Keeping Up With the Jonesers

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Two North American CEOs have their logos tattooed on their bodies: Nike’s Phil Knight and Urban Juice & Soda’s Peter van Stolk.

The van Stolk story is more fun.

van Stolk began his sales career in elementary school–he bought bubble gum in the USA and sold it, at a profit, to his Edmonton classmates.

He began his adult career as a professional ski instructor and team coach. But ski-industry employees have three months paid vacation each year, and van Stolk is not the kind of guy to just hang around. In 1986, it occurred to him that, if people bought ice cream from street vendors, they might buy fresh fruit from street vendors. So, with a church basement as Head Office, van Stolk started Fruit for Thought, which sold fresh fruit kebabs and fruit salads from sidewalk carts. It was a great idea, van Stolk got lots of press and the business did well.

Then someone suggested that he look at Just Pick’d Juices, a Florida company which was producing flash-frozen orange juice. van Stolk did some research and found that 51% of the $356 million Canadian juice market lay in orange juice. He sold his car, lived on orange juice for a year and made a whopping $12,600. (He does not remember that year fondly.)

But he’d found his métier. He moved to Vancouver and, before long, BC boasted the highest per-capita consumption of orange juice in North America, Western Canada represented 10% of Just Pick’d’s sales and van Stolk’s sales hit $1 million. By 1990, though, he was starting to sour on orange juice.

“I’d come from the ski industry, which is all about fashion and sex. Clearly Canadian was starting to go through the roof, Koala and New York Seltzer were still big. They had sex appeal. I was selling orange juice, which has no sex appeal. And I was a one-product company.”

van Stolk founded The Urban Juice & Soda Company and negotiated the right to import, bottle and distribute Washington State’s Thomas Kemper micro-brewed sodas. He bought two BC distribution companies and proceeded to obtain his degree in beverage distribution, learning about importing concentrate, buying glass, manufacturing, bottling. By 1993, he was the Western Canadian distributor for Arizona Iced Tea, West End Soda, Odwalla and Snapple and his sales had risen to $6.4 million. But he was tired of distributing other companies’ products.

“When you’re a Canadian distributor of American products, you’re treated like the poor cousin. Arizona was competing against Snapple, which is manufactured in Vancouver. Arizona felt that its Toronto facility was enough for Canada. The Americans said: ‘Why can’t you do things the way we do them in New York?’ I said: ‘There are eight million people in New York. There are maybe eight million people in all of Western Canada, which constitutes two-thirds of the territorial space of the USA. Hello? There’s a bit of a shipping issue here!’”

With distribution becoming an increasingly frustrating, not-for-profit venture, van Stolk decided to start producing his own soda. In the cut-throat, $115 billion North American beverage industry, launching a brand is an extremely risky venture. So van Stolk looked at what everyone else was doing and did everything differently.

“When most companies create a brand, they first look at the consumer, then production, then distribution. We put the distributor at the top of the equation. The greatest beverage in the world is useless if distributors don’t want it and consumers can’t find it. Back then, everyone was selling non-carbonated drinks. We knew that if we went to distributors and said ‘Please sell our iced tea’, they’d say ‘Why?’. Distributors needed a different type of beverage–a carbonated beverage which would capture people’s attention.

“Our next step was to look at production. And this is the most important aspect of the success of Jones Soda. Instead of creating a proprietary package, we took a stock package and made it proprietary–this is very very important. We chose the Corona bottle. It’s a stock bottle and you can get it anywhere, which means you can negotiate your price. Clearly Canadian, for example, had to invest in design, the creation of the mold and manufacturing. They use pressure-sensitive labels which are applied at the manufacturing stage, so each product has a different package. So if they have a run on peach soda, they can’t just make more and put it in cherry bottles–they have to make more peach packages. My labels are applied by the bottler, and my orange soda is in the same bottle as my grape soda, which is in the same bottle as my green apple soda. If I have a run on grape, I just change the labels. The labels are the lowest-cost item in the whole process. Aside from the fact that I didn’t have to make that huge up-front investment, when you’re talking operations, this simplicity is critical. It is crucial to the company’s growth and profitability.”

