- LaCroix’s sales and stock price nosedived after a 2018 lawsuit alleged that the bubbly water contains artificial ingredients.
- But LaCroix’s problems were exacerbated by increased competition, poor leadership moves, and outmoded marketing, according to brand experts.
- LaCroix’sunconventional marketing strategy and neon-colored cans helped fuel its ascent. But it’s time for a new marketing approach, experts say.
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Once the epitome of an it-brand, sparkling water LaCroix has fallen flat in recent months.
LaCroix became the beverage of choice of woke fitness buffs and Silicon Valley bros alike. But the brand has taken a hit in recent months, with sales nosediving, competition ramping up, and a 2018 lawsuit alleging that LaCroix contains artificial ingredients, contrary to its claims of being natural.
Read More: LaCroix faces a crippling ‘free fall’ as it turns ‘from bad, to worse, to disastrous,’ analyst says
“LaCroix enjoyed an extended honeymoon for years, but other than some retro branding and interesting flavor combinations, consumers have woken up to the fact that it may not be all that,” said Chris Allieri, founder and principal of the public relations firm Mulberry & Astor.
Business Insider asked LaCroix’s parent company National Beverage Corp. for comment. A spokesperson refuted the idea that the brand was in crisis, and issued the following statement:
“LaCroix is the #1 brand of sparkling water in the United States and the #1 brand in 41 of 52 Nielsen Metropolitan Statistical Areas. Media reports recently announced the discontinuance of some sparkling water products by a major retailer – but not LaCroix. Finally, LaCroix is the leader in converting its packaging to cans without BPA-based liners – others trail in this conversion demanded by consumers. The LaCroix brand and its performance clearly demonstrate that it is not in crisis.”
LaCroix has turned ‘from bad to worse to disastrous’
Started in 1981, LaCroix was a sleepy regional brand until it burst into the national spotlight around 2011 with a relaunch emphasizing its natural ingredients. Its neon-colored packaging, relatively affordable price and widespread distribution popularized it around the country.
Then in October came a whistleblower class action lawsuit alleging that LaCroix contained several synthetic compounds and misled customers into thinking it was 100% natural.
The company has refuted the allegations. Nevertheless, its sales and stock have since fallen. National Beverage Corp. last week reported its second straight quarter of year-over-year sales declines. Its stock price has plummeted 62.5% since September 2018.
“The LaCroix brand has gone from bad to worse to disastrous in a relatively short period of time following negative media attention regarding the ‘natural’ claim of the brand’s flavoring ingredients that surfaced in October of last year,” Laurent Grandet, analyst at financial services company Guggenheim Partners, wrote in May, calling the brand “effectively in a free fall.”
The brand also faces stiff competition
LaCroix still maintains the largest market share in the sparkling water category, but companies like Spindrift and Perrier and deep-pocketed rivals like PepsiCo.’s Bubly and Coca-Cola’s Smartwater are starting to eat into its share, according to Guggenheim.
People are seeking out new options like CBD- and caffeine-infused flavored waters, and LaCroix has mainly stayed with flavored bubbly water, said Deb Gabor, CEO of Sol Marketing.
Matt Rizzetta, CEO of brand communications firm North 6th Agency, called it a “missed opportunity.”
“They got complacent and didn’t pivot or adjust as the landscape became competitive,” said Rizzetta. “They had a golden opportunity, but they never made a concerted effort to capitalize on it.”
LaCroix’s organic approach to marketing only took it so far
LaCroix bypassed traditional channels like TV in favor of word-of-mouth and participatory social media campaigns on channels like Instagram that played into themillennial desire for authenticity and discovery.
But itsunconventional marketing strategy and neon-colored cans only took it so far. The competition heated up and social media platforms pulled back on the organic reach that brands could get, say experts.
“A disruptor brand can absolutely stick to social media, guerrilla-type marketing,” said Mulberry + Astor’s Allieri. “But when you’re coming up against a PepsiCo, who’s putting hundreds of millions of dollars, you can’t avoid paid marketing. All of that organic, earned media, and PR was not going to go on forever.”
LaCroix spent a mere $626,000 on platforms on traditional media in 2018, while Pepsi’s Bubly shelled out nearly $27 million the same year, according to Kantar Media, followed with a Super Bowl spot featuring Michael Bublé this year.
The leadership response hasn’t helped
Branding experts said the company’s leadership failed to show empathy and take responsibility.
National Beverage Corp. chairman and CEO Nick Caporella blamed the financial slump on unjust smear campaigns and compared the dented brand to people with disabilities, saying that “managing a brand is not so different from caring for someone who becomes handicapped.”
As Business Insider reported, the company is also facing a new lawsuit that claims that National Beverage Corp. president Joseph Caporella planned to prematurely and falsely state in April that its sparkling water cans were free of the chemical BPA.
“People want EQ over IQ, and empathy over excuses — and that reaction itself signals poor leadership,” said N6A’s Rizzetta. “Hubris and arrogance is usually what gets brands from the grey area to the dead zone in the middle of a crisis.”
“Instead of addressing the health and safety concerns head-on, the leadership has been more dishonest and inauthentic,” said Gabor. “The CEO asking for a free pass and absolving himself of responsibility is a big cop-out.”
Social media still fuels LaCroix’s marketing
The company is still eschewing “traditional higher-cost national advertising” in favor of social media platforms, regionally-focused marketing programs, and in-store placement, according to itsmost recent annual report.
This summer, for example, it’s running ads on buses and in grocery stores, giving away samples, sponsoring regional festivals, running podcast ads, and hosting social media giveaways tied to the hashtag #LiveLaCroix, a National Beverage Corp. spokeswoman told Business Insider.
There is no quick fix for LaCroix’s brand problems, but shaking up its marketing can be a good first start, experts said.
“A solid mix of marketing could help them move forward, but they have to move quickly,” said Allieri. “They probably don’t have the budget for a big TV ad spend, so they will need think outside the box. They could get behind a cause in a big way, and that might earn the trust of consumers.”
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