The real reason people are no longer drinking LaCroix

There was a time — not too long ago — that when you thought of the trendiest drink you could possibly be seen with, the answer was LaCroix. It wasn't just a drink, it made a statement. It said that you were hip, trendy, and on the cutting edge of all that was new in the foodie world… and, you were still managing to make decently healthy choices. Seriously, is it any wonder that LaCroix's popularity skyrocketed over just a relatively short period of time?

But like all things that burn super bright, that brightness just didn't seem to have staying power. By 2019, it was starting to look like LaCroix's shooting star was beginning to fizzle. Fewer and fewer people were tagging their social media photos with #LaCroixLove or #LiveLaCroix because, well, fewer and fewer people were loving it and living it.

So, what happened? The story is a bizarre one, and involves corporate missteps, very uncomfortable lawsuits, and a CEO who has made some statements that can only be described as shocking.

How bad is it?

Part of LaCroix's appeal was always that it was the underdog. It wasn't a huge corporation like Coca-Cola or Pepsi, and that was desirable to consumers who didn't just want their hard-earned dollars going back into massive conglomerates. But those big companies with the deep pockets can withstand a lot. LaCroix? Not as much.

According to Laurent Grandet, a beverage analyst for Guggenheim (via CNN), sales for the trendy carbonated water were "effectively in free fall" during early 2019. They dropped 6 percent in February, 5 percent in March, 7 percent in April, and a whopping 15 percent in May. That's not the kind of traction a company wants to be gaining, and it's not just happening over a few years, it's happening within a matter of weeks. Grandet wrote, "The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of time."

Ouch. The stock prices haven't fared any better, and between September 2018 and May 2019, the value of LaCroix's parent company, National Beverage (which trades as FIZZ), dropped a shocking 62 percent. The landslide started after the sales of seltzer steadily rose between 2013 and 2018, so what caused it to reach a tipping point?

They're nothing new anymore, but competition is

Part of the problem is that they haven't brought anything new to the market in recent years. Sure, there might be some new flavors popping up, but it's still just sparkling water. According to CNN, they're just not doing anything innovative or different, and that makes a company stagnant when there's really nothing that sets them apart from their competition.

To add insult to injury, some of the bigger competitors with bigger bankrolls and deeper pockets have noticed that there's a demand out there for sparkling water, and they're hopping on the bandwagon. Take Pepsi. They launched bubly, a sparkling water with super adorable packaging, cute little messages, and a misspelled name. Business Insider says that it has the potential to be a massive win for them, and it's designed specifically to take a piece of the market away from LaCroix.

Coca-Cola has also jumped into the sparkling water pool with their partnership with Topo Chico, and even Costco launched their own version of it as a part of their Kirkland Signature private label. And that has the potential to be horrible news for LaCroix: They may have branded themselves as the millennial drink of choice, but according to Retail Dive, more than half of all millennial consumers say they are all about the private label brands and would buy more of them if they made new products available.

LaCroix's CEO had a bizarre response

By March 2019, the downward slide of LaCroix's sales and stocks was already becoming painfully obvious, and that's when something weird happened. Nick Caporella, the CEO and chairman of National Beverage, LaCroix's distributor, was very, very upset about it. But when he released a statement to shareholders, CNN says he blamed it not on a changing market, on competition, or on a need to do something different with the brand, he blamed it on "injustice."

In a letter to those shareholders, he wrote: "Negligence nor mismanagement nor woeful acts of God were not the reasons — much of this was the result of injustice!" And then, it only got weirder.

He went on to say (via CNBC), "Managing a brand is not so different from caring for someone who becomes handicapped," adding, "Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies."

His comments didn't go unnoticed, and Dean Crutchfield of the crisis management firm Crutchfield + Partners had this to say about it: "He's actually caused himself his own mess. […] Now you've dug an even deeper hole."

A sexual harassment lawsuit is never good

In 2018, The Wall Street Journal reported that in the previous two years, two lawsuits had been filed against the then 82-year-old National Beverage CEO, chairman, and controlling shareholder Nick Caporella.

The lawsuits were filed separately by two pilots who alleged that they had been subjected to unwanted touching and harassment on more than 30 flights they accompanied Caporella on between 2014 and 2016. (Caporella is also a pilot, and flies his own corporate jet. The two men had been hired to act as second-in-command on the flights.)

