Sparkling water seems to be leading the charge for growth within the bottled water category. Kevin Klock, chief executive officer of TalkingRain Beverage Co., Preston, Wash., affirms this statement, noting that the segment is, in fact, the fastest-growing part of the category. According to Chicago-based Information Resources Inc., sparkling and mineral waters grew 32 percent in the 52 weeks ending March 23 in total U.S. supermarkets, drug stores, mass merchandisers, gas and convenience stores, military commissaries, and select club and dollar retail chains.
Although the segment is experiencing growth from many of its leading players, one brand continues to bring strong growth to the segment: TalkingRain’s Sparkling ICE.
Klock theorizes that consumers, for their own reasons, were looking for alternatives to traditional carbonated soft drinks but were limited in their options under the “sparkling” umbrella. “The problem was all the new beverages that had been created other than energy [drinks] in the last 15 years were all still,” he says. “The sparkling water category offered something for the consumer in that they could still get the effect of carbonation, but now all of a sudden we brought to it a wide variety of flavor and refreshment that fits the profile of what the consumer wants.”
Consumers seem to have responded well to that variety. According to Klock, Sparkling ICE sales were approximately $10 million in 2010. In late 2010, the company announced plans to take the Sparkling ICE brand national. That national launch seems to have paid off. In 2013, Sparkling ICE sales reached $350 million, Klock says. And that success has continued into 2014. Klock expects the brand to reach the $500 million sales mark this fall.
The company also has seen growth within its staff. In 2010, the company employed 65 people, but now that number is approximately 280, he notes.
Despite all of this success, the company experienced its own growing pains over the years. Klock notes that the company learned the importance of getting in front of high growth quicker by adding people and employing systems faster. “Now when we review products, we evaluate from a scalability standpoint to see how ascendable they are,” he adds.
Defining the brand
Although TalkingRain has enjoyed the positive response that Sparkling ICE has received in the marketplace, getting to that point required some necessary changes.
“For a long time, the company was very entrepreneurial,” Klock says. “We want to maintain that entrepreneurial environment, fostering constant change and idea creation while also placing a stronger focus on business. What’s really changed is it went from being an entrepreneurial company to being a business with an entrepreneurial spirit.”
Klock adds that during that entrepreneurial time, the company was trying to do everything for everybody but then recognized the strain it put on the business to do that. It was then that it decided to find a clear focus and become a branded company.
“We started to market and really define what Sparkling ICE was,” he says. “During that time, we made a lot of changes to refine our focus on ICE, and those changes made both a positive and significant impact on our business. TalkingRain was a small, regional beverage company with a wide variety of aspirations, and now we’re very focused.”
One such focus was defining the brand to help consumers understand what its beverages can offer them. “Our brand proposition is simple: It’s refreshing,” Klock says. “We’re refreshing and great tasting, and we don’t try to be anything other than that.”
Klock adds that consumer needs seem to be shifting, and he thinks that Sparkling ICE is leading the charge to fulfill those needs.
“The No. 1 thing [consumers] seek is taste, and refreshment is a key component of this,” he says. “We believe that if you have to explain why someone should drink your beverage, then its chances of success aren’t going to be very good, and that’s why we focused on refreshment; we think we’re leading the way in terms of providing this flavor profile that was missing for consumers.”
Accounting for 95 percent of the company’s portfolio — the other 5 percent is its TalkingRain brand of sparkling essence waters and spring waters — Sparkling ICE is composed of 11 regular flavors and six lemonade flavors.
“We have yet to have an introduction that cannibalizes any of the other SKUs or flavors,” Klock says.
Across its 17 SKUs, Black Raspberry, Orange Mango and Peach Nectarine are the leading three flavors, but their separation from each other and
the rest of the portfolio is not overwhelming,
“From a standpoint of sales and distribution, there are not large gaps between each SKU, so unlike historical brands where maybe the Top 4 SKUs fill up a majority of the business, we don’t see that,” he explains.
