Kevin Klock starts his morning with an Orange Mango and finishes off his lunch with a Strawberry Lemonade — one of the perks of being the CEO of the company who makes Sparkling ICE water.
Klock’s company TalkingRain has been making Sparkling ICE, a zero-calorie carbonated flavored water, since 1992. But only in the last four years have sales skyrocketed as consumers switched from sodas to sparkling water, springing life back into the sinking company.
“Everyone in the beverage world thought we were going to fold up and go away,” Klock said at its Preston headquarters. But, consumers “were tired of colas and lemon limes, and we were there.”
From 2010 to 2013, Sparkling ICE started spreading across the country and went from $10 million in sales to more than $300 million, Klock said. Sparkling ICE was also one of the top 10 new food and beverage products to hit shelves in 2011 and 2012, based on dollar sales, according to Information Resources Inc. (IRI), a Chicago-based market-research firm focused on consumer packaged goods.
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Pipes weave from one end of the bottling plant to the other, sending the flavored water from the mixing tanks that pump in fresh mountain spring water to empty bottles that pass directly overhead. After lids are attached and bottles are labeled, the conveyor belts send the drink to the “rainbow line,” what employees call the packaging area because of the bright water colors.
Workers wearing yellow vests and hair nets pluck bottles from the production line and carry them into a corner quality-control room. They test the carbonation, pH level, flavors, color and how refreshing the drink is.
Last year, Sparkling ICE became the top brand in the sparkling- and mineral-water category, pushing aside Pellegrino and Perrier, according to IRI data. The drink grew to 27 percent of the market last month, up from 1 percent in summer 2011.
A national advertising campaign with billboards and TV commercials last spring ended the company’s below-the-radar strategy.
“Most people tend to just want to jump up and down and wave their arms,” Klock said. “Staying quiet allowed us to get a very dominate share of the market before having to deal with competition.”
“A lot of people just woke up one day and saw us in Times Square in New York, down on Wilshire Boulevard in Los Angeles, on the promenade in Dallas and at the train station in Boston,” he said.
Success has not come easily for TalkingRain.
In 2009 the company was flailing in the midst of the Great Recession. It unsuccessfully launched two products nationally — Twist, a lightly flavored water, and Active Water, a vitamin-enriched water. But Coca-Cola’s Vitaminwater left no room in the market for similar products, Klock said.
TalkingRain’s lightly flavored sparkling spring water, Essence, was the company’s biggest seller at the time, and the company also produced bottled spring water. Sparkling ICE accounted for only 25 percent of the company’s revenue in 2010.
Then, when the CEO, president and vice president of sales all left for other opportunities in a six-week period, Klock stepped up.
He has a history of turning around dying companies. He graduated from Oregon State in 1991 with a bachelor’s degree in chemical engineering and went on to revive a branch of Ralston-Purina in Idaho. He also worked for Nestle and the Dairy Farmers of America in California before joining TalkingRain in 2006 as vice president of operations.
Klock says everyone had always told him “imagine what we could do if we focused on Sparkling ICE.”
The drink had always done well in the Northwest, especially at Costco, so Klock decided to throw everything the company had behind the product. The owners, Lawrence Hebner, Donald Kline and Donald Jasper, said they would back him as long as he didn’t lose any more money. They gave Klock the $273,000 he asked for to start marketing Sparkling ICE.
Klock said it was time to define what Sparkling ICE was: “What it should taste like,” he said. “What it should look like from a color standpoint. What you should sense when you open it up. How the ice cube looks on the bottle.”
TalkingRain did a total redesign, starting with Orange Mango — the most popular of what were then eight flavors — and it worked.
“In some cases, something only works in the region that it comes from,” said Russ Decaire, general merchandise manager for Costco’s Northwest region. “TalkingRain has sold different beverages to different Costcos, but Sparkling ICE was the one item that finally really took off for them, and for us.”
In 2010, as Twist and Active Water were being removed from the shelves of retailers around the country, Klock persuaded Kroger to swap them out for Sparkling ICE.
Kroger, the country’s largest grocery chain, stocked 19 stores in Indiana and sold an average of 53 cases a week, which was enough to persuade Kroger to sign a national agreement for Sparkling ICE.
Sales started to take off from there, which is where TalkingRain ran into trouble again.
After identifying 40 retailers to stock Sparkling ICE, Klock landed 39 of them — but he had anticipated only 10 or 12.
“We realized we had a problem,” Klock said. “So we went out and started looking for manufacturing.”
By summer 2012, the company had expanded manufacturing to six plants around the U.S. and one in Toronto.
“That was the most stressful time,” Klock said. “On one side, we had people patting us on the back saying ‘look at all the wonderful growth,’ but the consumer was failing to find the product.”
While TalkingRain scrambled to start more production lines, people around the country were going on the company’s Facebook page telling each other where to find certain flavors, said Nina Morrison, TalkingRain vice president of community and customer relations. “People even started to hoard it,” she said.
The brand also started getting attention in the trade press. BevNET, a beverage-oriented media company, named it Best Enhanced Water for 2012 and named Klock its person of the year for 2014.
“The temptation with a fast-growing brand can be to get cocky, but Klock has been humble about the company’s past mistakes and has let the brand realize its potential without overthrowing its coverage,” the BevNET website said about Klock’s win.
Being a zero-calorie drink, Sparkling ICE appeals to people trying to be more health-conscious, with the largest demographic between the ages 24 and 35.
“We kind of lost our way there for four years, from 2006 to 2010,” Klock said. “But now Sparkling ICE is 95 percent of our sales, and we have everything in place to see our growth continue to explode.”
Coral Garnick: 206-464-2422 or firstname.lastname@example.org. On Twitter @coralgarnick