Small companies, big impressions

"We used to do a lot of customer intercepts. We'd stop people right in our stores and ask their opinion of a product idea or give them a sample to taste. About a year ago, we stopped customers buying Hershey's Cookies & Cream milk and asked them how they liked it, if they would buy the same product under the Wawa brand and how much they would pay for it. Then we came out with our own," he says.

"We can watch first-hand what they're buying, what's new and what's hot. That's how we got into juices, drinks and teas. We also considered water, but haven't decided to make that ourselves," says Over.

C-store customers also talked the company out of making what could have been a packaging mistake. "HDPE worked so well with single-serve milk, we thought that was the logical package for our other beverages. But our customers told us they wanted a clear plastic bottle for drinks and teas, so we went with PET and saw another 30 percent jump in sales.

"We do a lot of taste testing. Some of it right in the stores, but we also do professionally done tests with our ad agency," Over continues. "For example, they told us to get rid of the snap-on cap on our plastic milk bottles."

Wawa also has used its clout as a large retailer to gather intelligence on, and sometimes within, Coca-Cola, Pepsico and Snapple. "We began benchmarking them about a year and a half ago. We wanted to learn to think like them, to think like a beverage company not a dairy or a C-store chain. Coke and Pepsi even have allowed us in to see their operations , our C-store component is a very big customer for them -- and we've changed some practices as a result."

Despite the trends toward lower calories and fat, Wawa determined from its C-store customers there was a market for a decadent milk drink. "So last year we introduced Double-Dutch Chocolate in 4 percent milkfat. It may fly in the face of low-fat and low-carb diets, but people love it," says Over.

Following instincts and some leads also led to a diet green tea, an "awesome lemonade, 12 percent juice," says Over, and an Arnold Palmer-inspired lemonade-tea combo.

There have been a lot of extra-base hits for Wawa. But there have been some strikeouts, too. Despite the nutraceutical connections, an oolong tea never caught on with consumers. Neither did a raspberry lemonade.

"In the case of the oolong tea, we even outsourced the production of that one rather than commit any internal resources," says Over. "But generally speaking, we're not afraid to give just about anything a try. It only costs us labels."

Wawa also is not afraid to spend money. "When we went to a decanter style for quarts and half gallons, we could have put on a simple, inexpensive label. But we really wanted to take advantage of the billboard possibilities, so we developed an expensive but vivid label and wrapped it all around the bottle," Over continues. "We could have bought a typical labeling machine, instead we bought one that was 15 times more expensive than a roll-fed machine -- $750,000 for one machine. That may sound crazy, but we look at it as an investment in our product and our brand. And it's paying off."

Similarly, the dairy installed a sophisticated Swisslog AS/RS in late 2000. It's four stories high, has 16 cranes, three miles of conveyors, four servers with redundancy and can handle 82,000 cases. It keeps product at 38 degrees. "We gained almost 4 percent in accuracy. We're now up to 99.98 percent dock audited accuracy.

"Just because you're small, just because you're in the dairy industry, doesn't mean you shouldn't take risks," he concludes.