PepsiCo Takes on LaCroix as Sparkling-Water Battle Gathers Fizz

(Bloomberg) -- PepsiCo Inc. is bringing its marketing muscle to the sparkling-water craze with a new drink aimed squarely at LaCroix, the upstart market leader.

Called Bubly, the drink will come in eight flavors and hit stores at the end of February. PepsiCo will advertise the product with two television ads on March 4 during the Academy Awards, one of the most-watched television events of the year. The Purchase, New York-based beverage giant said the Bubly launch will be one of its biggest ever.

LaCroix, which is produced by National Beverage Corp., doesn’t use traditional mass-media advertising. It built its consumer base through aggressive retail marketing and social media, said Duane Stanford, executive editor of Beverage-Digest, the trade journal that first reported on PepsiCo’s plans. The sparking-water category is growing by double digits annually, with LaCroix boosting volume by 63 percent in 2016, Stanford said.

“Bubly is PepsiCo’s most direct and significant attempt yet to challenge LaCroix,” Stanford wrote in a report Thursday.

Sparkling water is attractive for PepsiCo and rival Coca-Cola Co. The two industry leaders are pushing their portfolios beyond their namesake soft drinks as consumers are increasingly looking for more healthful products with less sugar. Per capita carbonated soft-drink consumption fell to a 31-year low in the U.S. in 2016, according to Beverage Digest. Meanwhile, bottled water consumption has been on the rise.

PepsiCo launched a new still bottled-water brand, Lifewtr, last year. The maker of Mountain Dew and Gatorade aims for two-thirds of its global beverage portfolio to have 100 calories or fewer from added sugars per 12-ounce serving by 2025.

Bubly will be packaged in brightly colored cans with smiles on the label that vary by flavor. One can has a mustache, for example, while another shows a tongue sticking out. The cans also have different greetings on their tabs, such as “yo" and “hey u.”

“We created Bubly to provide consumers with a great-tasting, flavorful, unsweetened sparkling water in a fun, playful and relevant manner that is unlike anything we’ve seen in the sparkling water category today,” Todd Kaplan, who oversees water brands for PepsiCo in North America, said in a statement.

PepsiCo’s launch comes as competition is heating up. Nestle SA, which owns Perrier and Poland Spring, said it plans to bolster its own sparkling-water offerings through its regional water brands. The new products will hit shelves this month.

To contact the reporter on this story: Jennifer Kaplan in Los Angeles at jkaplan84@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Mark Schoifet

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