How LaCroix’s Growth Surprised Coca-Cola and PepsiCo

By November 28, 2017ISDose

LaCroix beverage

It’s just water with carbonation—no calories, no sugars, no artificial ingredients, nothing but zeros on its nutrition labels—and something it calls “natural essence oils.”

But from those sparse raw materials LaCroix has fashioned a super-brand in the burgeoning healthy beverage market. It’s a billion-dollar brand for its parent company, Natural Beverage, as LaCroix puts to shame competing water offerings from some of the titans of the beverage business.

At Coca-Cola’s Investor Day, Chairman and CEO James Quincey was asked about the growth of LaCroix (and whether Coca-Cola had been nimble enough to spot the opportunity), and admitted “we weren’t nimble enough. Now, having said that, it’s not our expectation that we will capture every available opportunity and be the first to get them, I mean that’s an unrealistic expectation and our ability to grow 4% to 6% doesn’t require us to do so. We need to consistently gain share in a growing industry and that’s what will take us to the right level of top line growth. Competitors, new and existing, will find opportunities.”

And on PepsiCo’s most-recent earnings call, Chairman and CEO Indra Nooyi was asked by an analyst why “I see LaCroix in some Targets having 30 feet of space and Coke and Pepsi each maybe five or six.” She responded: “Maybe in a couple of cases we were slow to respond to some of these newcomers who have taken a lot of (shelf) space. And believe me, we will fix that.”

Sparkling water consumption is booming as Americans look for sensorily satisfactory ways to get their carbonated soft drink fix. Sales grew for the segment by 26% in 2016, according to Beverage Marketing Corp. Other estimates give it 30% market share, about double that of Perrier. But LaCroix has bubbled up above rivals, helping drive sparkling water sales overall.

“If you live in America or have any exposure to social media, you’ve witnessed the juggernaut that is LaCroix sparkling water,” rhapsodized Bon Appetit earlier this year. “You’ve heard its praises sung by paleo bloggers, #Whole30 devotees, fashion designers and late-night TV hosts.”

 

LaCroix was founded in 1981 by G. Heileman Brewing, a regional beer maker in La Crosse, Wisconsin. Later it was acquired by National Beverage and has become the rainmaker for that company. Its ingredients are just carbonated water and the flavors. And it doesn’t do any TV advertising.

One big factor in LaCroix’s transformation from a sleepy regional brand to a national powerhouse was that National Beverage wanted it that way. About five years ago, the company relaunched LaCroix with eye-catching candy-colored packaging and broader distribution, aiming at consumers of fancier sparkling waters such as Perrier with a mainstream price.

LaCroix beverage

Quirky marketing tactics have been another big reason for LaCroix’s rise, including social media debates that rage about which of LaCroix’s many flavors are best, and brand-directed tactics such as its 40 Can Challenge in 2014 that encouraged fans to trade a can of soda for LaCroix for 40 days and then share their experiences online. There alsowas a logo redesign in a font that speaks fluidity, and rendered in blue—the color of water.

Partly because National Beverage doesn’t share much information about LaCroix, there’s also developed an air of mystery around exactly what ingredients produce flavors ranging from peach pear to pomme baya. National will say only that the flavors are derived from these natural essence oils.

A LaCroix spokesperson told the Wall Street Journal only that “essence is our picture word” and that “essence is feelings and sensory effects.” As WSJ noted, “Essence is, essentially, the mystery behind a billion-dollar brand.”

After some digging around, WSJ’s reporters concluded that LaCroix’s “Essence is actually a clear, concentrated natural chemical that’s been used for decades in products as varied as gravy, ice pops, coffee, shampoo and even insecticide, according to industry executives and scientists.” WSJ’s investigation adds that it’s “a clear, concentrated natural chemical derived by heating the skins or rinds of fruits.”

“The flavors are derived from the natural essence oils extracted from the named fruit used in each of our LaCroix flavors,” the LaCroix website states. “There are no sugars or artificial ingredients contained in, nor added to, these extracted flavors.”

This article first appeared in www.brandchannel.com
Guest Author: Dale Buss.

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