LaCroix sales are "effectively in free fall," Guggenheim Partners' beverage industry badyst Laurent Grandet wrote in a report published on Thursday.
Sales of the seltzer brand fell 15 percent in May after falling 7 percent in April, 5 percent in March and 6 percent in February. The share price of La Croix's parent company, National Beverage, fell 10 percent this week and has fallen 62 percent since September of last year.
Grandet's badysis of the situation is dramatic, noting that "the LaCroix brand has gone from bad to worse to disastrous in a relatively short period of time."
But it's not a mystery why: there are now seemingly limitless options for the seltzer, and most of them are not companies that fight scandal after scandal.
The LaCroix brand is more than 30 years old, and for a long time it has maintained a moderate popularity in the Midwest. Around 2015, as reported by Libby Nelson and Javier Zarracina of Vox, its retro and fun aesthetic brand beat a completely new audience:
Long before the girls who wore "LaCroixs Over Boys" shirts were born this summer, LaCroix was loved by women concerned about their health and their budget in the middle of America. They knew something good when they found it, and they were a loyal audience. But most of the trends filter in from the coasts to the Midwest, not the other way around, so the first 30 years of LaCroix went under the radar.
Then, sometime in 2015, LaCroix, carbonated water without sugar and with a slight flavor wrapped in a striking tin, became an unlikely success. The New York Times published an essay about him. The Awl and Time Out New York rated their flavors. If you say "LaCroix" to a young urban professional, get ready for a possible explosion of enthusiasm, as if you had shaken a can of carbonated water.
Of course, the success of LaCroix led to competition. Everyone wanted a bit of the beverage market, or a "part of the throat," as is the term in the beverage industry, that I wish I did not know.
In 2017, Coca-Cola bought the Mexican fashion brand of Topo Chico gas water (super popular in the southern United States, especially among urban youth). Pepsi launched its own Bubly brand of sparkling water, and the tastier Spindrift won the favor of the same demography that had made LaCroix a fad. Seltzer is evolving: it can be purchased with alcohol or CBD. Millennials who embraced the normcore aesthetic of LaCroix with a wink have moved (or come back) to the clbadic Polar.
LaCroix is not evolving, argues the Guggenheim badyst, and in fact it is quite poorly managed. On the one hand, it is currently the subject of a clbad action. While LaCroix is marketed as "all-natural," the claimants argue that it contains artificial ingredients, "including linalool, which is used in the badroach insecticide." (Linalool, although not necessarily natural, is found in 63 different spices and is commonly used in foods and beverages, according to the National Institutes of Health.) The company's official response to this lawsuit included stinging tweets that asked your clients who came to your aid.
"We are proud to serve LaCroix to our families, hospitals and schools," official account of @lacroixwater. tweeted. "Please join us in our defense of our dear LaCroix."
This happened shortly after National Beverage's billionaire general manager Nick Caporella, 83, was charged with badual misconduct by two pilots who had worked on the company's plane. Both said he had touched them inappropriately on dozens of flights. LaCroix's response to this legal problem was also strange: a press release from the company with the word "NEWS" written on the top with the US flag superimposed, which described as "defamation" the stories of the pilots, without information that corroborates them, rather than a quote from a board member who declared: "I've known Nick for more than 40 years and I think these accusations are incredulous."
In March, when National Beverage published a sad third quarter earnings report for 2018, it did so with this widely commented explanation:
"We are truly sorry for the results mentioned above: Negligence, mismanagement and God's regrettable acts were not the reasons: much of this was the result of injustice! … Managing a brand is not that different from take care of someone who becomes disabled. "
(Reached for comment at that time, a spokesperson told Vox: "What I was saying was that the loving care that you provide to a person with special needs is what you do every day with the company.") All this is at the head of the policy of Caporella. The criticisms, which are usually almost impossible to badyze, but sometimes involve elaborate metaphors about the many failures of Barack Obama.
Although LaCroix has long referred to its clients as "our cult," it does not seem as faithful as it once believed.
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