Podcast

Daniel Torres Dwyer 25 March 2019

Sodastream as a Global Beverage Player with Ferdinand Barckhahn

The Beverage industry is not alien to changes in consumer trends and disruption. Sodastream is one of the players that’s transforming this industry, not only through their products but also through an innovative culture and strong Corporate Social Responsibility agenda. To understand the current dynamics in the industry and learn more about Sodastream, we’ve invited Ferdinand Barckhahn, current General Manager for DACH (Germany, Austria & Switzerland).

Topics covered in the podcast:

• State of current beverage industry
• How this plays off in the German market
• The reasons for Sodastream’s success
• Sodastream’s corporate culture
• The Business’ growth objectives for the coming years in DACH

Daniel:
Hi, I’m Daniel Torres Dwyer and welcome LS International Career Success podcast. The beverage sector is not alienated to new consumer trends and disruptions. Many people were surprised to hear about Pepsi Cola, one of the main players acquiring SodaStream last summer, but many others weren’t. We wanted to hear more about this business, so we’ve invited Ferdinand Barckhahn, the general manager for Germany, Austria, Switzerland at SodaStream to hear more about the success story about this company and what’s to come also in the future. Hi, Ferdinand. Thanks for joining us today.

Ferdinand:
Hi Daniel. It’s pleasure.

Daniel:
So just to start, what is the general situation today in the beverage industry in Germany, Austria and Switzerland?

Ferdinand:
Well, Daniel, There’s one huge segment, which is the water segment, specifically the mineral water segment. In average, German consumer consumes around 150 liter of mineral water per year. This is s huge, if you compare that to around 31 litres on Cola or 37 liters on lemonades. So mineral water specifically, the whole water category in Germany is just huge and dominating almost everything. While other categories like Cola, lemonades or the sugar categories in general, there are even stagnating and declining. Water is growing since years. And within water, we take a deeper look into water category. The CO2 is super important. So Germans tend to drink mineral water with CO2 and they’re on 70% of all the purchases done in Germany are done on CO2 mineral water. The lion’s share of water in Germany is related to CO2 mineral water. And if you go deeper into that then you would see that around 70% of the mineral water is purchased in PETE bottles and 30% only in crates, PETE and glass PETE crates. So the majority is purchased in plastic bottles, which is obviously not a good thing for the environment.
Then take other components into consideration like that. It is super absurd that consumers specifically the German consumers per year, they lift a weight of around 17 tons while in total, right of which means at the end of the day it’s like a lorry and they on top and a lot of time collecting bottles, storing bottles and bringing them to drink shops and money in return for collecting them. It does make a lot of sense for German consumers to do that, but they are very habitual and therefore they don’t even understand that there’s a better solution and now we come into play.

Daniel:
Yeah. Actually, this brings me to the next question. How is Soda stream playing in this context of a number of rich non alcohol, sorry, beverages in Germany?

