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PepsiCo returns to soda's roots with its SodaStream deal
PEPSICO'S US$3.2 billion purchase of SodaStream is an idea right out of the past.
Most consumers now drink soda out of bottles or cans. But the vending machine staple got its start as a mixable medical remedy. By buying SodaStream, PepsiCo will partly return to the mixable syrup model on which its sugary business empire is built.
Soda was introduced to the mass market in the late 1700s by Johann Jacob Schweppe, a German scientist who developed a process for carbonating water.
"There was a belief that volcanic mineral carbonated water was healthy," said Darcy O'Neil, author of Fix the Pumps, a book that details the history of the soda fountain. "Then people realised they could add lemon and some sugar to it, and that was the first soda."
For 100 years or so, soda was primarily thought of as medicine.
Pharmacists had syrup recipes of different herbs and spices that were mixed with carbonated water to treat all manner of ills. By the 1890s, soda fountains were reaching peak popularity.
"Coca-Cola was a syrup that was supposed to settle your stomach," Mr O'Neil said. Once the flavour became popular, the company licensed its syrup to bottlers in the early 1900s - a move that competitors like Pepsi quickly followed.
Syrups and soda fountains remained popular, and during Prohibition soda recipe books became desirable as Americans thirsted for creative flavour combinations. But in the 1950s, the vending machine started to take over.
"They could saturate the environment with those," Mr O'Neil said, and mix-your-own sodas started to decline in popularity.
Syrup is still available to restaurants and cafeterias with soda fountains, but most people today get their soda from cans or bottles. And while SodaStream has made DIY sodas a little more popular with modern consumers, the big beverage companies have had limited success with the direct-to-consumer syrup approach this century.
Coca-Cola tried to work its way into consumers' kitchens four years ago, when it bought a large stake in Keurig Green Mountain, which makes countertop drink dispensers. It ended that effort two years later because of poor sales.
Now, though, people may not be looking just for healthier alternatives, but also for more variety and control.
"The hipster culture has done a really good job of bringing that back," Mr O'Neil noted. "There's this idea that cooking and doing your own thing is better than just getting pre-packaged stuff. Now we have all the resources to research how to make it, and SodaStream has made the carbonation process really easy, so I guess it's just a natural extension of the trend toward doing things yourself."
The soda bottle is in no danger of disappearing, Mr O'Neil added. But PepsiCo is gambling that the market is ready for some new, or old, alternatives. NYTIMES