LaCroix was the millennium mark "it". Now he has lost his way

Sales of flavored sparkling water are "actually in free fall", wrote in a new note Laurent Grandet, a drinks analyst for Guggenheim. Sales fell by more than 15% in May after dropping nearly 7% in April, 5% in March and 6% in February, according to Guggenheim.

"The LaCroix brand has gone from bad, if not worse, to disastrous in a relatively short time," said Grandet, citing increased competition for drinks of the same type and the "lack of significant or disruptive innovation" from the from the owner of this drink, National Boisson.

National Beverage's stock price fell 10% this week and 62% since September 2018.

According to research firm Mintel, US consumers are increasingly looking for beverages containing functional elements, such as nutritional value or a burst of caffeine. They also want healthy, low-sugar or sugar-free offers. The sparkling water ticks a lot of these boxes.

Seltzer retail sales in the United States more than doubled from 2013 to 2018, Mintel said.

LaCroix, with its retro label and unique aromas, has become an unlikely leader in the seltz market. The brand has been around for almost three decades and belongs to a relatively small company. But sales have taken off during this decade and LaCroix has become one of the symbols of the Millennial generation.

The big drink manufacturers have understood quickly. Competition in the sparkling water market has intensified over the past two years.

Coca-Cola bought Mexican water maker Topo Chico in 2017 and recently released sparkling flavored versions of its Smartwater brand. PepsiCo recently introduced the Bubly sparkling water brand. Costco is also launched in the sparkling water sector by launching calorie-free flavored drinks under its private label Kirkland Signature last summer.

Due to LaCroix's new competitors, Grandet stated that its customers "have since discovered that other brands offer acceptable substitutes" and that "LaCroix does not have much of a thing that sets it apart from the competition in terms of intellectual property or value added ".

In his note, Grandet also accused the inexperienced management of his parent company, National Beverage. He stated that it was "unlikely that LaCroix could recover significantly if it was in the hands of National Beverage".

National Beverage recorded a decline in sales and earnings during its last quarter. This triggered an unusual response from Mercurial's president and chief executive, Nick Caporella.

"We are really sorry for the results mentioned above," he said in a letter to shareholders. "Neglect, mismanagement or lamentable acts of God were not the reasons – a lot of this was the result of an injustice!"

He made an unusual comparison between LaCroix and people with disabilities, adding that managing a brand is like "taking care of someone who becomes disabled."

The company also did not fully file a lawsuit filed in October 2018 regarding LaCroix's ingredients, which, according to Grandet, was the catalyst for the decline in LaCroix sales.

As part of the lawsuit, Lenora Rice, a client, said that she had started drinking LaCroix in 2016 because she thought all her ingredients were natural. But Rice now alleges that LaCroix contains several synthetic compounds, including a chemical used to kill cockroaches, and claims that the company misleads its customers by claiming that LaCroix is ​​100% natural.

National Beverage has issued numerous statements refuting allegations since the filing of the lawsuit.