Few drinks hit the spot like an ice-cold, bubbling soda. However, consumers are increasingly realizing that many sodas are extremely sugary and unhealthy. In fact, sugary drinks are the single largest source of calories and added sugar in Americans’ diets.

It’s no surprise, then, that consumption of soft drinks is declining. Americans consumed 54 gallons of soft drinks per capita in 1998 and just 40 gallons per capita in 2015, a 35% decrease in less than 20 years. But consumers are still looking for exciting, tasty drinks. Sales of sparkling water have doubled in the past decade, and legacy soda brands are investing in healthier alternatives to traditional sodas. 

While the pivot away from sugar and high-fructose corn syrup is a major trend in beverages, there are many other shifts impacting what we drink. The cannabis-infused beverage market is growing rapidly, with a projected CAGR of 17.8% over the next five years. Global sales of craft or artisanal soda are also increasing steadily. Alcohol consumption continues to decline each year, causing consumers to seek alternative beverages for happy hour. 

The beverage industry is evolving rapidly to meet the needs of the 2020 consumer. There are many potential trends to capitalize on, and a company at the intersection of several growing markets could become a new leader in soft drinks.

Smart Soda is a soft drink company producing vitamin-infused, alkaline-based sodas and carbonated beverages for both the wholesale and retail markets. The company is endeavoring to build the next leading soft drink brand. It has a wide variety of products and revenue streams catered toward the slightly-healthier soda drinker, the corporate food and beverage buyer, the cannabis beverage enthusiast, and more. 

Smart Soda was founded in 2019 and has already made major strides in distributing healthier sodas and fountain soda technology to consumers and corporations. The company’s core is its wide range of better-for-you soft drinks. Smart Soda offers 32 beverage flavors, ranging from unsweetened sparkling waters in flavors like Mixed Berry and Watermelon Lime, to specialty sodas (Apple Cinnamon, White Grape, etc.), classic sodas like cola and root beer, and alkaline/mineralized waters. All of these beverages are vitamin-infused, vegan, kosher, and can be infused with CBD. 

The company already offers or is developing a wide variety of ways for the market to access those drinks. First, the soda syrups are available in traditional bag-in-a-box (BIB) format for sale to dining and corporate establishments with soda machines. Second, Smart Soda offers a variety of dispenser equipment to help partners market and sell Smart Sodas with unique displays ranging from traditional-looking soda fountains to touch-screen beverage dispensers and taps. The company invests heavily in equipment innovation. Smart Soda is currently under review for two patents for soda fountain systems. Lastly, Smart Soda is beginning to expand its retail arm, bottling sodas for sale at Costco and on Amazon as well as launching additional retail partnerships with various bottling and formulation options. 

While large-scale retail distribution is still in the works, Smart Soda’s principal traction thus far has come from B2B sales. The company has partnered with Sysco, SkyChef, Bareburger, and other corporate and hospitality accounts to offer sodas to employees and customers. Smart Soda is available in 45 Bareburger locations across six states — that account is projected to generate almost $1 million for Smart Soda in 2020. 

Smart Soda generated just over $334,000 in revenue in 2019 and achieved a small margin of profitability with almost $8,000 in net income. The company is currently raising up to $230,000 at a $10.7 million valuation.

Smart Soda was co-founded by Lior Shafir and Julia Solooki. Shafir, the company’s CEO, is a beverage executive who previously served as the exclusive distributor of Sodastream Professional in the United States. He has seemingly worked in various management positions in the beverage business for the last 20 years. Solooki, Smart Soda’s President, is a healthcare professional with experience in operations and business development for various companies. She currently serves as the Director of Business Development for a healthcare services company and so presumably works for Smart Soda part-time.

Smart Soda’s near-term goals are to launch CBD sodas alongside restaurant partners and to launch its retail distribution business with Costco and Amazon. Beyond those initiatives, the company plans to grow corporate relationships by doubling its sales team, closing 500 new accounts, and investigating a possible franchise model. 

While revenue projections are not a focus of Smart Soda’s crowdfunding pitch, Smart Soda CEO Lior Shafir shared basic revenue projections in the discussion section of the company’s Republic raise page. According to those figures, Smart Soda has already generated $546,000 in 2020, with $1.2-$1.5 million planned for 2020 and $8 million planned for 2021.

• Diversification of revenue across equipment, B2B, and retail: Many soft drink companies are focused on launching the latest trendy sparkling water can and building a buzzy brand. But Smart Soda is focused on building diversified revenue channels ranging from soda fountain equipment to high-margin syrups to retail soda bottles. While this broad portfolio could reflect a lack of focus, Smart Soda’s proven traction across several verticals indicates that the company has struck a lucrative balance of B2B and retail potential to guarantee its staying power. 
• Wide range of flavor and formula options in a rapidly-evolving space: Smart Soda is not doubling down on a specific soft drink category and betting on its success. Instead, it offers sparkling waters, artisanal sodas, classic but better-for-you sodas, and alkaline waters. Smart Soda is even launching a CBD beverage line this year, with hopes of becoming the first CBD fountain soda brand. This diversity of beverage offerings expands Smart Soda’s opportunity for corporate partnerships and options for retail success. It also better guarantees the company’s staying power through the shifting trends of soft drinks.
  
• Proven traction with partners: Though only founded last year, Smart Soda has already inked deals with major restaurants and food logistics companies, and those partnerships are contributing significantly to Smart Soda’s bottom line. The company’s Bareburger partnership alone is expected to generate almost $1 million this year. A successful consumer-facing relationship like that one only enhances the company’s ability to close additional restaurant deals and begin retail sales. 

Smart Soda is an all-in-one soda company offering fountain soda equipment, wholesale syrup bags, and trendy consumer beverage formulas with the ultimate goal of leading the next era of soft drink consumption. The company’s ability to achieve traction in each of these verticals — and do so profitably in just over a year — is an impressive signal that Smart Soda executives have a keen understanding of the beverage industry.

Prospective investors might worry that Smart Soda’s focus on so many areas of the beverage lifecycle, from distribution machines to syrup to Amazon launches, means that each vertical suffers from lack of devoted attention. Arguably, Smart Soda’s consumer retail operation is at greatest risk from under-resourcing. Many of the rapidly-growing soft drink brands in the last several years are obsessively brand-focused and have used keen digital marketing tactics to build thriving DTC businesses before forging retail partnerships. With Smart Soda devoting sizable resources toward patenting soda fountain technology and building relationships with restaurants, the consumer face of the brand may suffer. Smart Soda’s potential in the popular market may be limited as it faces stiff competition from more consumer-focused brands. 

However, Smart Soda is still well-positioned to capture market share as a fountain equipment and soft drink syrup distributor. The company has stated that its ultimate goal is IPO, and current traction and profitability indicate the potential viability of that pathway. Laird Superfood — a plant-based beverage company that just filed for IPO — offers a potential model for small-cap public offering. According to Smart Soda projections, the company is only a year or two away from exceeding Laird’s annual revenue.

In sum, the sheer breadth of Smart Soda’s beverage offerings and its ability to capitalize on equipment, consumer flavors, syrups, and more are impressive. While ultimate success may hinge on Smart Soda’s ability to scale its B2B operations, launch a compelling consumer brand, or both, current signals indicate that the company has built a lasting product already generating sales in restaurants across the United States. Therefore, Smart Soda is a Deal to Watch.