(Urban Juice & Soda is also the only beverage company in history to win top honours for package design in two categories in the same year: its Wazu Natural Spring Water bottle won six International Bottled Water Association awards, knocking Perrier out of the top spot. The Jones bottle edged Coors’ to win the Glass Packaging Institute’s 1998 Carbonated Beverage Clear Choice Award, the glass container industry’s highest honour. van Stolk also notes that the total pre-market cost of Jones Soda was $41,000. and the total pre-market cost of Wazu was $20,000.–an unheard-of feat in the beverage industry.)

Once he had his production and distribution parameters in place, van Stolk looked at the consumer. He was playing in the New Age beverage market (fruit beverages, bottled waters and iced teas). This segment, which grew wildly through the late ‘80s and early ‘90s, now averages US $6 billion in annual sales. But van Stolk felt that beverage marketing lacked creativity and that his competitors were not looking properly at their consumers.

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The target market for the New Age beverage business is the 14-24 age group–that’s 25 million fashion-conscious North Americans. It is growing twice as fast as any other population segment, it spends US $90 billion annually and influences the expenditure of twice that amount. But van Stolk identified an additional market: the 14-24 year-old wannabes–the 10-13 year-olds who want to be 14, and the 25-28 year-olds trying to hang on to their 24 year-old identities. van Stolk’s thinking, therefore, expanded his market from 10-28. When you factor in that increased current and future disposable income potential, more opportunities present themselves.

These consumers are the trend-setters, not the trend followers. van Stolk saw large corporations spending millions on market research when they should have been out on the streets–not only watching what members of their market were currently doing, but trying to figure out what they were going to be doing in the future.

Looking for emerging trends, van Stolk scoured magazines like GQ, Details, Esquire–even House & Garden. He hung out on the streets of Vancouver (Yaletown) and New York (Soho). He saw the re-emergence of Day-Glo colours, three-button suits, Hush Puppies, lava lamps. This was 1995 and the old was newly new, the square newly hip. Hence the Jones brand.

What elements does it have that attracts these people? Bright, bright, jewel-like colours seen through the clear glass of slim, casually-elegant bottles. And a playful, uncomplicated name: Jones–retro-hip, Cold War conventional with a dash of heroin chic.

(These consumers also had to like the taste of Jones, of course.  Consequently, some of its flavours are much sweeter than other beverages. While Canadians choose sweet-ish beverages, Americans–especially in the 10-28 group–like their sugar.)

“The ingredients are the most expensive element and your product has to look good and deliver on taste and refreshment, otherwise you don’t have a brand,” says van Stolk. “With taste, you have to strike a delicate balance between science and guess-work. When we launched Jones in 1996, we had a quality issue; our flavour company supplied us with a product which was not up to par. My flavours didn’t maintain their shelf life over a long enough period–they tasted great off the line, awful 90 days later. But we fought our way through that and it was part of the learning curve.”

Jones now has a reliable, quality flavour supplier (in a secret US location), and five North American facilities producing three Slim Jones flavours, 3 Natural Jones flavours and 12 Jones Soda flavours (the New York Times rated Jones grape and cream soda as the best on the market). In Canada, it sells for up to $1.49; in the US, the average is $1.29 (although the bar at the Four Seasons in New York sells it for $5.00).

So there’s the Jones brand. Now you just set a marketing budget and bombard consumers with clever advertising, right?

Wrong. van Stolk has never undertaken paid advertising.

“We don’t play the Big-League game,” says van Stolk. “The Big League players give consumers what they think they want and ram it down their throats with advertising. When people are bombarded with messages, their instinct is to turn away. So we said, ‘Instead of marketing this product to people, how can we ground it with them? How can we let the brand grow naturally among the core audience, as opposed to force-feeding it to them?’

It’s the natural versus the artificial approach–it’s difficult, challenging and time-consuming, but it’s better than blowing oodles of money on telling people you’re something.