Klock adds that because of its flavor variety, Sparkling ICE has been able to appeal to new consumers. “Consumers who may not necessarily have come to the category historically are now finding a flavor that works for them,” he says.
One area in which TalkingRain was able to achieve this goal was with the launch of its lemonade portfolio. “We recognized [that] the lemonade category was growing very rapidly, so what it was missing was something that was zero calories and sparkling,” Klock says.
To complement its Classic Lemonade flavor that launched in 2012, the company released Sparkling ICE Strawberry Lemonade, Raspberry Lemonade and Lemonade with Tea in 2013. “We decided that there was an opportunity in the lemonade category, and obviously the success of [the line] told us there was,” Klock notes.
The brand took the lineup a step further this year and added two more Sparkling ICE Lemonades with Peach Lemonade and Mango Lemonade flavors. Peach Lemonade merges the flavors of sweet, fresh peaches with the tangy flavor of lemons, while Mango Lemonade infuses the tropical essence of mangoes into the classic lemon flavor, the company said in a press release. Similar to flavors Sparkling ICE has launched in the past, Klock notes that Peach Lemonade and Mango Lemonade help fill a void in the market.
Although Sparkling ICE is active in new product releases, the company employs a very meticulous approach before releasing a new variety, which typically takes about two years from idea to full production, Klock says. “We engage with our consumers, and we put a lot of focus into our consumer feedback mechanisms,” he explains. “We’ve defined Sparkling ICE, so if we can’t make [a new flavor] fit with the brand, we don’t [make] it.
“I will say [that’s] what sets Sparkling ICE apart,” he continues. “We don’t introduce new products if they don’t meet the need. A lot of beverage companies will throw flavors out there, [and] we are very, very meticulous about what we bring to market, and I think that’s the reason why everything we’ve launched so far has been successful.
“We’ll say that, being a small beverage company, there’s a lot that we can be nimble about,” he adds. “One thing we’ll never be nimble about is the quality of the product we bring to market.”
Broadcasting to the masses
As sales continue to ramp up, the Sparkling ICE brand also is exploring new marketing mediums to reach consumers.
Last summer, the brand released its first TV commercial, dubbed “Dive In.” The 30-second spot was an animated ad that showcased its different ice cube logos dancing wildly inside a bottle of Sparkling ICE, which signified the idea of taste buds reacting to its flavor, the company said. Highlighting Sparkling ICE’s variety of flavors, the commercial featured the tagline, “Bold Flavor. Zero Calories. Perfectly Possible.”
Klock says the company wanted to develop a commercial that was fun but delivered a clear message of refreshment to consumers.
The commercial also featured the song “Pumpin Blood” by the Swedish band NONONO. “The music was discovered by Jessica Hansen, my executive assistant, when we were trying to find a song that would fit the commercial,” Klock says. “At the time Jessica discovered it, you couldn’t buy the song in the U.S. — it had no video, no nothing — and, at that point, the band had never played in the U.S.”
The music video actually launched in the United States a few days prior to the commercial’s launch and has since appeared in many other commercials and TV programming spots, Klock notes. “It’s one of those little fun facts that people don’t know,” he says. “The song has been used everywhere, but [Sparkling ICE] was the first commercial to [feature it].”
However, national TV commercials are not the only way the company is expanding its presence. Supporting local communities has always been part of TalkingRain’s DNA, Klock notes. But once Sparkling ICE became a national brand, the team was tasked with making sure this was still part of the company’s culture.
“One of the challenges we talked about when expanding nationally was that it’s more difficult to be involved in as much on a national basis,” he says.
On the national level, TalkingRain has partnered with Children’s Miracle Network Hospitals and breast cancer awareness organizations because those national platforms feature events organized around local communities to benefit those local efforts, he notes. However, the company also is willing to select local events that might support an employee’s family needs, for example, but that has become more difficult to replicate on a national scale, Klock adds.
