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Its a Beverage Company!
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DRAFT PRIVATE & CONFIDENTIAL
DisclaimerThis presentation is for educational purposes only. Nothing in this document or any information herein should be
construed as an offer, invitation, marketing of services or products, advertisement, inducement, or representation of
any kind, nor as investment advice or a recommendation to buy or sell any investment products or to make anytype of investment, or as an opinion on the merits or otherwise of any particular investment or investment strategy.
Any examples of strategies or trade ideas are intended for illustrative purposes only and are not indicative of the
historical or future strategy or performance or the chances of success of any particular strategy. This presentation
and any statements made in connection with the presentation are the presenters opinions, which have been based
upon publicly available facts, information, and analysis, and are not statements of fact.
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Outline At heart SODA is a beverage company
USD 1Bn revenue target is easily achievable Major beverage company tie up is highly likely and could propel the
stock by more than 300%
Management should be focused on getting a major tie up via SodaCaps
ASAP
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Everything You Need to Control Your Soda Experience
Soda Makers
The CO2 The Flavors
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Youre buying a soda, just deconstructed
+ =
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Investor Update on May 13: Two big takeaways Revenues to hit 1Bn USD in 2016! (2012= 436mm)
US adoption increasing Canister volumes accelerating
In 4Q12, grew 89%
In 1Q13 grew 101%! What does this mean? More users with greater frequency and higher
canister turnover, higher gross margins
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Despite the move, its STILL UNDERVALUED!
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What does 1Bn in sales really mean? US household penetration on only 5%
25% Revenue CAGR (this is slower than they have averaged) At LEAST 170mm USD in Net Income
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The $100 Price Target We think this is fully achievable
Puts the company on roughly 10x 2016 P/E, not expensive Short interest at 38% of the float
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How do they get there?!
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How to get to 1Bn?Greater penetration of canister distribution points
400 Kroger stores in2Q, potentially
nationwide by year end
CVS by 2014
Makes senseto buy your
soda whereyou buy your
soda!
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How to get to $1BnGreater brand recognition
Super Bowl Ad Went Viral
4.9mmviews!
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How to get to $1Bn
Entering refrigerator marketRestaurant edition
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Restaurant AdoptionChef-led innovation
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Riding Two Global Themes Customization
Environmentally friendly consumption
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CustomizationAt first I was just putting in half apple juice and half water, said Sara
Williams, a mother of three in Boulder, Colo., who owns two SodaStream
machines: one for water and one for everything else. Then I started
throwing in cherry juice, and grape, and we went a little nuts.
-NY Times
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Plastic Bottles Target of Consumer Awareness and Green Initiatives
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Enviro-Friendly Around the World
Germany
Israel
Yankee Stadium
US University Campuses
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The Plastic Bottle as a Political Issue
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The Game Changer Syrup direct to consumer
Preserves brand equity Allows major beverage companies to access the platform
Higher margins for all
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Soda CapsWhat is a Soda Cap?
Allows portion control
Cap is added to the bottle and mixingproportions are controlledConsistent taste every time
Control over taste is EXTREMELY important tothe beverage companies. Coca Cola controls thesyrup to water ratio at every soda fountain. Even
at McDonalds.
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Soda Brands Care About Brand Perceptionas our industry faces new opportunities and social challenges, we
continued to strengthen our strategies, plans and commitments to a
sustainable environment and promoting active healthy lifestyles within each
of the local communities in which we operate.
-Coca Cola Annual Report
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Coca-Coal Responds
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We Expect Social Pressure to Push Coca Cola on to the SodaStream Platform
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Why It Makes Sense For Coke Currently Coca-Cola Bottlers make a 40 %
Gross Margin
Why is Coke Leaving so much money on the
table?
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Distribution Costs!BOTTLERS SPEND MOST OF THEIR
GROSS PROFIT MOVING SODA FROM
POINT A TO POINT B!
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When this: Makes this:
You need less of these:And less of this:
Its Really This Simple
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Economics of a Major Tie Up Tie-Ups to drive SodaMaker sales
Increased consumption of branded drinks to drive accelerated canister
consumption
As sales mix tilts towards canisters, significant margin expansion
Could increase KO EBITDA margin by 3-4% - a Win-Win!
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Match Made in HeavenWe believe the question is not if but when will you see a machine like
this available
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Tie up example: SBUX and GMCRStarbucks tied up with the Keurig in March 2011
Since then, SBUX has sold 850mm K-Cups
GMCR revenue increased more than 250% over the following 24 months
Rev in $MMs
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Revenue ForecastsAt 5% of the US home soda market, and flat penetration in Europe,
revenues could reach $2Bn in 2016, which is double company forecasts
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Margin ImprovementA shift to greater canister usage can drive net margins in excess of 20%
Net Income potential in 2016 with a major beverage company tie up?
20% * $2Bn = $400mm
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Valuation What do you call a company that sells you everything you need to make
a beverage?
A beverage company!
Where are 2016 P/Es for beverage companies?
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Tie Up Valuation 2016 P/EsBev Companies
Coca-Cola 15x
Pepsi 15x
Dr Pepper 11x
Monster 16x
Average 14.25x
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2016 Potential Price Target2016 Net Income: 400mm
2016 P/E: 14.25x
2016 Market Cap: $5.7Bn
2016 Share price: $283
Upside: 340%
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The Message to Management
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