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LaCroix was the millennial "it" mark. Now it has lost its way



Sales for flavored carbonated water are "effective in free fall," wrote Laurent Grandet, a drink analyst for Guggenheim, in a new note. Sales have fallen more than 15% in May after tumbling nearly 7% in April, 5% in March and 6% in February, according to the Guggenheim.

"The LaCroix brand has gone from bad to worse, to catastrophic in a relatively short time," said the Grand, with increased competition for similar drinks and "lack of meaningful or disturbing innovation" from the drink's owner, National Beverage.

National Beverage's ( FIZZ ) The stock price has fallen 10% this week and 62% since September 201
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American consumers are increasingly seeking drinks as has functional elements, such as nutritional value or a caffeine tube, according to the research company Mintel. They also want healthy, low sugar or sugar-free offerings. Sparkling water marks many of these boxes.

Retail sales of seltzer in the US more than doubled from 2013 to 2018, Mintel estimated.

LaCroix, with its retro brand and unique flavors, became an unlikely leader in the seltzer market. The brand has been around for almost three decades, owned by a relatively small company. But sales took off this decade, and LaCroix became one of the symbols of the millennial generation.

It didn't take long for the big drinkers to notice. The competition in the spark market has grown strongly in the last couple of years.

  LaCroix sales have fallen dramatically in 2019.
Coca-Cola ( KO ) bought Mexican sparkling water maker Topo Chico in 2017 and recently released flavored sparkling versions of its Smartwater brand. PepsiCo ( PEP ) recently introduced the Bubly brand with sparkling water. Costco ( COST ) has also entered the glittering business, and launched non-calorie tastings under his private label Kirkland Signature brand last summer.

Due to LaCroix's New Competitors, the Grand said customers have "since discovered that other brands offer acceptable substitutions" and that "LaCroix does not have much to distinguish it from the competition in terms of intellectual property or added value."

In his note Grandet Also due to inexperienced management from his parent company, National Beverage ( FIZZ ) . He said it is "unlikely that LaCroix can recover to any meaningful degree while in the hands of National Beverage."
National Beverage reported a decline in sales and profits in its last quarter. It triggered an unusual response from the company's Mercurial Chairman and CEO, Nick Caporella.

"We really regret these results mentioned above," he said in a letter to the shareholders. "Negligence or lack of leadership or godless acts from God were not the causes – much of this was the result of injustice!"

He made an unusual comparison between LaCroix and people who are physically disabled, adding that dealing with a brand is similar to "caring for someone who is disabled."

The company has also not fully recovered from a class action filed in October 2018 on the ingredients of LaCroix, which the Grand Sa was the catalyst for LaCroix's sales.

In the lawsuit, a customer named Lenora Rice said she started drinking LaCroix in 2016 because she thought it had all natural ingredients. But Rice now claims that LaCroix has several synthetic compounds in it, including a chemical used to kill cockroaches, and claims that the company is misleading customers by claiming that LaCroix is ​​100% natural.

National Beverage has issued a number of statements that reject the claims since the lawsuit was filed.


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