The company also is looking into more sponsorship opportunities for the brand. For example, Sparkling ICE was available for purchase at the Rose Bowl this year, and it is the official sparkling water for the Ladies Professional Golf Association (LPGA).
“What’s really fun for us is that we see the players, the caddies, the organizers and the fans all consuming it,” Klock says. “When you think about the relationship with the consumers, as they’re drinking a Sparkling ICE [while] watching the event and they see the player [drinking it], it’s authentic.”
Out the door and on the shelves
Event sponsorships are not the only partnerships that the Sparkling ICE brand has been cultivating. The company has been scaling its direct-store-distribution (DSD) network to help accommodate its bourgeoning growth.
“With the brand scale, this is the first product to come to a lot of these distributors in a long time that has had this kind of velocity, so it’s really important for everyone to work together,” Klock says. “A lot of times, this product will hit a distributor, and they don’t realize how quickly it will sell, and it can sometimes take them by surprise.”
He adds that the company recently completed assembling its independent DSD network across the United States. “We now can deliver to pretty much every county in the U.S.,” he notes. “It was a very large, monumental task in the last year, but we are not affiliated with any one major company. It’s a variety, a group of people, that we felt would be the best at distributing our brand.”
To help support this vast U.S. network, TalkingRain has established field marketing specialists for the Sparkling ICE brand. “We now are putting people in the market to work specifically with our distributors to help facilitate delivering this brand to retail,” Klock says.
And when it comes to launching new products, the field marketing associates will be able to work closely with distributors to identify launch dates, market-ready retailers and display materials. “It’s a large, concerted effort between field marketing and the distributors, so it’s a very involved process,” he says.
Although the field marketing team will play a crucial role in ensuring that merchandising materials support their partners, TalkingRain also brought in its distributors to discuss point-of-sale materials as well as merchandising items to get their feedback about what works for their markets.
“Rather than just forcing it on them, we actually asked their opinions as to what would be the most efficient for the market,” Klock says. “It may look good, but if it’s very difficult to merchandise, it’s of no value.”
This group approach will be a key contributor as TalkingRain looks to expand the Sparkling ICE brand even more. Already available in every county throughout the United States as well as in Canada and Mexico, the company is hoping to add more international markets to its network.
“We’re very interested to expand the brand internationally,” Klock says. “… As we say, it is the next global brand.”
Let’s talk about TalkingRain … the brand
Preston, Wash.-based TalkingRain Beverage Co. entered the national stage when it rolled out its Sparkling ICE brand to the masses in 2011. Since then, the company has seen its retail sales explode from $10 million in 2010 to $350 million in 2013, according to Kevin Klock, chief executive officer of TalkingRain Beverage Co. However, Sparkling ICE isn’t the only brand in the bottled water company’s portfolio. The other brand is actually the company’s namesake.
Accounting for 5 percent of the company’s sales, the TalkingRain brand is made up of
10 SKUs. The brand features both a spring water variety and natural fruit essence sparkling waters. “Our Natural, Lemon Lime and Tangerine tend to be the most popular flavors,” Klock says. “[They] have a really light, crisp flavor.”
The remaining flavors in the portfolio are Berry, Lemon Zest, Pomegranate Lime, Mango Acai, Peach Nectarine, Kiwi Strawberry and Coconut Pineapple.
Although the TalkingRain brand accounts for a small margin in the overall company, that is not because of concerns with the brand. “The reason why we have not been able to spark a lot of time with our TalkingRain brand and other items is just because of capacity concerns,” Klock explains.
Klock adds that now that the company has a strong network and greater capacity, it plans to start expanding the founding brand.
The brand currently is available in the Pacific Northwest, Korea, Taiwan and Japan, and the company has plans in place to expand its presence. “It is a brand that is starting to expand,” Klock says. “… New markets are already going to see that this year.”