LaCroix is soaring, but could the sparkling water brand lose its fizz?
- LaCroix, owned by National Beverage Corporation, continues to enjoy double-digit growth, but experts wonder if the sparkling water brand can keep its momentum, according to Bev Net. Sales of the beverage have more than doubled during the last two years, to $225.5 million.
- Anthony Vendetti, an analyst with Maxim Group, said in July that the growth of LaCroix was masking the flat-to-declining performance of the company’s other brands, the beverage publication reported.
- While LaCroix is the fastest-growing unsweetened brand of sparkling water, it’s still second to Nestle’s Perrier and San Pellegrino in terms of sales. “We believe, based on the independent sales data, that LaCroix is growing significantly faster than the category,” Vendetti said.
Sales of LaCroix's popular sparkling water are surging, but there is concern the beverage won’t be able to keep up this pace of growth, and that National Beverages other drinks won’t bring in enough revenue to compensate for the loss.
The no-calorie sparkling water has become a powerhouse in recent years, thanks to its clean ingredient list, playful social-media driven branding and cheaper price. LaCroix is especially popular among millennial consumers, many of whom are looking for an affordable, healthy alternative to soda and plain water.
LaCroix touts its ingredients as only carbonated water and natural flavor. This isn’t a secret recipe, like the one Coke famously keeps under lock and key. This is a combination competitors can, and are, duplicating — a red flag that LaCroix may have trouble with long-term success.
Smaller competitor, Spindrift, has differentiated itself from LaCroix by removing all natural flavors and essences from its sparkling waters. Now, the ingredients are limited to real fruit and bubbly water. The switch, which was announced earlier this year, could be a way to lure LaCroix consumers who are beginning to question what ‘natural flavors’ really are.
Spindrift was already making a name for itself before the change of ingredients. The company reports that it has grown more than 800% in the last 2 years, and just recently received an additional $10 million in funding. SodaStream, with its countertop sparkling water machine's, also has watched sales jump, with revenue during its most recent quarter increasing 9.6% to $130.6 million compared to a year ago.
LaCroix hasn’t had to stray too far from its updated roots to compete with beverage giants. National Beverage relaunched LaCroix about five years ago with new, brightly colored packaging. The idea was to make it a more affordable alternative to pricier Perrier and San Pellegrino.
Nestle, which owns both Perrier and San Pellegrino, still leads LaCroix in sales. In addition, they’re expanding the flavor options. Coca-Cola and PepsiCo weren’t focused on sparkling water when LaCroix got its facelift. When sparkling water sales took off, retailers like Whole Foods and Target were quick to make shelf space for them.
Still, LaCroix’s dominant place in the beverage aisle could be in jeopardy as Coca-Cola and PepsiCo play catch up. They have the built-in distribution and marketing ability to make a sizable dent in LaCroix’s share of the market. Expect both beverage companies to invest R&D in sparkling beverages, or explore purchasing a competitor to cash in on this trend. If LaCroix is still a market leader after the next wave of sparkling beverage launches, it would be a positive sign that the brand has staying power.
- BevNet LaCroix Rising, But For How Long?
- The Wall Street Journal LaCroix Bubbles Up in Sparkling Water Brand Competition