Look Out, Coke and Pepsi! Here Comes Sparkling Ice   

By Dale Buss 

American consumers have gotten used to the bedazzling display of Sparkling Ice in supermarket aisles, with multiple vibrant colors and flavors of its effervescent beverages blasting out at shoppers through clear plastic bottles.

And now in the brand’s push toward $1 billion in annual sales as it helps vanquish traditional carbonated soft-drink brands, Sparkling Ice is creating an even bigger splash with its largest-ever overall marketing campaign, ranging from its first TV ads to it most extensive in-store presence. “Be Not Bland” is the tag line for the $37-million campaign.

The abrupt and still publicly unexplained recent departure of CEO Kevin Klock could prove a speed bump for Sparkling Ice constituencies such as retailers and employees. But American consumers are likely only to fuel continued breakneck sales growth for a brand that literally has redefined the U.S. beverage business.

“There’s been a shift toward more flavor profiles and from zero to very few calories around the world,” Brian Kuz, who joined Sparkling Ice as chief marketing officer after several years as a marketer for Red Bull, told CPGmatters.

“Now this is happening in the U.S. We’re seeing a focus on sugar taxes in quite a few different cities, and now is the time to educate consumers that Sparkling Ice is a healthier alternative than carbonated soft drinks – and that it also plays into the variety-seeker out there who is interested in a lot of different flavors. People are also looking for alternatives to flat water. It’s a perfect storm of timing for us.”

Parent company Talking Rain embarked on its current product line and strategy for Sparkling Ice only in 2010, leveraging a zero-calorie carbonated drink, sweetened with sucralose, in several flavors and positioning it as a healthier alternative to carbonated soft drinks (CSDs).

Under Klock, starting from a trivial level, Sparkling Ice has managed to ramp up to a retail value of sales of more than $650 million a year. U.S. retail sales surged by 18 percent in 2015 and nearly tripled over 2012, capturing 1.6 percent of the overall American soda market in 2015 versus the 4.1 percent that was still held by fast-declining Diet Pepsi and 7.5 percent held by quickly fading Diet Coke, according to Euromonitor.

Sparkling Ice retains a well-publicized goal of $1 billion in retail sales by 2018. “We’ve established ourselves as a brand, and now it’s about going really deep,” Klock told CPGmatters last fall. “We’ve got great household penetration, and now it’s about giving them reasons to drink more.”

Leading beverage-industry consultant Tom Pirko believes that Sparkling Ice is “still growing dramatically because it hasn’t meandered among the eclectic but prolific horde of ‘alternative beverages’, many of which either somewhat confuse consumers with their complicated appeal to ‘unique ingredients’ or appear as knock-offs of other alternative beverages.

“It is difficult to win and hold consumer loyalty in the alternative category,” the president of Bevmark Consulting, who advised Klock, told CPGmatters. “Sparkling Ice has set itself apart. It worked hard to establish presence in the marketplace with national distribution as a mainline beverage.”

Indeed, Klock’s strategy seems to have succeed both because of its blunt ambition in taking on Coca-Cola and PepsiCo for the loyalty of consumers who enjoy carbonated beverages, as well as how his approach has avoided allowing Sparkling Ice to be considered just another CSD.

In the process, Sparkling Ice created a new beverage sub-category and to has increased its dominance there even as new competitors rising to attempt to take advantage – such as Fruitwater, by Coca-Cola, and Aquafina Flavor Splash, a PepsiCo entry – have faltered.

Thus Sparkling Ice seems to have grabbed the kind of “first-mover” advantage that helped Five-Hour Energy, Monster and Vitaminwater succeed in creating and then owning the energy-shot, energy-drink and enhanced-water categories, respectively.

There have been at least three key elements to Sparkling Ice’s success, as strategized by Klock. It attacks the giant CSDs with an entirely different merchandising scheme based on its contoured, tall, 17-ounce clear plastic bottles in brightly colored and robust fruit flavors including Black Raspberry, Orange Mango and Pomegranate Blueberry. The graphic that dominates each bottle shows a piece of fruit trapped in an ice cube, communicating “refreshment” to directly challenge the soft-drink giants, as Pirko put it.

Second, another major pillar for Sparkling Ice has been stretching the definition of “better for you” to appeal to consumers who have been desperately looking for healthier alternatives to soda. The brand has succeeded in this even though it contains the same artificial sweetener as Diet Pepsi. Klock chose to play up the healthful aspects of Sparkling Ice in every way possible, including putting the words, “Naturally Flavored Sparkling Water” on bottles and playing up attributes including vitamins, antioxidants and no calories.

Third, Klock ambitiously tackled the task of building Sparkling Ice’s own, independent national direct-to-store distribution network so that the brand’s growth wouldn’t be throttled by the huge distribution networks with which Coca-Cola and PepsiCo have dominated the U.S. beverage business. Klock put together more than 250 distributors from Anheuser-Busch to MillerCoors to large independents and scores of sub-distributors.

Along the way, Sparkling Ice introduced a number of line extensions and sub-brands – including teas, lemonades and an unsweetened line of carbonated waters called Essence – that have helped fill out its presence.

Today, even as Klock’s departure creates some uncertainty for the brand, Sparkling Ice’s new ad campaign is an attempt to consolidate and accelerate its position. “Be Not Bland” is a slightly tongue-in-cheek slogan that embraces “authenticity and individuality, celebrating the people, places and personalities that fill life with flavor and ‘not bland’ moments,” as the company put it in a news release. The TV spots focus on modern families in recognizable, everyday moments – with twists.

“Even with the big sales numbers, we haven’t built a big connection with consumers, and with our brand personality and how we’re different,” Kuz explained. It’s time to differentiate and lead.”

So, he said, “Be Not Bland” reflects a 360-degree approach that also includes print advertising and digital, including social-media, marketing, as well as more in-store marketing and merchandising than the brand ever has done.

“We’ve done some phenomenal work in the store,” he said. “We’ve gotten good display before, but we’ve never communicated that strong a message. This is our national program, a chance to really bring the campaign to life in stores. You’ll see it executed at the shelf and with shelf talkers, and will see us in large display and creativity.

“When we mentioned the campaign to retailers, they all wanted to differentiate on their own and in their own little distinct ways.”
American consumers already have shown they take Sparkling Ice seriously. So do its competitors. The new campaign should accelerate the Sparkling Ice phenomenon and keep the brand on track to its $1-billion sales goal.   

                                                                         April 2017
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