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“Jones is about discovery. It’s fun and exciting to discover something. We said, ‘Here are our customers. What can we do for them? And when we’ve done it for them, let’s make it available to them in places where they love to be and let them discover it.’

“When you go into a convenience store, you stay for 3.5 minutes and you have 690 beverage brands to choose from. Jones can’t be in that environment. We have to take the confusion out of the game and make the Jones choice automatic. So Jones goes where no soda has gone before– bowling halls, record stores, piercing parlours, shoe stores, used clothing stores, sex shops, tattoo parlours, beauty salons, raves, CD-listening bars–anywhere where no one else sells soda. People go into these places and there it is. They’ve discovered it.”

Discovery is helped along by the Jones Blitz Team, a group of very high-energy guys from California (because Canadians are too reserved). These are the Jones Street Fighters–full-time employees who drive around the streets of selected markets in a 34’ RV, painted orange with black flames and topped with a surf board. Dressed in neon orange Jones jumpsuits, they burst out of the vehicle, often on skateboards and carrying musical instruments, passing out CDs, bottles of Jones, bits of Jones Stuff. Depending on your viewpoint, they’re obnoxious or hilarious. Either way, Jones gets the desired attention.

Perhaps the greatest Jones innovation lies in how it communicates with its customers–its customers being Internet fiends with short spans of attention and no patience with Big Business.

“My consumers want to care about the companies they deal with, and they want to feel involved,” says van Stolk. “They’re not going to pay attention to something if they don’t care about it and are not involved. And we only had the label to work with.”

If you look at the back of a Jones bottle, you’ll read this: ‘Ya gotta make a living somehow; we chose the beverage world. Good old soda with a twist. No hidden meanings, no billion dollar ad campaigns. At Jones we want you to buy a lot of soda and recycle the bottles.’

Corny and patronizing, sure. But, to young adults, it presents van Stolk as the underdog. Customers want him to succeed. (van Stolk is also generous in donating to causes which matter to his customers.)

But how do you involve your customers? You make your product inter-active. For starters, by getting your customers to supply your product’s graphics.

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From the out-set, Jones asked customers to send in their own photos for use on the Jones labels. Photographs flooded in–in 1998, 22,000 photos were received. The photos–colour, sepia-tone, black and white–are scanned and reproduced in four-colour process. Jones produces 50,000 cases of soda a day; each of the 36 bottles in each case has a different label. Each label is numbered and carries the name of the photographer and the name of his or her home town. In the last two years, countless North American community newspapers have run feature articles on locals who have had their photos Jonesed.

van Stolk won’t say how much this extra effort costs, only that he spends about 30% more on labeling than does his competition. And it is a coordination nightmare. But it’s worth it–no amount of money could buy the kind of brand loyalty that this inter-activity inspires.

The labels themselves receive a lot of attention. One nut-bar lambasted Jones for running a photo of salt and pepper shakers, claiming that Jones was encouraging inter-racial commingling. A label bearing a photo of the ‘Walk’ traffic sign received complaints about encouraging violence (because it looks like the outline of a body.) Kids like to make adults mad so, for them, this kind of reaction is terrific. And, for kids and teens, Jones is not a beverage–it’s a lifestyle. Their parents now order custom-labeled cases of Jones for birthday parties and bar mitzvahs. Children lug bottles of Jones to school–not to drink it, but to trade the bottles, with the goal of having as many consecutively-numbered labels as possible (it would not be Jones-worthy to steam the labels off the bottles).

Jones was also one of the first beverage companies to have its own web site, a site which made the 1997 Top 10 lists of both Netscape and Yahoo. “Our goal is to have the best site in North America,” says van Stolk. “We constantly work to improve it. It’s what allows me to communicate with my customers and listen to what they have to say. I don’t care what they’re drinking. I want to know what music they’re listening to, what shoes they’re wearing, what they’re eating, what they’re thinking.”

