Building a Billion-Dollar Brand
TalkingRain CEO strives to make his company the next AriZona
Published in Convenience Store Products
NEW YORK -- With a mission to become a $1 billion brand over four years, the recipe in meeting a lofty goal like that is, in Kevin Klock’s eyes, astoundingly simple: Place a bottle of Sparkling ICE in the hands of every consumer.
Klock, CEO of Preston, Wash.-based TalkingRain Beverage Co. hopes to accomplish that through brand awareness, product innovation and tactical direct-store delivery (DSD) partnering—all with an emphasis on what’s been to this point an slippery exercise: c-store channel expansion to suit their needs.
Klock expounded on a host of insights about the company’s flagship Sparkling ICE brand on Thursday during Wells Fargo’s “Beverage Buzz” conference call series. The webinar was moderated by Bonnie Herzog, managing director for beverage & tobacco for Wells Fargo Securities, New York.
Sparkling ICE, a zero-calorie beverage combining naturally flavored mountain spring water, fruit juice, vitamins and antioxidants, expanded its portfolio to 11 flavors with the recent rollout of Cherry Limeade and Strawberry Watermelon flavors. Sparkling ICE Lemonades, launched last year, are available in six flavors. Most all single-serve bottles within the brand retail from $1.19 to $1.29.
“Our brand positioning for Sparkling ICE is simple: It’s refreshing,” said Klock. In sizing up its future fortunes, the company had mulled the prospects of expanding into functional beverages and protein drinks, but at the end of the day Klock believed what U.S. consumers “were really missing was the ‘refreshing’ part of beverages. People are looking for flavor—not necessarily zero-calorie. High-calorie lemonades, energy drinks and higher-calorie teas have all grown, so the emphasis is on refreshing.”
Founded in Seattle in 1987, TalkingRain shifted gears in 2010 from its brand roots when several key executives departed. Klock said one core brand, Active Water, “had run its course,” so the decision was made to ride Sparkling ICE, and to do so within a national distribution framework.
Klock said measured sales in 2010 of the brand were less than $1 million, but the brand hit its stride in 2011; by the end of 2013, measured annual sales had amassed $300 million—plus another $50 million in what he called unmeasured business.
During the webinar, Klock addressed key themes that can put the Sparkling ICE brand on a path to achieving an auspicious $1 billion in sales by 2018.
On DSD distribution: Last year, the company saw 20% of its U.S. distribution coming in the form of DSD. “We pretty much went out and scratched and clawed” to get a viable DSD network in place, and it continues to grow. “We found a way to scale that business. C-store space had once proved expensive. [Sparkling ICE’s c-store sales were reported to be about $13 million.] I think we have the ability to expand into large and small c-stores, and in large and small cities. We’re getting into that space now, and the solution is DSD. If we can get our c-store presence in place, we are well on our way to $1 billion sales [by 2018].”
On the c-store challenge: “The biggest challenge is that 70% of people know what they want when they get to a store. So brand awareness for us is big. We’ll rely on marketing campaigns directed at c-stores, because you have to become top of mind with consumers. We need to educate consumers we are [in c-stores].”
On what beverage segments Sparkling ICE is taking share: Klock cited diet-soda sales declines as one opportunity, but said the lion’s share of growth is coming at the expense of enhanced water, which he said is “taking a beating.” Klock said Sparkling ICE’s shelf space has grown a minimum of 50% with its present retailer networks, and “every indication is for continued growth in shelf space.”
On competitor innovation within the sparking-water segment: Klock said that TalkingRain does not fear innovation from competitors, but rather embraces it. He cited fruit water as one example of innovation that’s bubbled up, but Klock did not believe there was much competitive innovation occurring within the sparkling-water space. “From our standpoint, we would like to see some new strong innovative launches, because competition is healthy” and brings awareness to the segment.
On the core consumer of Sparkling ICE:“We spent a lot of money last year determining who our consumers are.” The 24- to 45-year-old female is proving to be the brand’s top consumer; however, in testing, the company found that “we have a very broad demographic,” he said.
On marketing strategies:Not elaborating on specific dollar contribution, he said marketing spend will be a “blend of outdoor, TV, events and street teams. What you won’t see is stadium ads or endorsement fueled by celebrities.”