June 7, 2019

3 Ways to Lose Share of Throat

Well, that didn’t take long. A little more than a year ago, I wondered how the launch of Bubly would affect the flavored sparkling water category, and how it would affect LaCroix in particular.

The answer seems to be quite a bit, and it’s been making the news. Back in April, a Bloomberg report showed that Bubly had increased its market share by more than four percent over the past year, taking most of that share of throat – yep, that’s an official beverage industry term — from LaCroix.

Worse than declining share of throat, LaCroix’s sales have fallen 15% in May after dropping 7%, 5% and 6% in April, March and February respectively.  That happened in a category that grew in sales by 16% over the past year.  Not good for what was labeled as the Millennial “it” brand.

But the story now isn’t so much on how Bubly would fare, but how LaCroix has responded. Judging by the numbers, it would look like not very well. So what happened? Three things that are quite inter-related, but presented here in list form to make the search engines happy:

    1. Failure to evolve
      National Beverage claims the success of LaCroix is nothing more than luck. True, LaCroix was already there with a product that consumers were looking for as they started to turn away from high-sugar drinks. But they also had a merchandising plan placing product in non-traditional locations like office supply stores in addition to supermarkets, which showed some level of forethought. Beyond that, it’s hard to say what was designed and what was divine intervention. Regardless, what got you there isn’t necessarily going to keep you there, especially when you have competition. Then again, you don’t have to evolve. It worked out well for the dinosaurs.
    2. Failure to innovate
      It really is a commodity product, something consumers are finding as they try other brands, particularly Bubly, who recently unleashed a whole new batch of flavors. This is a category where people are likely to buy their favorite flavors rather than their favorite brand. And as more players enter, including store brands, the more of a commodity it becomes.That’s why the category as a whole is changing. Sure, LaCroix has added new flavors over the years, and they also introduced the Cúrate blended flavor line, but it feels more reactive than innovative. However, I think their big missed opportunity lies in their reluctance to innovate their marketing. While word-of-mouth helped them grow, as competition moved into the category, they seem to have changed nothing in their marketing approach except for building a social media presence. Case in point, on checking their website I see they also have the NiCola line, with cola and coffee flavors. I had no idea and I’m a regular purchaser.
    3. Failure to invest
      Not only does there appear to be no innovation in their marketing, there seems to be no additional investment. This applies to creative production as well as media channels. While it’s hard to compete with the deep pockets of PepsiCo, I can’t see where LaCroix has made any effort. The web experience at Bubly is bright, fun and engaging – a positive disruption – while at LaCroix it feels dated and stale. A quick Google search for LaCroix advertising turns up nothing but a piece of student work. And in a time where thinking about a product ends up with a slew of banner ads following you across every piece of electronic equipment you use, I’ve never encountered one in the wild.  Even a moat.com search turns up a single true web banner. It’s much easier to defend ground than gain it.

Admittedly, I don’t know the inner workings of National Beverage. They may feel their core base is loyal and will never go away, being content with a reduced share. Maybe they feel what worked will work again. Of course, there are other issues at play that could distract them from the challenge at hand. There have been lawsuits, bad press and some head scratching comments from the Chief Executive Officer. Enough that if I was an investor, I might go another direction. Or maybe that success being luck is a little closer to the truth after all.

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Steve Cox

Steve, like all HMH'ers, has a passion for following these trends in and out of the industry in order to better determine the best solutions for our clients. Nice.