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The Jones site (www.jonessoda.com), receives 1,000 hits and 400 visits daily. For every two people who visit the site, one leaves a name, address and comment. Site visitors can ask questions, look for labels, talk about a Jones experience or ask ‘Soda Slut’ for life advice. There’s a recipe page, a music page, a place to suggest new flavours or flavour names. Visitors can download free web rings and screen savers or order Jones caps, T-shirts, posters and stickers. In addition, van Stolk’s employees (the company has grown to 28) respond to 1,800 e-mail messages a week.

Jones Soda also has its own lexicon. To buy is ‘To Jones’. To drink is to be a ‘Joneser’. The official ‘AdrenoJones’ sports are rollerblading, surfing, wakeboarding, snowboarding, net-surfing and cross-dressing. Today, Jones is taste-tested by California high school students, and it is the exclusive soda in 45 Ontario high schools. The Jones vocabulary is so entrenched in North American schools that a Spokane principal, evidently forgetting that she was alive in the 60s but that her students were not, called van Stolk to complain that his revival of the ‘60s heroin-addict’s phrase for craving a Jones–‘I’m Jonesing’–encouraged drug use. (van Stolk asked her if her school sold Coke and she hung up on him.)

van Stolk enjoys poking fun at his competition. Although, when he declared that ‘Image Is Nothing, Cash & Sex Are Everything’, he did hear from lawyers representing Coca Cola (which uses a similar, but opposite-meaning, phrase). He didn’t fight back, he just stopped using the phrase. But that only turned the posters and T-shirts bearing the offending phrase into collectors’ items now eagerly sought by members of the dozens of Jones fan clubs.

It should be noted that van Stolk actually believes that image is everything. “Quality is obviously very important, but beverages are all about image. There are four areas which create image–music, fashion, sport and entertainment. If you understand how image is created, you can work within those four areas to keep your brand successful.”

van Stolk has contracted arrangements with the top guys in the snowboarding and skateboarding worlds (there will soon be a new line of labels featuring them) and he has forged an alliance with North America’s third-largest music company, BMG. You’ll find Jones all over BMG’s heavily-visited web site, and Jones was the only soda served at BMG’s Grammy Awards party at Barney’s New York last year.

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For older teens and 20-somethings, Jones is less a beverage than a fashion accessory. So, when Armani launched its younger line–Armani Exchange–for 1998, it took the images from its print campaign, put them on Jones labels and distributed 200,000 bottles around Manhattan. Jones has been involved in promotions with Tommy Hilfiger and Jean Paul Gaultier, and the window-dresser for Macy’s used Jones as the basis of an eight-window fashion display. Jones Soda is also a television regular, appearing on Donny & Marie, Friends, Mad About You, Ally McBeal, Spin City–even Law & Order.

It’s important to note, however, that van Stolk has never approached anyone regarding a promotion. “Entertainment is Corporate America. I can’t play with Corporate America, so I let them play with me. I’ll put Jones in a cool hair salon in LA, some producer will see it and call me. A music industry guy sees Jones in a used book store in New York, he thinks it’s cool and calls. You identify your image zones and make sure you’re there. You’ll get discovered.”

Obviously, although van Stolk looks and sounds like your stereotypical ski bum, the guy is sharp. He knows his industry inside out–where the pit-falls are, how to avoid them.

“In the North American beverage industry, 100 new brands are introduced each year; the failure rate is 99.9%. In 1994, Snapple Iced Tea was on top of the world; in 1995, 438 new iced tea brands were introduced in the US. The flood of me-toos backed up the distribution channels, backed up retail sales, confused consumers and diluted the market. In 1995, Snapple’s sales went from $750 million to $500 million, while its costs stayed the same. So I did what most companies don’t bother to do: I spent the money to copyright my brand and my products. Now, no one can copy me and I won’t get whacked.”

To date, van Stolk has spent $1.5 million on legal fees, all to protect the Jones trademark. No one else can put photographs on soft drink bottles. No one else can rotate their labels. No one can use the name ‘Jones’ or the Jones ‘J’. No one can use any part of the Jones lexicon. Patents have been obtained, or are pending, for a host of other Jones-related items.

