I don’t understand how a major company like Pepsi can be getting into sparkling water this late in the game.

This is a perfect example of why so many of the large traditional brands are losing share to smaller, more entrepreneurial newcomers.

Here are some stats from the NY Times that Pepsi has been aware of for years and yet nothing until now….

•  In 2016, bottled water sales by volume surpassed carbonated soda for the first time
• Volume sales for carbonated soft drinks declined for the 13th consecutive year in 2017
• Sales of domestic sparkling bottled water doubled between 2015 and 2017 to $8.5 billion
• Sales of LaCroix have ballooned and the stock of its owner, National Beverage, has more than doubled in the past two years.

Read on below for more on what I wrote about La Croix back in September 2016 as well as my observations on why large companies fail more often than they succeed when trying to get innovative, on-trend products to market.

 

TREND 2: LACROIX SALES ARE EXPLODING!!

 

As of September 30, 2016

• Sales of LaCroix have ballooned from $65 million in 2010 to $226 million in 2015 (doubling in the last two years).
• LaCroix is now the No. 1 brand of flavored bottled water in the US, with about a quarter of the market share in that category.
• LaCroix’s meteoric rise happened without any traditional advertising. Instead, they invested in social-media marketing and partnerships with bloggers and snappers and their neon-colored packaging grabbed customers’ attention in stores.
• Only a handful of random flavors are available at each retailer that sells LaCroix, so it creates the perception of scarcity. As a result, customers tend to buy their favorite flavors in bulk.

So Why Is It So Difficult For Legacy/Traditional Brands To Generate Fresh Ideas And Get Them To Market?

Over the years, I have observed firsthand what a struggle it is for legacy/traditional brands to generate fresh ideas, anticipate trends and introduce innovative new products.

Whether it’s soda companies, beer companies, or fast food restaurants, their new products are weighed down by unoriginal concepts and heavy-handed executions.

Big companies are more risk averse than entrepreneurs and start ups, but there are some extremely creative new product development teams at those companies.

However, they are rarely supported by the enterprise. Here’s what I’ve observed happening that stymies their attempts and why we see so few genuinely breakthrough products coming out of those companies:

• Too many committees involved in the creation of new ideas. Committees are better at stifling than innovating.
• Ideation teams that are far too big and cumbersome to get anything accomplished
• Best ideas killed by market research that looks to the past vs. the future
• Companies too committed to status quo vs. new ideas
• Companies supporting dying brands (yesterday’s news) at all costs

Bottom Line: The majority of big company new product pipeline is garbage. The only way they are able to get products that consumers genuinely want is through acquisition. Came across this insightful and very provocative piece on this same topic in hbr this morning. If this subject is of interest, worth reading. Link here.