What is Behind La Croix’s Quick Decline?

It was maybe not even a year ago that everyone was touting their favor for canned sparkling water company La Croix.  As a matter of fact, La Croix is often regarded as the definitive beverage of choice for the world’s youngest and most discerning—and most prominent—consumers:  millennials. But what started out as a Midwest-regional attempt to capitalize on a Northeast-regional trend might have sputtered out. At least, that is what the latest sales numbers suggest.

Indeed, La Croix started out with massive momentum. At a time when young—often health conscious—consumers are trying to move away from sugar-laden drinks like soda, a flavored-sparkling water brand seems to make sense. And it did, at least for a while. 

But, let’s be honest: La Croix really isn’t all that great.  And, to continue that honesty, none of the flavors really taste like their names. Actually, the drink rarely tastes like anything at all, except maybe stale seltzer.  You would be better off pursuing such refreshment from higher quality companies like San Pellegrino. 

Apparently, a big part of the appeal of the La Croix experiment was its somewhat fringe aesthetic.  Those who “like” La Croix might, perhaps, be more interested in the community around it than in the drink itself.  

But either that community is shrinking or the aesthetic is wearing off as LaCroix-owner National Beverage Corporation has reported that sales of La Croix are in a “free fall.”  Furthermore, Guggenheim beverage analyst Laurent Grandet notes, “The La Croix brand has gone from bad, to worse, to disastrous in a relatively short period of time,” specifically citing that increased competition and a “lack of meaningful or disruptive innovation” from National Beverage as major sources of the company’s decline.

Also, La Croix has had trouble recovering from a 2018 class action lawsuit about their ingredients; and this has likely contributed to the decline as well. 

So, just how poorly is La Croix performing?  Well, owner National Beverage (FIZZ) share price is down 10 percent this week alone, contributing to a 62 percent decline since September of 2018.  More significantly, this comes at a time when retail seltzer sales in the United States more than doubled (between 2013 and 2018).