Canadian beverage guru Peter van Stolk shakes up the
beverage market with his offbeat business strategies.
Canadian beverage guru
Peter van Stolk says he was born with an entrepreneurial spirit. And in 1984,
at the age of 20, that spirit was realized when van Stolk fulfilled his
lifelong dream of owning his own business. Under the name Urban Hand, the
enterprising youth produced and sold funky hand-painted sunglasses nicknamed
"urban hand shades." And although this venture was short-lived, van
Stolk identified an
important key to his future entrepreneurial successes – grooving to the beat of
a different drum.
Van Stolk took a rebellious path, both in business and
in life, shunning the university routine to pursue an exciting career as a
professional skier. He says this distinction was earned through years of hard
work and patience -- starting out in a ski shop and ending up on the ski
slopes. Competing in such a stylish sport gained van Stolk a unique
understanding of how to market a trend.
"Marketing skis is really an image game," he insists.
"Skis do not change that dramatically, but every year there are different
colors on top of them." After a few years skiing in the professional
circuits, van Stolk's entrepreneurial spirit would draw him back to childhood
dreams of running a company. And during a summer hiatus, he would hang up his
skis for good, but not before receiving a valuable education in niche
marketing. With a fresh perspective on this business stratagem, van Stolk
launched a second business, Fruit For Thought, in 1987.
However, this lifestyle proved far less glamorous than the
exciting times of a snow racer. Each morning at 5:00,
van Stolk found himself in a rented church basement preparing fresh fruit
kabobs to vend on the streets of Edmonton, Alberta. His persistence soon paid
off, however, when his fruit distributor suggested he look into distributing a
product called Just Pik't Juices.
Just Pik't specialized in Florida fresh-squeezed,
flash-frozen orange juice, and this was of special interest to van Stolk, who
quickly recognized the potential of such a product in a region of Canada that
was devoid of orange trees. "I had no aspiration to be in the beverage
industry at that time; it just fell in front of me," admits van Stolk.
"I looked at the overall juice industry and found out it was a $336
million industry – and orange juice accounted for 51 percent."
He says these promising figures led him to a quick decision
to sell his car and invest the profits -- all $18,000
-- in a trailer load of juice. With this move came new business objectives
and a new name for the emerging beverage marketer: the Urban Juice and Soda Company (UJS). The
newly founded beverage-distribution company wasted no
time in establishing goals, the first of which was securing distribution rights
to Just Pik't Juices for all of Western Canada.
"In 1987, I was selling juice out of the back of a truck, and the
first year was horrible," recalls van Stolk, CEO and "chief bottle
washer" of the micro-soda/new age beverage company. "The whole year,
we had only $12,000 in revenue, so there was not a lot of money going
around."
This was not due to a lack of demand for the product;
to the contrary, the young entrepreneur had retailers ready and waiting to
stock the juice. But the first trailer load from Just Pik't was unusable
because the product was syrup-thick. "I had 14,000 cases of juice that you
couldn't drink," explains van Stolk. "I had to borrow more money to
buy a new trailer load to fill my customer's orders."
This was a major setback that put a damper on the company's
first year of profits, but things would soon change when van Stolk caught the
eye of the media. After being featured on the cover of a local newspaper, a
large retail chain in Calgary made a major purchase and drove sales to the next
level. In its second year of existence, UJS earned $250,000 and another $440,000 in 1989. By its fourth year, UJS had
reached the $1 million mark selling only the Just Pik't juice line.
Van Stolk's alternative strategies for growth
have since led the company to revenues in excess of $7 million – a number the
pop star expected would double in 1999.
UJS entered the juice business as an
importer/distributor, and after some early success in this arena, van Stolk
found the confidence to explore another important aspect of the beverage
industry: bottling. At the same time, he was seeking to add more depth to the
growing distribution company by introducing a root beer to his line of
products. The Seattle-based Thomas
Kemper Brewing Co. was attractive to van
Stolk because it represented an opportunity to learn how to manufacture a
beverage, from purchasing raw materials and mixing the ingredients, to bottling
and labeling the finished product. This deal would be key to the evolution of
UJS.
After only a short time in the distribution
business, van Stolk earned a reputation for picking winners.
"I always looked at the fashion industry to
see where the new trends were coming from in the beverage industry,"
explains van Stolk, who views beverages as a fashion accessory. He says
that, as a distributor, he witnessed very fast growth of certain alternative
and new-age brands and recognized a distinct life cycle in the
specialty-beverage industry.
"Beverages come in and out of fashion, just like
clothing and music," he explains, adding that beverages today are more
about image than taste, offering several examples of "fallen star"
favorites like Sundance in the early 1980s, Koala Springs in the late '80s,
Clearly Canadian in the early 1990s, and Snapple in the mid-'90s.
He also offers a philosophy about the geographical movement
of such trends. "Being based in Vancouver,
everybody would run down to California and bring the trends up from there. My
thought was to go to the East Coast because it usually takes two years for a
trend to make its way across the country."
