Preheat oven to 350°F and spray a 9x13-inch baking dish with nonstick cooking spray.
In a medium mixing bowl, cream butter and sugar with a hand mixer, starting on low and increasing to medium speed until light and fluffy. Add in eggs, one at a time, and vanilla. Again, mix on low, increasing to medium speed until incorporated.
In a separate bowl, combine flour, baking powder baking soda, salt, and cocoa powder.
Alternating between the flour mixture and water three times, add each to the creamed butter and sugar, mixing until incorporated.
Fold in the drained and chopped sauerkraut.
Pour the batter into the prepared baking dish and bake 35-40 minutes, or until an inserted toothpick comes out clean. Let the cake cool before adding the frosting.