16% stake in Keurig.

In addition to its recent performance issues, SodaStream has come under dissection in the past because the location of one of its main plants is in a part of the West Bank that is considered by Palestinians to be occupied territory.

Actress Scarlett Johansson, SodaStream’s celebrity spokeswoman, was urged by activists to give up her role. However, she rejected the suggestion, and instead stated that the company pays its employees above-average wages for the region and is an economic model for cooperation with Israelis and Palestinians working side by side.

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