UJS is hardly a one-man show, however. Van Stolk
depends on his staff of more than employees to keep him up to date on the
hottest trends in fashion and entertainment. "There are so many young
people around here with blue and green hair, and piercings and tattoos, and
they are vital to the success of Jones Soda," he explains. "They give
me vibes on the latest fads and tell me what the target audience wants --
because they are the target audience."
With the root beer deal in his pocket, van Stolk's next goal was
securing the distribution rights to a line of iced teas, and the savvy beverage
marketer set his sites on an emerging brand called Arizona. After successfully
brokering a deal with one of America's trendiest tea companies, van Stolk
proceeded to round out his offering with the products of a Missouri-based
beverage maker named West End Soda. With four core brands in place, UJS earned
$6 million in 1994. But van Stolk says the challenges of being a distributor
left him feeling tired and blue.
"When we were dealing with our American
brand holders, they did not have a comprehension of what it is actually like to
sell beverages in Canada," explains van Stolk. He points out that
beverages typically sell best in cities with dense populations like New York
and Miami. Canada's population, however, is spread far and wide and demands different
distribution strategies in order to pull a profit. This
nuance of the Canadian marketplace was a significant factor to van Stolk, who,
at the time, was distributing beverages strictly inside the borders of the
country.
"It was always challenging trying to
educate the brand holders about the unique differences that Canada holds in the
marketplace in the particular arena of beverages," says van Stolk. He adds
that with production plants so far from his Canadian customers, UJS wasn't
making acceptable profit margins after paying the truckers to deliver the
beverages across the United States and into Canada. He argued that, with a
plant in Vancouver or Seattle, he could cover 16 million people in a more
sensible fashion.
After several years as a distributor, van Stolk says
the constant struggles with brand holders about production and distribution
strategies caused an epiphany for the then-young entrepreneur, leading him to
reevaluate his original objectives. Confident that he had learned enough about
the beverage industry to carve out his own niche, van Stolk sold all four of
his distribution agreements to concentrate solely on the UJS line of products
in 1994.
Van Stolk conceptualized three UJS-branded
beverages with the code names "red dog," "yellow dog" and
"blue dog." The renegade of refreshments felt strongly that the
new-age beverage industry lacked creativity, and he vowed not to be another
"me-too copycat" drink.
The true identity of "red dog," as it
turns out, is WAZU Water. And selling bottled water was a simple decision for
van Stolk. In the early '90s, new "brands" of spring water were
steadily flowing into the market, each claiming to be better than the rest. But
van Stolk viewed the notion that one spring produces significantly
better-tasting water than another spring as "bogus," and WAZU debuted
as an industry gag with the logo, "Wet Yourself." Essentially,
WAZU is nothing more than spring water targeted to an alternative Generation X
market, but it was a stepping stone for a company in transition from a
distributor of established brands to a producer of an original brand.
"Water was easy for us to get into, and we
felt we could show the world that we could market well," says van Stolk.
In 1995, WAZU made a big splash in a highly saturated industry, winning
marketing and design awards that gave the company momentum to continue building
its own brands.
"Yellow dog", a.k.a. Jones Soda, is a
traditional carbonated beverage in unusual flavors (like Pineapple Upside down
or Blue Bubble gum soda) and bright colors that stand out on the shelf. This
micro-soda was created at the same time as WAZU, but
van Stolk says that because of the flavor profiles and the varied ingredients,
it took a bit longer to bring the premium brew to market. Jones Soda (whose
common name was chosen because van Stolk felt that Americans would identify
with the brand) was formally introduced to a thirsty Generation X in 1996.
"Jones was always planned to be the lead brand," says van
Stolk. "We knew if we could get Jones going really well, we could
introduce WAZU to that distributor base. So it would be a one-two punch, a pull
instead of a push." Although WAZU was introduced
a few months before Jones, the soda line is now beginning to fulfill its
intended role.
Van Stolk doesn't mind sharing his low-cost
methods for manufacturing Jones: "Contract packaging is the only way we
can do it." Van Stolk says, from caps to labels, Jones was designed using
existing components and capacity in the beverage industry to keep production to
a minimum.
Today, WAZU Water is produced in two facilities, and Jones Soda is
produced in four different plants in Canada and the United States. (And the
identity of the yet-to-be-released "blue dog" is still top secret.)
After considering different production and
distribution strategies, van Stolk turned to brand design, another vital key to
the success of UJS. And van Stolk says having a good soda is essential. But
with Jones, he is trying to build emotional ties with the consumer, and he
feels having fun is a big part of making that connection. In fact, van Stolk
says if Jones can bring a smile to the customer's face, then it's worth the
buck they paid for it. (Jones Soda retails for about $1 a bottle in most
markets.)
To describe his branding strategy, van Stolk coined and trademarked the
term "grounding," which refers to forming a bond with the consumer.
