Image Credit: Mike McCune
When you are thirsty, what kind of drink do you reach for? A lot of us will grab a soda, a water, or maybe even a coffee or a tea. However, just a few years ago a new option showed up: favored bubbly water. The leader in this market category was a brand called LaCroix. The LaCroix product managers did very well for a long time. However, the popularity of their product has attracted new competitors and now the LaCroix product managers have to take a look at their product development definition and find ways to defend their market share. What should they do to keep the fizz in their product sales?
The Cost Of Being Too Popular
The flavored seltzer water segment of the drink market exploded in size over the past few years. LaCroix was the firm that was driving this market segment. However, now things have changed for the company. The LaCroix product managers are struggling to deal with two simultaneous problems: the arrival of a host of new competitors and a lingering lawsuit over LaCroix’s ingredients. Competition is coming from both Coca-Cola and Pepsi who have both introduced sparkling water products. At the same time, startups and a number of private label seltzer brands have shown up.
What’s happening here is that customers are now being offered more options when they go shopping. Customers are leaving LaCroix because they believe that the competition offers better taste, lower prices, or have ingredients that they can feel better about. The LaCroix product managers have a number of different things that they can do. They can spend more on marketing and they can spend to get more shelf space in stores. However, both of these are expensive options.
The challenges for the LaCroix product managers started last year. That was when Pepsi launched a new seltzer brand that they called “Bubly”. At the same time, Coca-Cola started to expand the distribution of their Topo Chico which is a sparkling mineral water that they import from Mexico. Just to make things a bit more difficult for LaCroix, last year a class-action lawsuit was filed against them alleging that their all-natural product claims were not true. The lawsuit claims that LaCroix contains synthetic ingredients. The LaCroix product managers have denied these claims and have paid for independent lab tests to verify their natural product claims. They need to get this resolved or it may end up looking bad on their product manager resume.
How LaCroix Plans On Being Successful In The Future
The LaCroix product comes in a wide variety of fanciful flavors that include pamplemousse and blackberry cucumber. The labeling on the cans simply say “carbonated water, naturally essenced” or “carbonated water, natural flavor” as their ingredients. The product managers at LaCroix have come out and said that their ingredients are certified natural and not genetically modified. The product managers have said that there are no artificial ingredients either contained in or added to its extracted flavors. The product managers have tried to be very clear that they will never make false statements about their product.
The concerns that that the LaCroix product manager have is that they may not be able to recover their market share. Last year, LaCroix’s share of their market peaked at 23.3%. Since then it has fallen to 17.3%. The competing brand, Bubly in the same time period has surged to 9.4% of the market. Currently sparking water sales in the U.S. are continuing to rise and have reached US$2.5B.
The good news is that if the LaCroix product managers can figure out how to fix things, they can probably stabilize the market trends with incremental brand support going forward. LaCroix is going to continue to face competition from other firms. A good example of this is Pepsi who was late to come to this market; however, they saw an opportunity to market a product that was a seltzer like they do a soda brand. What Pepsi has done is to launch Bubly with a Superbowl ad and then they distributed it to convenience stores that LaCroix could not reach.
What All Of This Means For You
A market for a new type of drink has shown up almost overnight. Consumers have started to demand flavored bubbly water. The leader in this market, a company called LaCroix was able to rule this market for a long time. However, the arrival of competition and other problems are now threating their market share. The LaCroix product managers are going to have to review their product manager job description and find a way to take action.
The LaCroix product managers have two problems on their hands. The first is that they all of a sudden have a number of new competitors that they are going to have to deal with. At the same time they are facing a lawsuit over their ingredients. LaCroix is losing customers because they believe that the competition is offering cheaper products that taste better. One of their biggest competitors is Pepsi who has launched a competing seltzer product line called Bubly. A lawsuit has been filed against LaCroix alleging that their ingredients are not natural. What has attracted customers to the LaCroix brand has been their fanciful flavors. The LaCroix product managers have been very clear that their ingredients have always been natural. It’s not clear that LaCroix will be able to get back the market share that they have lost. They are going to have to stabilize their brand and then come up with a way to do battle with Pepsi and their Bubly brand.
The LaCroix product managers are in a good place. They have a highly recognized product that their customers like. They are going to have to create flavors that the Pepsi Bubly brand can’t emulate to win back the customers that they have lost. They need to settle the lawsuit as quickly as possible because that is causing them bad publicity. The seltzer market continues to expand and the LaCroix product managers can grow with it if they come up with the right answers.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think creating new flavors would be enough for LaCroix to win back the customers that they have lost?
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What We’ll Be Talking About Next Time
The product managers at Facebook have real problem on their hands. The company is so large and so successful, that in order to make it larger and more successful they have to come up with really big ideas. This means that they have to sit around and review their product development definition as they try to identify new products that can appeal to their over 2 billion users. The Facebook product managers think that they’ve come up with something that is going to work: a new cryptocurrency called Libra.