Coca-Cola is launching Topo Chico Sabores, premium sparkling waters made with fruit juice and herbal extracts that bring the fast-growing beverage into a new non-alcoholic category and premium drinking experience.
The Atlanta-based CPG company has rapidly accelerated innovation in Topo Chico — through new flavors and product extensions, including alcohol through its relationship with Molson Coors — to give consumers more choices and reasons to consume the popular drink. Coca-Cola is optimistic Topo Chico could one day top $1 billion in sales.
Topo Chico Sabores, which mirrors an offering the company had on shelves more than a century ago, comes in three flavors: Blueberry, Tangerine and Lime. They are set to hit shelves this month.
“The most interesting piece about that is how the brand has sort of transcended the sparkling mineral water space, has become bigger than just the category itself,” Dan White, Coca-Cola’s chief of new revenue streams, said in an interview. “And that's where really the growth from Topo Chico comes from and what we're really leaning into."
Coca-Cola paid an estimated $220 million in 2017 to purchase Topo Chico, a brand it had worked closely with for nearly a century before, as it moved aggressively to diversify its beverage portfolio and reduce its dependency on sugary drinks.
In the years since, Coca-Cola has used its muscle to significantly expand Topo Chico’s distribution across the U.S., elevating the once regional favorite into one of the most popular brands in its category. Topo Chico also has been a beneficiary of surging demand among consumers for fizzy drinks that provide needed refreshment while avoiding sugar.
Sales have soared following the acquisition as Coca-Cola greatly expanded the beverage’s availability across the U.S. Between 2017 and 2021, the brand’s market share in the sparkling water category rose from 20% to 35%, according to Nielsen data provided by Coca-Cola.
"We've really done a very, very good job of allowing the brand to become what consumers want it to be,” White said.
What consumers have shown through research, he said, is that they view Topo Chico as more than just the mineral water collected and bottled from Mexico. The ability to bring Topo Chico into other categories, coupled with a period of strong demand, has made White and others at Coca-Cola optimistic that it could one day grow into a $1 billion brand at a beverage giant better known for Diet Coke, Body Armor and Dasani.
“It's on a trajectory to do that," White said. He declined to predict when it could reach the $1 billion level.
Flavored sparkling water alone currently generates approximately $300 million in U.S. retail sales, according to Coca-Cola, with that growth expected to continue.
While demand for the offering remains robust, according to White, Topo Chico has recently struggled to produce enough of the product due to a lack of bottling equipment and an industry-wide shortage of glass bottles. Coca-Cola is making progress in addressing those issues, he said.
Sales of Topo Chico flavored offerings plunged 41% to $50 million during the 52 weeks ending on February 23, according to Circana, a Chicago-based market research firm, while in nonflavored — where it’s third in the seltzer/mineral/sparkling category behind Nestlé’s Perrier and San Pellegrino — sales declined 6% to $184 million.
Topo Chico flavored water fell more sharply compared to original mineral water as Coca-Cola prioritized putting more of its resources into the core offering given the challenges the brand was facing, White said.
Growth for the iconic mineral water also is hindered by the fact that it comes from the Cerro del Topo Chico in Northern Mexico, and Coca-Cola is trying to be responsible stewards of the finite resource, White noted. It’s a big reason why, as Coca-Cola has grown the brand, it uses water for newer offerings that don’t depend on the Mexican spring.
Instead, Sabores and other Topo Chico extensions are using water from where the products are produced. They infuse the liquid with the right level of minerals and carbonation to give it a taste and feel as close to the original unique profile as possible.
The company is optimistic about the potential of Sabores because half of Topo Chico’s customers crave more flavored water options. At the same time, the popularity of Topo Chico Twist of Grapefruit and Twist of Tangerine — which comes with a lighter flavor profile compared to Sabores — also indicates further interest.
A major goal of growing the Topo Chico brand at Coca-Cola is giving people more reasons and occasions to drink it.
For example, a consumer could crave just the sparkling mineral water, desire flavor like with Sabores and Twist, or in the evening, a hard seltzer or ready-to-drink cocktail. Unlike the classic Topo Chico, the other offerings also eschew glass in favor of aluminum, addressing the packaging shortage issues and enabling that the product can be consumed in areas where glass is banned.
"What we're doing with Topo Chico is providing a number of different entry points," White said. “That should give people new opportunities to experience the brand and in the ways hopefully that they enjoy."