In the biblical story of David and Goliath, the small boy slays the giant. Our story today has small heroes, but nobody dies.
It would indeed for difficult for a Jones Soda to knock off Coca-Cola or Pepsico. Ditto for Wawa Dairy and Hirzel Canning in their respective categories. But being small has its advantages. You can be a lot more fleet of foot, take more risks, get excused for making some mistakes. But that doesn't mean you can't hit some home runs.
All three of these companies have pulled some firsts in their categories. Hirzel was the first company in North America to use a reclosable steel can. Wawa Dairy is quick to try unusual flavors in both milk and other drinks -- getting both pre-launch input and immediate feedback from its convenience store customers. Jones Soda makes such a strong connection with its customers that more than 4,000 of them have contributed photos that have been turned into product labels.
They are three very different companies in three very different businesses. Each category has its quirks, from the stodgy milk industry to the easily commoditized canned vegetable business to the two-company category of carbonated soft drinks. Each category has seen its share of consolidation, with clear leaders emerging. But as the top guns got bigger, they also turned into battleships: unassailable at what they do best, but incapable of sharp turns. That leaves a lot of room around the edges.
For instance, Pepsico made headlines back in March when it announced it would unveil a mid-calorie cola, Pepsi Edge, sometime this summer. (Those fair-weather dieters among you who have been mixing regular and diet Pepsi at home are entitled to a "duh.") Coke, in a marketing stroke of genius, claimed to have had one in the works, too, and would beat Pepsi to market. Jones Soda, suspecting there was at least some short-term hay to be made, promised nothing but quickly launched a mid-calorie soda. "It's not rocket science," says CEO Peter van Stolk.
Despite their differences, our three Davids also have some things in common. Product development in all three is a multifunctional and somewhat casual affair, from salespeople bringing back ideas from grocers to voting for new soda flavors on a web site to sampling customers at convenience stores. Hirzel and Wawa also tightly integrate manufacturing into the R&D process; both have surprisingly sophisticated manufacturing processes for their size and their categories. While Jones outsources its bottling, it has forged especially close relationships with both its copackers and its ingredient suppliers, who play important roles in product development. All three companies admit to making some mistakes, but regard errors as inextricable parts of ideation.
All also have a strongly entrepreneurial spirit, which is particularly refreshing in a industry that, despite claims to the contrary, still keeps score in 13-week increments. "We don't have the budgets our competitors do, so we have to take risks and move quickly," says van Stolk.
Far from walking in the shadows of the giants, these small companies are leaving some pretty big footprints of their own. Their stories follow.
,'Everybody does R&D'
Common sense and gut feel still drive Hirzel Canning
When the salesman came calling on the Acme grocery chain in Philadelphia 30 or so years ago, the buyer said he wished he had an "Eastern" style of stewed tomatoes, a formulation a little sweeter than what he was getting with the "California" tomatoes of his current supplier.
The comment could have been brushed off with "we don't make that," or at best forwarded to a corporate hierarchy or inflexible product development department. In fact, the salesman's company, Hirzel Canning Co. and Farms, made just about every kind of canned tomato product but stewed tomatoes. But this salesman was also the company president, as well as one quarter of the research and development department. All it took was a little tinkering and a new store brand of stewed tomatoes hit the shelves of Acme stores along the East Coastfollowed later by Hirzel's Star Cross brand.
"That was kind of crude R&D, but it was how a lot of our products were developed," says Karl Hirzel, the third generation to be running the Toledo, Ohio, company. "Up until five or six years ago, almost everything was done by trial and error and by keeping our eyes and ears open. We'd ask our [grocery] customers what they wanted, we'd look at what was in the market and especially what was doing well and we'd think of ways we could improve on that. A lot was common sense and gut feel."
The 67-year-old Hirzel admits the market has gotten a little more sophisticated, so the R&D department has ballooned to two dedicated professionals, as well as "anyone else who needs to be in on the development of a new product. We're doing R&D at all levels. Every plant manager does R&D, every production manager, every salesperson who tells us what their customer wants," says Hirzel.
In fact, he says, product development usually starts with the salespeople. "They're our front line. They see what's already out in the market, what's doing well and what the retailers want," Hirzel says.