$1bn brand by 2018? Analyst thinks Sparkling Ice target ‘achievable’
Bonnie Herzog, senior analyst at Wells Fargo Securities, said in a note yesterday that she recently met top executives from brand owner Talking Rain - namely Kevin Klock (CEO, Marcus Smith (CFO) and Michael Lowes (COO).
2014 sales forecast to be in the region of $425-475m is testament to Sparkling Ice’s success – the fastest-growing beverage brand in the US over the past three years with leading positions in lemonade and single-serve bottled water.
In fact, Herzog said, Sparkling Ice is now the 11th largest brand by sales relative to leading CSD brands, even drawing fire for its edgy '...side of waters' advertising strategy from Nestle Waters.
“Ice is striving to be a $1bn brand by 2018, which we think could be achievable based on (1) new products and brand extensions such as Sparkling Ice Tea (2) increased domestic distribution, particularly in the C-store channel," she said.
PepsiCo's Lipton Walmart move will 'legitimize' sparkling tea
The third factor was growing its 4.3% market share within the $9.3bn market for diet CSDs and sparkling waters, Herzog said, while the fourth factor was international expansion.
Unpacking these points in more detail, the analyst said that Sparkling Ice Lemonade (launched 18 months ago) had been a great success, and is now the No.1 shelf-stable lemonade in food, drug and mass (FDM) channels with $55m+ in measured sales.
Herzog said Talking Rain management believe that recent launch, Sparkling Ice Tea, will be even more successful, based on strong early sales and positive feedback from distributors and retailers.
"Although the sparkling tea category is still a very small subset of the $3.1bn shelf stable tea category, we do believe it has potential, particularly given Talking Rain's success growing the sparkling water category through Ice," she said.
Takeaway? Sparkling Ice will continue to win shelf space from CSDs, bottled waters
"Further, we think that PepsiCo's Lipton brand's recent announcement of a 90-day exclusive with Walmart for sparkling versions of its tea legitimizes the sparkling tea category and the Ice Tea launch could position Ice to ultimately be the leader in this small but growing sub-category," Herzog added.
Summing up, Herzog said she expected Ice to continue to win shelf space from diet CSDs, regular CSDs and bottled water.
"Bottom line. International expansion and further penetration of retail channels as well as new products, including potentially a caffeinated Ice at some point in the future, should support ongoing growth," she said.
