Sparkling Ice Breaker: 5 Questions with Talking Rain CEO Kevin Klock

Talking Rain built its business steadily over several years and then seemed to explode on the world in 2012 with news that its pioneering sparkling water brand, Sparkling Ice, already was a nine-figure company that had stolen a march on big-beverage giants and created a vibrant new better-for-you beverage category all by itself.

Attracting soft-drink weary American consumers with zero calories and an array of appealing flavors such as coconut pineapple, strawberry lemonade and peach nectarine—with all the carbonation that drinkers enjoy in sodas—Sparkling Ice has commandeered lots of shelf space in the highly competitive US beverage market on the way to about $500 million in annual sales these days.

Coca-Cola since has countered with Glaceau Fruitwater in bottles and Dasani Sparkling Water in cans, and Nestle Pure Life has just introduced Exotics Sparkling Waters in cans, providing the first big counter to Sparkling Ice from a giant of the bottled-water world.

But Sparkling Ice has such a lead in a category that it essentially created that Talking Rain CEO Kevin Klock justifiably is focusing not on the competition but on how to make Sparkling Ice a long-term powerhouse brand. Klock told brandchannel how he plans to get there.

brandchannel: How would you describe what Sparkling Ice has accomplished so far?

Klock: In the last 10 to 15 years, everything in the beverage industry kind of shifted into a “functionality” mode. Everything had to be about [nutritional] functionality. But if you go back to the original really big beverages, they were all about refreshment and energy. Energy drinks have taken off but we’ve seen a real decline in the soda category. Yet consumers are still craving something sparkling. That left it wide open for us.

We hit on how consumers really wanted flavors. Look at the beer, liquor and food industries—today’s consumers want more flavor. They don’t want steak and potatoes anymore, and they see cola and lemon lime soft drinks as the steak and potatoes of the beverage industry.

bc: Given that flavor is such an important component of Sparkling Ice’s success, how do you make sure you get flavors right?

Klock: It has to make sense to consumers from a neurology standpoint. The visual of fruits, the color of the product, the smell of it and taste all need to hit on the same elements and be consistent with one another. That’s part of the brand experience.

bc: What’s your pricing philosophy?

Klock: We felt it was important not to get into the high-low game; the consumer doesn’t like to see something that is priced at $1.79 regularly that is suddenly on sale for 79 cents; they’ll never buy it at the full price again. We think we’re true to consumers with a [regular] price of $1.29, dropping to a dollar on sale. That still leaves us in the premium category.

bc: What do you think of the competition now coming your way? 

Klock: The big carbonated soft-drink companies will be the strongest. But we think competition is great. We need more successes in the category to convince retailers to add more shelf space so there is more opportunity for us. The more competition, the more attention comes to us without having to spend a lot of money on marketing and advertising.

bc: But why not follow 5-Hour Energy’s business model? They’ve never had strong competition and they have the category they created almost all to themselves.

Klock: Yes, the first to market typically dominate, and that’s what we’re doing right now is dominating the category. Actually the gap between us and the competition is still growing, and we’ve already seen some brands disappear. Ultimately the first to market remains the substantial leader even after competition comes.

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