"I believe grounding is the way of the future. A brand has to create an
emotional connection with the consumer," explains van Stolk. "If it
doesn't, it's just a product. If it's just a product, then you are selling on
the basis of price and utilitarian purposes -- without emotion. Jones is not my
product; it's every man's product."
The label on Jones bottles is cutting-edge in itself, using photography
as a medium that allows consumers to interact with the brand. The photos change
often, as customers submit snapshots that are considered for the Jones label. Van Stolk says that during last year
alone, UJS received more than 22,000 photographs from Jones Soda lovers, and
more than 600 were actually picked up for use on the labels. Photos are
selected on a range of criteria that reflect the alternative style of Jones,
including suitability to the task, integrity, funkiness and "good ol'
plain Wow factor." Past labels include a boy blowing bubbles, a jazz
musician, and a collection of abstract photos of common subjects.
Jones is also making headway as the first interactive soda using Web
technology to reach out to its
target audience. JonesSoda.com is customer-driven, with daily quotes and
digital postcards submitted by site visitors, brand-related contests, a chat
room, and more. Visitors can also rate the Jones flavors with the click of a
mouse.
"Everything you see on the site comes from
customers telling us what they want," explains van Stolk. "We truly
ask for their opinions, and we truly listen." The Slim Jones line of diet
soda products, for example, was spawned from customer feedback.
When launching Jones, van Stolk quickly realized
that the rules in the beverage game were being set by major industry players
like Coca-Cola and Pepsi. And since
the rules were not in his favor, he decided to break them.
Van Stolk's strategy for competing revolves
around building consumer awareness. To gain awareness, he reasons, a beverage
needs to be visible on the store shelf, but premium space is dominated by the
mainstream brands that can afford it. Realizing that he could not effectively
compete with the billion-dollar annual North American promotional budgets of
Coke and Pepsi, van Stolk committed to a cutting-edge distribution plan, taking
Jones where no man has ever sold soda before by targeting offbeat markets, such
as extreme sports shops, adult video stores and tattoo parlors. He says this alternative distribution strategy allowed
Jones the opportunity to be noticed by the audience it was created for: 14- to
24-year-old consumers.
Van Stolk's unique distribution strategy was
another growth catalyst for the trendy Canadian company. "The
up-and-down-the-street channel is one that we perceive to be a trial
format," he explains. Jones Soda also sells individually from independent
retailers, such as cafes, delis and corner stores. "People are more likely
to try something once in a deli than to buy a four pack from the grocery store
of something they have never tried before," insists van Stolk.
This gives UJS a slight edge over larger
competitors that generally avoid independent markets, viewing them as
ineffective from a cost perspective. van Stolk admits he worries little about
what the competition is doing and says he prefers to focus on building his own
brands.
Alternative marketing techniques have also been key to the success of
Jones. "We don't really advertise; it's more guerrilla marketing,"
says van Stolk. "It has nothing to do with money; it is about being legit.
You can't buy your way into the beverage market anymore."
For example, UJS depends greatly on word of
mouth to educate consumers about Jones and employs a 34-foot, bright orange
recreational vehicle with blow horns on the front, surf boards on the top and a
leopard-skin interior to further its cause. This rolling exhibit frequently
makes round trips from San Diego to Vancouver, stopping at various locations
that Jones Soda lovers call home to reinforce customer loyalty and acquire new
fans of the brand.
Having established success in the alternative markets, UJS is starting
to target more traditional beverage distributors that will bring Jones to a
broader audience, including convenience stores, grocery stores and
mass-merchandising outlets across North America.
Van Stolk's innovative strategies for growth
have served UJS well, and now his goal is to achieve statewide coverage for the
retailers stocking his beverages. UJS has already made considerable headway
toward this objective, securing five statewide deals during the last two
months.
"Jones Soda is achieving so much growth
right now, and it's really exciting," says an enthusiastic van Stolk.
"In April 1998, I had 34 distributors in North America selling Jones Soda.
As of today, I have 130, and I'm [adding] probably two a week."
Like most retailers, Van Stolk says that the
Internet is the future of UJS. "I am moving towards e-commerce because of
the ability to interact with the customer," he reveals. Van Stolk wants
Jones to be "The Soda of the Net" and will unveil a unique approach
to selling beverages online in the coming months.
Jones' motto is, "The World Doesn't Need
Another Soda." But apparently, the world is taking a liking to Jones Soda.
In fact, van Stolk says Jones will soon enter markets outside North America,
including Europe, Australia and Tokyo.
At this point, Jones Soda is no longer just a
soda. Jones Soda is a brand. And van Stolk says he wants Jones to be a
"big brand" and hints at new products to come. "If I have my
way, we are not just sticking to sodas; we're coming out with stuff that you've
never seen before," says van Stolk. "But our concept remains the same
-- you have to let the customers interact with the brand. The world is going
interactive."
Name: Urban Juice & Soda
Company
Location: Vancouver, British Columbia
Founder: Peter van Stolk
Founded: 1987
URL: www.urbanjuice.com
Industry: alternative beverages
Employees: 32
Revenue: $7 million (1998)
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