The allegations of one lawsuit were withdrawn as part of a settlement, but the other lawsuit continued. When The Wall Street Journal reached out to the second pilot, he stood by his allegations "100 percent," saying, "It was definitely inappropriate." Eventually, CNN says, the second case was also settled out of court.

National Beverage responded to the publicity, issuing a statement that read, in part, "There is no truth to any of the allegations and nothing remotely akin to the alleged events occurred." The chairman of the company's audit committee added, "The board is aware of the allegations and knows them to be untrue, based on our knowledge of Mr. Caporella and the investigation that was conducted."

The weather might actually have something to do with it

By June 2019, some — at least, MarketWatch — were being cautiously optimistic about the potential of a few good months coming up for LaCroix. Why? Because of a factor that might be part of their long-term problem: They're a warm weather drink.

Trendy Instagram photos aside, when is the best time to reach for a LaCroix? When the sun is shining and the weather is warm. Analysts — and some retailers — have blamed a cold and rainy spring for LaCroix's sales decline, and there's no denying the fact that you're probably less in the mood for a cold, sparkling LaCroix of any flavor when it's dreary and dismal outside. Is it an oversimplification? Perhaps, but it very well could be part of their problem. The same analysts and retailers are hopeful that warm summer months will bring a boost in popularity for the ailing brand, but whether or not they're going to be strong enough in the hot months to make up for the cold ones remains to be seen — but it's an image problem that'll have to be fixed going forward.

The artificial ingredient lawsuit

Here's a biggie. LaCroix built a huge part of their business on being an all natural and healthier alternative to soda, but in 2018 they were hit with a lawsuit that claimed they were filled with all kinds of artificial ingredients. One of those was linalool, "which is used in cockroach insecticide," the lawsuit said.

There's nothing that will get unwanted attention faster than the mention of cockroaches, even though Vox says linalool is actually found in dozens of spices and is a commonly used food ingredient. It's all in the details, right?

Still, it seemed to be in direct opposition to LaCroix's statement that they're 100 percent natural — at a glance, at least. The company took to social media to say that all the flavorings came from "the natural essence oils from the named fruit used in each of the flavors," and that the allegations were "misleading."

But, inquiring minds wanted to know, what are "natural essences"? The Wall Street Journal tried to find out, and LaCroix told them, "Essence is our picture word. Essence is — FEELINGS and Sensory Effects!" (Does that mean you're drinking fruit's pain and emotional well-being when you drink LaCroix?)

According to Food Navigator, a similar lawsuit filed in early 2019 was supported by test results from the Center for Applied Isotope Studies at the University of Georgia. The results found LaCroix was anywhere from 36 to 98 percent synthetic, and LaCroix countered by calling them all "professional liars."

It got too popular

How can getting too popular be bad for a brand? You wouldn't think you'd ever hear such a thing, but something a little unusual happened during LaCroix's meteoric rise through the Everlasting Gobstopper-esque layers that is the hip and trendy.

When LaCroix got super popular, it was marketed to a particular group. It was a large group, but it was a group that wanted to believe they were on the fringes of mainstream society, not beholden to corporate behemoths like Pepsi and Coke, and definitely not the type to follow what everyone else was doing. And they could demonstrate that by choosing the brightly designed, funky LaCroix as their drink of choice because, Fast Company says, it didn't have to be good, it just had to be interesting, different, and a little quirky — just like the image those who chose it wanted to project.

But LaCroix went too mainstream itself, and when everyone, their grandmother, and their weird cousin that never gets invited to family reunions is also drinking LaCroix, it's just not as interesting and well-defining a choice as it used to be.

They catered to the trendsetters

For a long time, soda was king — it wasn't until LaCroix that sparkling water really went mainstream. Vox found this interesting statistic: In 1988, the average person went though less than four gallons total of both still and sparkling bottled water. Now, how many cans of LaCroix did you drink per week when you were really, really into it?

They made massive gains in popularity through a few avenues: dieters who blogged about weight loss and healthy alternatives, and writers. LaCroix made sure they were front and center at charity events like those run by Susan G. Komen for the Cure, and they also made sure the most popular lifestyle and mommy bloggers were writing about them. Also posting about them? Many of LA's most high-profile television writers.

