Small companies, big impressions

How Jones Soda, Wawa Dairy and Hirzel Canning outmaneuver the giants in their categories

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"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."

Don't follow every trend

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.

 

'We need to take risks and move quickly'

Jones Soda creates a pop culture around unusual flavors, retro bottles and an emotional connection with its young consumers.

Turkey and gravy-flavored soda? A web site that greets you with "Time flies like the wind. Fruit flies like bananas" (sent in by a customer). An energy drink called WhoopAss.

 

No, this is not your father's beverage company. And if you don't get it, well, that's OK. For every potential buyer this irreverent, in-your-face approach turns off, it also ingratiates Jones Soda to probably more than one new customer of a certain demographic.

"We own the 14-24-year-old demographic," says Peter van Stolk, founder and still CEO of the 17-year-old (isn't that appropriate?) company. He throws at that niche everything he thinks they might be interested in, from athletic heroes culled from the ranks of skateboarders and freestyle bicyclists to blog areas on the Jones web site to unusual flavors in sometimes short runs.

 

"We don't have the budgets our competitors do, so we need to take risks and move quickly," van Stolk says.

Case in point: Pepsico three months back announced it was coming out in late summer with a mid-calorie cola, in partial response to America's trimming of carbohydrates. A few weeks later, Coke said it would follow suit. Jones didn't say anything; it just quickly formulated and launched a half-calorie, half-carbohydrate watermelon soda.

"The world doesn't need another soda," van Stolk reportedly said when he founded the company. What he meant, he says, is that Coke and Pepsi do a fine job of producing good-tasting products that slake the world's thirst. "People sometimes need more than a soft drink. They want an emotional connection to a product.

"The quality of the product is, of course, a very important component," he continues. "But it's only one, and some companies focus too much on the product. There's also packaging. But what I see as most important is the emotional connection. I want all our customers to get excited by our product, to feel like it partly belongs to them."

That explains the company name. "Why Jones? Because I couldn't get Smith," van Stolk says. He's not being facetious. "I figured that with a common name like Smith, at least all the Smiths in the world would try it and feel that emotional connection." He was satisfied when his trademark lawyers came back with Jones, learning only after the selection the various vernacular meanings of the word. "All of which work in our favor," he adds.

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