Dive Brief:

• Costco has launched a line of sparkling waters with three flavors — including grapefruit, lemon, and lime —according to People. The cans, flavors and price points are similar to LaCroix sparkling water.
• The warehouse club's private label had other lines of sparkling waters, which include flavors like black raspberry, orange mango and kiwi strawberry. The new Kirkland-brand seltzers cost 33% less than the LaCroix brand at $7.49 for a 32-pack, versus $7.99 for a 24-pack of LaCroix.
• According to the Costco Connoisseur Instagram account, Kirkland’s lemon and lime flavor seltzers taste “exactly the same” as LaCroix’s.

Dive Insight:

It isn’t surprising that Costco released its own version of LaCroix, following its playbook of mimicking other big name brands under its private Kirkland brand.

The flavored sparkling water trend has been booming the last five years, with sales growing nearly 42%. Today, Americans drink more than 172 million gallons of it every year. In 2016, bottled water was America's favorite drink — surpassing soft drinks for the first time ever — according to Beverage Marketing Corporation. Sparkling bottled water is seen as a premium and more high quality than regular tap or bottled water.

Americans have been reaching for carbonated drinks for generations, but it wasn’t until recently that consumers strayed from sugary sodas and opted for healthier options, like sparkling water. LaCroix was founded in 1981, but didn’t start flying off the shelves until five years ago. The boom in popularity could have a lot to do with recent health concerns with the sugar in soft drinks. Sparkling water drinks like LaCroix target millennial and Gen Z consumers, who want drinks with natural ingredients and no calories. 

Premium sparkling water brands like Perrier, Sanpellegrino and LaCroix have been on the market for years now. Recently, other CPG brands have tried to catch on to the trend. In February, Nestlé launched new sparkling waters for each of its spring water brands. Before the launch, only $103 million of the company's $2.6 billion in water sales came from its sparkling water products. Earlier this year, PepsiCo added bubly, a new zero calorie, all-natural sparkling water to its portfolio. 

Costco’s Kirkland Signature brand products, which have a cult-like following, make up for about a quarter of the retailer’s sales — and could spell trouble for LaCroix's sales in the store. If Costco chooses to place its new sparkling waters side by side with LaCroix, loyal LaCroix customers could be swayed to switch. With competitive prices and identical flavors, Costco is in the running to become the next favorite sparkling water among consumers.