30 May 2014 Soda wars turn to a new front – sparkling waters

While US soda sales fell at an accelerated pace last year, extending a streak of declines that began in 2005, Americans are apparently developing a taste for another type of sweet, carbonated beverage.

Last year, a small brand called Sparkling Ice saw sales more than double to $302.4 million from the previous year, according to IRI, a Chicago-based market research firm. While still a tiny fraction of the broader soda industry, it represents striking growth from 2009, when sales were just $2.7 million.

And it’s just one of the factors chipping away at the dominance of traditional sodas like Coke and Pepsi, particularly in the diet category.

Sparkling Ice drinks, which are labelled as “Naturally Flavored Sparkling Mountain Spring Water,” come in a variety of fruity flavours and are made with the artificial sweetener sucralose, better known by the brand name Splenda.

Its success hasn’t escaped the attention of Coca-Cola and PepsiCo.

Coca-Cola introduced a line called Fruitwater last year that bears many resemblances to Sparkling Ice, including packaging in tall, clear bottles. A few months later, PepsiCo followed suit with Aquafina FlavorSplash, which also comes in a variety of fruity flavours.

The success of Sparkling Ice, which has zero calories, may also be among the reasons diet sodas are suffering steeper declines than their full-calorie counterparts. Last year, Diet Coke’s sales volume declined 6.8 percent and Diet Pepsi’s declined 6.9 percent, according to Beverage Digest.

While some commentators argue that flagging sales of Diet Coke and Diet Pepsi reflect consumer concerns about artificial sweeteners; the phenomenal success of Sparkling Ice which is arguably equally ‘artificial’ (it’s sweetened with sucralose, contains artificial colours and potassium benzoate as preservatives, and does not feature any exotic ‘natural’ ingredients) suggests other factors are at play.

Kevin Klock, CEO of Sparkling Ice parent company TalkingRain, described the drinks as having a lighter taste than sodas, which he said are more syrupy.

Sparkling Ice was created in 1992, but the push to make it a national brand began in 2010, Klock said. He said that the brand’s popularity is in part due to the failure of big soda makers to come out with new flavours over the years.

“We’re looking for that consumer who’s been looking to leave carbonated soft drinks but finds water boring,” he said.

That Sparkling Ice has anything but a clean label does not appear to have put customers off, although Kock says the firm is actively looking for alternatives for all of these ingredients.

“Of course we’d like to use natural sweeteners and colours and preservatives, and if we could get the same taste, vibrant colours and preserve a cold-filled product without artificial colours, sweeteners and preservatives, we would.

“But not everything can be completely natural and organic. At the very least it shows you don’t have to be ‘all-natural’ to make it in the soft drinks aisle,” he points out.

And as for innovation, while everyone wants to come up with genuinely groundbreaking new products, the success of brands like Sparkling Ice also proves that you don’t necessarily have to come up with something radically new to succeed, say commentators.

In fact, they add, you might be sitting on a brand that already has all the right ingredients for success – but just needs to be refreshed, revamped or re-positioned to unlock its true potential.

Source: Wall St Journal, BeverageDaily.com

Additional reading:

Talking Rain CEO: We can turn Sparkling Ice into a $1bn brand by 2018

Want to know what success looks like? Check out Sparkling Ice. In early 2010 it was generating $10m a year. This year [2013], it’s on course to generate $350-400m and CEO Kevin Klock tells FoodNavigator-USA it could be a $1bn brand by 2018.

It’s a story that will give hope to struggling food and beverage marketers everywhere. No secret ingredient, no technological breakthrough, no miraculous novel sweetener, no revolutionary new concept or format (it’s fizzy water). But staggering growth.

So what’s the secret?….