March 23, 2011
Putting the ‘Pop’ back into soda pop
At the dawn of the 20th century, the British royals were privy to a spiffy new system for infusing drinking water with carbon dioxide bubbles. It would take 53 years for SodaStream to reach commoners, and another 42 until it was acquired by an Israeli distributor and transformed into an international DIY product called Soda Club.
The brand really started to sparkle when it was taken over in 2007 by an Israeli entrepreneur with a Harvard Business School degree, and today the home carbonation system is sold by 40,000 stores in 41 countries. CEO Daniel Birnbaum says that about 4 million households now have a SodaStream machine on the kitchen counter.
“We still have a long runway ahead of us,” Birnbaum said. “There are a lot more households out there.”
Jazzing up a blah brand
Birnbaum was perfectly happy at the helm of Nike Israel when fellow Harvard alum Yuval Cohen, managing director of Fortissimo Capital, asked him to check out a possible acquisition.
“When he told me it was Soda Club, I almost fell off my chair, because I thought the company was gone,” recalled Birnbaum, who had previously established Pillsbury Israel.
But after visiting the firm’s Airport City headquarters, he predicted that Soda Club was a sure investment. It had an existing sales base of close to $100 million in a product category that accounts for $230 billion in sales globally.
Making what he calls the quickest career decision of his life, Birnbaum left Nike and took on Soda Club, determined to push its envelope of potential. Because for all its modest success, the brand was as flat as week-old pop.
“It was losing money on operating expenses. The management had little passion or optimism, no growth strategy, no new product pipeline, no new market development. I asked about their plans for markets like Russia and the U.S., and they had no answers.”
Just four years later, having rebranded the system with its old name and a new logo, Birnbaum has added 24 countries to the marketing mix and even relaunched it in the United Kingdom with its original commercial jingle, “Get busy with the fizzy.”
In the United States, where Soda Club was strictly Web-based, SodaStream is now available in mega-retailers including Williams-Sonoma, Macy’s, Bloomingdale’s, Sears, Kohl’s and Bed, Bath & Beyond.
A native New Yorker living in Israel since he was 7, Birnbaum understands the American market well thanks to his education and a stint at Procter & Gamble.
In November last year, SodaStream’s initial public offering on NASDAQ turned out to be the eighth-largest Israeli IPO ever in the United States and Israel’s biggest IPO in 2010.
“When we rang the closing bell on our first day as a public company, the vice chairman of NASDAQ announced that we are an Israeli company, and I just glowed,” said Birnbaum, who lives in Tel Mond with his family.