And when they start posting that your favorite vampire drama is fueled not by blood and sweat but by LaCroix, you're going to buy it, right? But there's the problem: Trends are just trends, and they burn out fast. It's not going to be long before these trendsetters, Instagrammers, and bloggers are on to the next big thing, and they'll be leaving empty cans of LaCroix in their wake.

They're uncomfortably conservative

It's no secret that the political climate in 2019's America is very, very volatile, and you can see it all across the country. But you can also see it in the correspondence and comments of CEO Nick Caporella, who incidentally doesn't think too many good things about his customer base. In fact, he's described the typical LaCroix drinker as "a cult-led, tech-charged millennial with 'change' power." Cult-led? Yikes.

That's not the only reference he's made to LaCroix being like a cult, either, and Mother Jones did a deep dive into his correspondence and uncovered a ton of ultra-conservative views he's expressed. In 2011, he lamented the idea that "Ideals, Principles, Values" were being overrun by "Energy, Eco, Green," and in 2012 he compared the country to a car trying to parallel park on a busy street in the rain.

He's been even more direct than that, calling President Obama's reelection the "final services for President Kennedy's — 'What You Can Do For Your Country,'" and lauding Trump's election as "put[ting] a capital 'H' on Hope again." He signs off memos with: "Patriotism — If Only We Could Bottle It!" and all of that adds up to create a behind-the-scenes corporate culture that's at odds with the beliefs of many in their target market.

The CEO seems to think everyone's out to get him

According to Vanity Fair, LaCroix's popularity has actually been waning for longer than you might think. They were reporting on the "bursting of the LaCroix bubble" way back in October 2017, when shares in LaCroix's parent company were toppling. While most people were selling, CEO Nick Caporella issued a press release where he insisted that the real problem wasn't anything to do with the drink, the market, or trends, but that someone was just out to get him.

He wrote: "Are perpetrators stimulating self-serving movement by stating falsehoods, creating rumors and deliberately manipulating FIZZ value? We think so!"

He went on to suggest that it was all some sort of elaborate set-up and proclaimed again and again how well his company was doing, even as he called on the Securities and Exchange Commission to step in and decide whether or not whatever he thought had happened was even legal. They did step in, sort of — they archived his press release with a note that said it contained "forward-looking statements" and warned that if anyone were to take his claims at face value and act on them, the end result might be very different than the expected one.

Everything was going just fine before everyone noticed it

Here's the really weird thing: LaCroix was doing just fine before it got all popular and trendy.

It's actually been around since 1981, says Quartzy, and even weirder, that's more than two centuries after a Leeds brewer invented carbonated water. It is, of course, actually from Wisconsin, and Vox says that for 30 years, LaCroix existed quite happily as the go-to drink for middle America. Specifically, it was a staple in the pantries and kitchens of budget-conscious families who wanted something a little healthier than soda, and it was sort of a well-kept secret that only about a third of the country actually knew about.

Then, it wasn't "sparkling water," it was "tasteless soda." For three decades, it was happy to be the drink of Girl Scout troops and roving bands of school-age children on summer break, and it wasn't until it got popular that it got ruined. Thanks, trendsetters.

Will they recover?

So, here's the million-dollar question: Will LaCroix be able to pull out of the downward spiral that it's in, find a new way to introduce itself to the masses, and convince longtime fans to come back? While it's impossible to know the answer without a functioning crystal ball, analysts have made some observations about the possibilities.

Guggenheim beverage analyst Laurent Grandet had this to say about LaCroix's prospects (via CNN): It's "unlikely LaCroix can recover to any meaningful degree while in the hands of National Beverage."

That's because, he adds, National Beverage just doesn't have the experience to know what it needs to do to save the sinking ship, or to figure out how to differentiate the brand from any of the other sparkling water brands out there.

MarketWatch says that industry analysts do see a way that LaCroix can make a comeback, but the only way that's going to happen is if the company is sold to someone with experience building a brand and enough money to make the investment that's going to be needed to keep it afloat. They also named only one company that might logically make the move to buy LaCroix — Keurig Dr Pepper, Inc. — but doubted they'd be interested. Unless a private buyer steps up — and National Beverage decides to sell — it looks as though the future will continue to dim.