Ferdinand:
What I really need you to step a bit aside from linking it to the nonalcoholic beverage category. Generally, the long-term trend of German consumers is that they will now have individual products on the one hand side. They will now have environmental friendly products and they will now have convenient products. If you would take a look into the beverage category in general, which is, also containing, you know the beer category or a sparkling wine category, but also obviously the non alcoholic category and you will see that this is by far in Germany, not convenience, not very individual. It obviously not at all environmental friendly. For us as Soda Stream, this is a fantastic opportunity to tap in and deliver to German consumers a superior benefit, which is related to exactly these three long-term trends. We understood that German consumers are fed up with the schlepping. They don’t want to go to a supermarket and schlep almost a small car over a year in average because it’s also not healthy. Right? It’s like its crossing back pain. You don’t have hands free for important topics like children, et cetera, et cetera. It costs you a lot of space at home, in your car. You need to spend a lot of time bringing back the crates so it’s super inconvenience. So if you have that Soda stream at home, you get rid of all these inconvenient aspects of the current category. That’s one thing.
On top in average, there are 17 billion PT bottles produced in Germany on a yearly base. We all know that out of the 17 billion PT bottles per year, not everything is brought back in order to the recycling system. You know the recycling system as communicated by the German law is right now with the actual studies that we have, we only recycle around 60% of all PT bottles which are produced. So where do these other bottles go? There are a lot of bottles would go to rivers or lakes. They’re contaminating our planets. We all see the whales with all the plastic in the stomach, but for the German consumer they cannot relate because it’s not in front of the face. But if you would go out to the forest and you would see PT bottles out there and there are many of those PT bottles in the forest or in the lakes or in the rivers actually in Germany, that would recognize the issue that we’re having.
Also the environmental topic, which is super important because if you use a Soda of stream, you would save mother earth from the PT and can pollution and you’ll save around two to 3000 cans and PT bottles on a yearly base using our system. So it’s also super environmental friendly. So our general ambition in that region, which I’m responsible for is to get rid of all the schlepping, you know, and provide consumers with a superior solution so they don’t have to carry crates and PT bottles anymore and to get rid of PT one way of plastic in that region. So liberate them from the PT issue or plastic issue in general and we’re getting there very fast day by day. If you take a look into the numbers and the performance of the company over the last couple of years. In Q1, around 5% of German households would use our system. Today, we around 10% household penetrations, which is crazy. We doubled our household penetration. So it is amazing to see how fast the system is gaining track and therefore our ambition to transit is to get to 20% our household penetration, which means we need to double that households penetration again and therefore we need not only great strategies but also fantastic people.

Daniel:
Absolutely. Why do you think that Soda stream is also like more in the longer term, let’s say 2030, why do you think it’s a player to watch?

Ferdinand:
Well, probably you have heard that not only Soda Stream was successful and recognized by many, many authorities in the past that we are doing a good job and that we are relevant for the total category in general. We are super disruptive. Many products and services, they call themselves disruptive but they are not. They don’t let categories disappear or brands disappear if they are used. Soda Stream for me is a super example for disruption because it doesn’t make a lot of sense for German consumers to behave on a long run the way they are behaving right now. They are pending time on unnecessary things like schlepping crates or PT bottles, driving to drink shops. That’s not necessary anymore because the tap water quality is one of the best in the world and there is no reason why not using the current tap water and it’s going to be even better on a long run. So that’s not only good for us, but also other interests like probably you’ve noticed that Pepsi Cola bought a Soda Stream three months ago. So big companies obviously acknowledge the success of Soda Stream and with the combination of Pepsi Co and Soda Stream with the financial opportunities arising from that merger and the opportunities on the distribution level as well on a global base. I think that this is a perfect mix in order to establish a long term successful business with every single day, which causes new consumers join in the system and we’re going to have better machines over the long run. We got to have better services on a long run. So there is no need for consumers to continue this very costly, unnecessary behavior having at the moment.

Daniel:
Very interesting. And how does this bias towards growth and even making the world a better place, but how does that reflect on Soda streams business culture?

Ferdinand:
Well, heavily, you know on the one hand side, we behave like a startup because we are disruptive and if you believe that around 80% of households can be penetrated with our system and we are right now at only 10% of household penetration. There’s a huge growth opportunity out there. The culture we are having right now is on the one hand side, super entrepreneurial. So we don’t have huge teams and huge silences. So we’re super lean in our structure. We take decisions fast and we were searching for people who are willing and able to take risks obviously, who are willing and able to fail and learn from failures and then afterwards doing things even better or willing to collaborate on different levels, building networks in order to gain a best practices, worst practices and share them within teams, not only on a local level, obviously on a global level. And if they take initiative, if they are willing to be brave to take initiative, being optimistic, I think that’s exactly what drives us and what drives the business. So it is in a nutshell, a very entrepreneurial mentality and culture and specifically it relates back to somehow also brave, some bits crazy people who want to change the world for better.

Daniel:
Okay, fantastic. We’ll look Ferdinand, and this was really interesting to also wrapping it up with the business culture changing the world, but also more of the business conversation and the beverages context in Germany. So thanks a lot for joining us today.
Ferdinand:
It was super special to me and many, many thanks Daniel. So a lot of successful for the future and see you soon.

Daniel:
Thanks a lot Ferdinand, and thanks also to our listeners and see you in the next edition of the podcast.