Inside the Bubble: An Evolving Category Shifts Emphasis Back to Flavor

For a category in which unflavored varieties and a small group of basic flavors have long dominated, a wave of disruption seems to have finally arrived. After long reigns at the top, the traditional giants – LaCroix, Nestle, Sparkling Ice, private label, along with Coca-Cola and Pepsi – have seen their iron grip on the space slip, while rising names like Spindrift, Liquid Death, Waterloo, Sanzo, HOP WTR, and a resurgent Clearly Canadian have charted significant gains in dollar sales and volume growth, thanks in part to a renewed emphasis on flavor and packaging innovation. When consumers’ sparkling options grow to regularly include complex hop-infused waters, effervescent Asian fruit flavors and real juice-based varieties, the appeal of a simple lime or lemon SKU may seem pretty flat in comparison.

During LaCroix’s heady years in the mid-to-late 2010s, accepted wisdom suggested that the eventual entrance of Coca-Cola and Pepsi into the category would tilt the balance back in the favor of the soda giants, but that optimistic dream appears uncertain now. At the National Association of Convenience Stores (NACS) trade show in October, Coke quietly revealed that its flavored sparkling water line AHA, launched under the gathering clouds of COVID in March 2020, was already headed for an early retirement due to disappointing sales. The line will retain a limited retail presence and will be a part of Coca-Cola Freestyle fountain systems, Considering the expectations and robust marketing support the brand received, AHA’s downward slide is a blow to Coke’s category ambitions, but the company’s decision also suggests its confidence in the potential of premium import brand Topo Chico to keep growing: per Circana data through Nov.

10, Topo Chico’s non-flavored drinks dollar sales grew 23. 1% ($220 million) while its flavored SKUs rose 6. 6% (over $64 million).

Its success in growing from strong regional brand to national player — boosted by extensions into mixers and alcoholic hard seltzer categories — suggests Coke will continue to use Topo Chico as a red carpet for future carbonated innovations. The brand’s newest release seems to confirm that notion: as AHA is phased out, Topo Chico Sabores, the brand’s first canned drink, is being positioned to pick up the reins. The three SKU line — Blueberry, Tangerine and Lime, priced at $1.

50 per 12 oz. slim can — is placing a big bet on flavor by integrating real fruit juice rather than flavorings, a la Spindrift. Sabores, which clocks in between 5 to 15 calories per can, has rolled out in New York, Los Angeles, Denver and select regions within Texas, with expansion planned for 2024.

A notable aside to that: eager to get a piece of Topo’s market share, another Mexican sparkling brand in glass bottles – Mineragua, first introduced in 1997 – rolled out revamped packaging and refreshed branding this year, led by the tagline “Life With Sparkle,” in six formats — individual 12. 5 oz. glass bottles, 4-packs, 9-packs, 12-packs, 30-packs and a 1.

5 liter PET. For Pepsi, which beat Coke to the punch with the launch of its sparkling flavored water Bubly in 2018, the path ahead is less clear. Bubly is still hanging around with a 9.

9 share of the category, but it’s not scaling: growth was an anemic 1% in the 52-week period that ended on November 10, according to Circana, while its non-flavored waters generated just over $6. 3 million during that time frame. That pace won’t be enough to make up ground against flavored category leader Sparkling Ice, which did over $828 million despite slipping 1.

6% over the same period. Elsewhere amongst the large strategics, the focus is generally more on cautious iteration rather than bold revamps. At NACS, Blue Triton shared a restaged version of premium still water line Poland Spring Origins that positions it exclusively as a sparkling water in a 12 oz.

slim can in three varieties – Lime, Berries and Peach – all using organic, non-GMO natural flavors. LaCroix has been more willing to push the envelope with new releases like Mojito and Sunshine this fall. That demand for flavor has given a resurgent Clearly Canadian runway as well.

Having shipped more than 50 million bottles since 2017, dollar sales grew 48% ($52 million) and unit volume was up around 40, thanks in part to line extensions Essence and Zero Sugar. Retailers have responded: in November, the brand went national with Sam’s Club, joining a list of store partners that also features Kroger, Publix, Albertsons, Safeway and Food Lion, among others. The overall category numbers also seems to indicate that flavored sparkling water drinkers are ready to shake things up; according to Circana, volume fell 7% over the 52-week period, while averaging pricing was up around 10%.

And on the emerging brand side, they’re eager to meet that demand. Asian fruit-inspired Sanzo has been one of the big gainers over the past 18 months, during which the New York-based company has picked up new distribution, licensed partners and fundraising to continue driving growth. Its fifth flavor, Pomelo, debuted in a new can design in spring, but the introduction of 6-count and 12-count multipacks – the format which drives over 90% of flavored sparkling water sales, according to Sanzo – may represent an even more significant step towards opening new retail doors and channels.

Over the course of the year, the format helped earn the brand placements in Jewel-Osco and Gelson’s, while a shift in emphasis from off-shelf displays from single cans to 6-packs at Whole Foods hasn’t hurt either. Yet Sanzo is just one of an exciting cohort of startup brands that are bringing bold flavors into the space. Aura Bora continues to push ahead as well: with the exception perhaps of the infamous Green Bean Casserole flavor that returned for a limited run during Thanksgiving, the brand had a busy year of releases with Blueberry Wildflower, Peach Honeysuckle and Honey Pumpkin, as well as their BevNET Award-winning collaboration with Graza Olive Oil on a non-alcoholic “martini.

” While maybe not pushing that far, Waterloo (Spiced Apple, Cranberry) and Nixie (Black Cherry Lime) have also explored new taste experiences. Waterloo has long made its beans with flavor intense enough to meet the needs of a recovering soda drinker. It looks like that intensity is coming to its own category on a widespread basis as well.

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