La Croix's Succession of Coca-Cola & Pepsi

0:00 Big Soda At Work 2:19 Consumers Wising Up 5:42 Triumph of Science 8:09 Coca-Cola vs. PepsiCo 10:00 The Industry's Reckoning 12:45 The Chosen One 15:51 Long Way Home 18:47 New Players, Same Threats 19:18 A Future of Known Unknowns Viewers may find some clips in this episode to be pixelated and low quality (480p at best or 240p at worst). It was an intentional decision to use pre-2010's footage for certain segments. I felt it would be a more authentic viewing experience to use footage directly from the era that this episode covers - notably the mid 2000's when Internet was dial-up, information was communicated exclusively through magazines or cable news, and Americans were coming to terms for the first time with obesity / nutrition / health / diet. Topics that didn't make the final cut of this episode to read after watching: - M&A is truly the tool of corporate America. Pepsi did acquire SodaStream in 2018 for ~$3B in an effort to bring sparkling waters directly into consumers' homes as a few commenters have kindly shared their experience below. To me, SodaStream's at-home sparkling water maker (having a machine that can carbonate your water and consumers mix in the syrups / flavors they want) is eerily similar of Keurig's Kold at-home soda maker. Kold was eventually discontinued due to product issues and too high of a price point at ~$350. SodaStream on the other hand has a significantly more favorable entry point (starting at ~$100). - It's interesting that both SodaStream and Kold have elements of the old HP printer model, where consumers pay for one fixed $$$ cost upfront (machine) but have to regularly spend $-$$ over the lifespan of the product to continue using the product (gas canisters with SodaStream, pods for Kold / normal Keurig, ink cartridges for printers). - To me, the appeal of sparkling water consumption is the opening of the physical aluminum can that's identical to soda. That crack and sip sound is engrained deep and primed in consumer psychology as a satisfying sound. I can't speak for SodaStream or Keurig, but the notion of filling up a mug or Hydroflask with sparkling water without that cracking opening the can feels like it would take away from some of the appeal. - Topo Chico was acquired by Coca-Cola for ~$220M, which has a cult following in Texas. But the strategy Coca-Cola is taking Topo Chico sparkling mineral water these days is less in La Croix / bubly / AHA's direction and more in the alcoholic Truly / WhiteClaw / High Noon hard seltzer market. - In the context of United Airlines only serving bubly comment, I'm fairly confident what's happening with La Croix is that it's losing its seat at the table when it comes to B2B institutional deals, where PepsiCo and Coca-Cola have a much more established sales network and stronger existing relationships with corporate clients. If I put myself in the shoes of a major airline, hotel, restaurant, gas station or any business that sells beverages for $$$, it is far easier for me to procure all my beverages (soft drinks, juice, sparkling water, bottled plain water, diet soda) through 1 single contract with PepsiCo or Coca-Cola. In return, I'll probably get a discount because of my exclusivity with PepsiCo or Coca-Cola so my beverage profit margins are even better + consumers will get what they want. - If I really want La Croix in my business, I have to sign my own contract with National Beverage which adds operational overhead and supply chain complexity when I don't need it - while they can give me a leading sparkling water brand and some juices, I would still need another entirely different supplier to give me my plain bottled water, soft drinks, diet sodas and more. I'm sure the same is playing out in grocery stores where La Croix's shelf-space is being eaten away by Bubly and AHA as Big Soda can easily cut deals with the supermarkets to get the best shelves / aisles / exposures. - Not sure why international expansion is not a strategic investment for National Beverage Corporation. Big Soda has made APAC and EMEA as its most strategic high-growth markets and the demand for sugary soda in those regions has not declined (in some cases, has even gone up) vs. America. As the episode says, sparkling water seems to still be mostly an American phenomenon.

Another hit against La Corix in especially Europe is that the sparkling water market already is saturated. The market is filled with alternatives, even Coca-Cola and PepsiCo have their local brands and partners.

It's truly disgusting how easy and cheap it is for big companies to buy anybody's opinion. Torturing reality into submission. Just like cigarette, companies

as a diebetic, seeing people say that sugary drinks don’t contribute to blood sugar makes me wanna cry

I've been drinking La Croix my whole life, so it was really weird to me how it all of a sudden got popular. I still don't know that I've ever seen a proper ad for it. It used to be generic (cheap) Perrier, which is why we bought it.

Another thing that la croix needs to get on is restaurant sales. I've NEVER seen the option to buy la croix at a restaurant in non-canned form. You can't get it at soda fountains or in your glass at sit down restaurants. For a lot of people I know, these restaurant visits and the ONLY time they have soft drinks. If they can't get a la croix there, they'll never drink it at all.

It never even remotely crossed my mind that soda might be a temporary thing that society eventually outgrows. It's always felt like a staple of society, an immovable, irreplaceable axiom of modern life. The last few decades have shown that it's entirely possible that sugary soda might eventually decline to a specialty item over the next century. To me, that's an odd thing to consider, since "fizzy water with light flavoring" is incredibly unappealing. But that's just me.

I was surprised you didn't mention the "sparkling" insurgence into other beverage industries such as beer and alcohol. Brands like White Claw leading the charge that then prompted the rise in other sparkling or seltzers in brands like Bud Light, Dos Equis, as well as non-alcoholic brands like TopoChico

Ever fresh is a giant brand. They have orange juice at every gas station in the whole country. Most liquor stores too. It was probably what made the most of their money before Lacroix took off

Sparkling water has a long history in Europe, but also flavored sparkling water has been booming at least in Scandinavia for literally decades. It was only a matter of time (~15 years it seems) before America or someone else caught on. Interesting thing about the Scandinavian market is that the brands mostly stay within their country of origin. Like you *can* get the Swedish Ramlösa in Norway (and sometimes even Stenkulla), but the market there is definitely cornered by the Norwegian Farris and their lime/lemongrass and mango/orange flavors

Big credit to the level of research man, where do you find these clips/interviews? It's amazing and really helps tell the story more than just graphs and numbers.

Great video bud, FYI La Croix have been available in New Zealand supermarkets for a few years now, it is getting around. Love the stuff.

Love that clip at the end "that's what parents are for" lol. This is a great channel, your videos are amazing.

Holy $hit coca cola!! the fact that they could with a straight face suggest that sugary drinks arent correlated to obesity or bad health is INSANE!

During my pregnancy I switched from diet sodas to Bubly or LaCroix, and its definitely made a difference in my consumption towards sodas; the occasion craving hits but I don't actively seek it out anymore. I grew up in a house where diet soda was a constant. I definitely agree that sodas shouldn't be sold in schools, I taught middle school previously and holy shit, my students would crash hard after lunch. It was like pulling teeth to teach after 12pm.

I prefer using soda stream. It's liberating that I don't need to lug around these heavy cases of liquid. If I fizz chilled herbal tea, it tastes better than the store bought soda.

"That's a terrible business practice" to "that's what parents are for" my God that guys double speak is strong.

this is a great channel! Such in-depth fundamental analysis on many big companies. You should have way more subscribers

I'm surprised there was no mention of flavored Shweppes or Polar. I always considered them long-time players in the flavored water market.

Like you briefly mentioned. La Croix is only big in the US really. You can find it in Canada at a good amount of groceries stores now, but not all, and their stock of it isn't huge usually. PepsiCo with the Bubbly brand really took over here, everyone likes it and there is tons of it in every store now. Lots of marketing and they entered the Bubbly brand into Canada while La Croix was still only in a select few high-priced grocery stores. Which is another huge factor, The price for an 8-pack of La Croix is the same as a 12-pack of bubbly in Canada.