Talking Rain (Sparkling ICE) CEO: We had one store in London sell 3,000 bottles in a week

Speaking to FoodNavigator-USA a month after the brand launched in the UK and  Ireland, Klock said: “We’ve only got two weeks’ worth of scan data, but all major retailers that were talking about testing it in a limited number of stores are now going full bore, and where they can they are actually moving the launch forward. ​

“In Ireland, of our budgeted volume for the year, we sold 50% of it in the first six weeks, so we’re off to a very strong start. And we had one store in London sell 3,000 bottles in a week.”​

With the UK government recently announcing a tax on sugary drinks​​ that will come into force in April 2018, meanwhile, UK consumers and retailers are looking for brands just like Sparkling ICE, said Klock.

“In the UK they are being more progressive on sugar​, and Tesco ​[the largest retailer in the UK] has goals to reduce sugar in its ​​​[private label] products, so it’s a good time to enter the market.”​

Push into convenience and foodservice​

In the US, meanwhile, all the time and money spent building an independent national DSD (direct store delivery) network is beginning to pay off, said Klock, who has achieved significant penetration in grocery chains over the past five years, but has more recently been driving a push into convenience and foodservice channels.

 “Our ACV in the convenience channel is up to 34% and by this fall we should be in all 7-Eleven stores in the country. By the end of the year we should have an ACV of 42%, so we’re making good progress and seeing solid double-digit growth.​

“On the foodservice side, we’ve just announced a national partnership with Waypoint, which is a national broker for foodservice, and we just landed all the high schools in northern Florida, and by the beginning of the coming school year we expect to be in high schools in 46 out of 50 states.​

“We see good sales velocity in the schools we’re in; we have some high schools selling as much as 900 cases a month as we are one of the few brands that students actually want to drink that you are allowed to bring into schools ​[which have recently had to restrict sales of sugary drinks].”​

"We have some high schools selling as much as 900 cases of Sparkling ICE a month." ​

Kevin Klock, president and CEO, Talking Rain​

Essence of… captures new dayparts and new consumers​

On the product development side of things, the company’s new ‘essence of’ sparkling waters, which contain only two ingredients – carbonated water and natural flavors – should not cannibalize sales of regular, Sparkling ICE products (which contain artificial colors, sweeteners and preservatives), but generate incremental sales by attracting new consumers to the brand and giving current Sparkling ICE fans more options, he said.

“We know that people that drink sweetened beverages also want unsweetened moments, so it was a logical step to make sure that we have something for consumers who are loyal to Sparkling ICE that want unsweetened options.”​

While the ‘essence of’ product is similar to Hint Fizz, the Sparkling ICE brand has broader appeal, he said: “Hint Fizz is more like a Perrier-type product whereas we are added value, but not high end​.”

‘Essence of’ was only launched six weeks ago, but is already off to a great start, he said: “We’re hitting the numbers that we want to hit, and the market response has been fantastic.”​

He added: “Our focus has been on the major chains in the northeast and the southwest and nationally with Target. We could have gone pretty much everywhere straightaway but we wanted to make sure that we had the right product and messaging before we went national.​

“The temptation is there to explode it out, especially when retailers are asking for it, but we learned some lessons from our experience with tea, where we would have been better off doing a regional launch, as we had to change our labels and if we’d have had our time over again, we wouldn’t have had it out so broadly before we did that.”​

The lemonade category has started to lose its luster a bit​

In the flavored, sweetened sparkling water category, meanwhile, Sparkling ICE continues to dominate, said Klock: “Fruitwater and Aquafina FlavorSplash have gone away​ [both brands have been discontinued], and Sparkling ICE teas are doing well, but I’d say the lemonade category has started to lose its luster a bit, although our base flavors are doing well.​

“In general, we are very well positioned for when the FDA guidelines on added sugar come in ​[manufacturers will have to list added sugar on the Nutrition Facts panel from 2018], when we are all going to find out just how much the consumer really cares about sugar.” ​

Acquisitions, partnerships, investments​

A chemical engineer by trade who joined TalkingRain in 2006 as VP of operations, but found himself running the company four years later, Klock now sits at the helm of a business very different to the one he joined 10 years ago, and says his role has changed significantly, particularly over the past nine months.

“Now I am able to sit back and take on a more strategic role, thinking three to five years ahead and looking more at commercial relationships, strategic ventures, acquisitions and traveling a lot, which is a huge change for someone that grew up in the operations side of the business.”​

We could invest in brands or acquire them​

So are acquisitions on the cards?

According to Klock: “Sparkling ICE is a great anchor brand, but we have a system that can bring innovation to market much more rapidly than our competitive set, so we are looking at commercial relationships and acquisitions we can make that bring more value to our company and to our distributors and retailers.​

“We could invest in brands or acquire them, or there may be opportunities where we want to go overseas and someone overseas might want to get distribution of their products in the US, so there might be commercial relationships we can build there.”​

The Sparkling ICE brand – which was worth somewhere in the region of $10m in 2011 - notched up retail sales of more than $659m in 2015, and has a fighting chance of reaching its well-publicized target of $1bn in 2018, says Kevin Klock, president and CEO of brand owner Talking Rain.