1998 was the Jones breakthrough year–sales went from $2.7 million in 1997 to $7 million (which translates to 13 million bottles). Among the reasons for the increase is that van Stolk doggedly worked North America, market by market, increasing the number of distributors selling his product. In 1998, he went from 98 to 105. As of this writing, 125 distributors carry Jones. When Jones has 200 distributors, it will be considered a National Brand.

“In the beverage industry, this distribution increase is considered to be a huge growth curve because distributors don’t have to choose us–they’re inundated by product. But, last year, the image started to kick in and perform. It’s a combination of business planning, timing, hard work and luck but the real key is the constant inter-action with customers–communicating with them, listening to them, responding to what they say. That’s what drives sales.”

van Stolk knows that Jones is not going to be around forever. “Rule Number One is that you never name your company after your brand–look at New York Seltzer. Rule Number Two is that you never fall in love with your brand. A brand has a seven- to ten-year life cycle. When Jones was launched, the Big 5 in the New Age category were Sundance, New York Seltzer, Koala Springs, Clearly Canadian and Snapple. As a category becomes saturated, the lead brand falls. Today’s big seller will one day be forgotten.

“Where companies run into trouble is when they see a product’s sales sliding and start throwing marketing dollars at it. But that’s just forestalling the inevitable. When you see that a product’s time has passed, you have to let it go and be ready with the next one. So Rule Number Three is that you use the power of one brand to launch a new one.” (van Stolk is launching something new in May. It’s absolutely top-secret, but he says that its like has not been seen before.)

Why launch something new when you’re riding high? Because you have to hit the wave before it starts to crest–not once it’s crested. (Wherefore Fruitopia?) van Stolk is right not to care what his customers are drinking–when he says he wants to know what they’re wearing and thinking, it’s market research. If he can see where they’re going and predict what they’re going to want, he can have their product out there, waiting for them to realize that they want it.

Urban Juice & Soda is a publicly-traded company on the Vancouver Stock Exchange, about which van Stolk says: “It has its pros and cons. If I had to do it again, I wouldn’t–I’d go the venture capital route.” On the other hand, Urban Juice & Soda was the first VSE-listed company to make the cover of Inc. Magazine.

van Stolk has received an inordinate amount of press. From CBS News, CNN, CTV, the Wall Street Journal, the New York Times, the Los Angeles Times, the Houston Chronicle and magazines such as Warp, Entrepreneurial Edge, Entrepreneur, Brandweek, Periscope and People. Maclean’s Magazine named him one of the Top 100 Canadians To Watch, NBC’s News Today placed him on its list of ‘Who & What Will be Hot in 1998’. In May, he is the Keynote Speaker at The Beverage Forum, a prestigious, invitation-only conference hosted by Beverage World Magazine where, with his shaved head and in his neon orange jumpsuit, he will tell the CEOs of Coca Cola, Pepsi and Budweiser all about Life with the Jonesers– perhaps, at the same time, holding up one of his ‘Kick Your Coke Habit’ posters.

This kind of attention is obviously much more effective than straight advertising would be. Still, van Stolk does have plans to go the orthodox route–one day.

“We will not be good clients–we’re difficult, spontaneous. A PR or advertising agency would go crazy trying to get us to do things in the traditional way. Our whole strategy has been to make people aware of us in a positive light–but letting them discover us. Because if we did the traditional PR or advertising thing and told people about ourselves, they’d get skeptical and cynical and the game would change. But, as the brand matures, we’re going to need advertising. In two years, we’ll have the grounding process complete and will be ready for traditional marketing.

“Meanwhile, I know that Jones has been successful. I know it because I know that people love my soda–because they tell us they do and because we sell more every day than we did the day before. And we’ve managed to stick to the Jones Mission Statement, which is: Sell Soda, Make Money, Make a Difference, Have Fun.”

Blitz Magazine, March 1999

 

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