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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Not Worried, Being Happy: Happy Planet Foods Makes a Splash in the Beverage Business

hp6Blitz Magazine, November 2000

“Wouldn’t it be nice if we could produce and sell the world’s best juice while promoting sustainable farming and environmental responsibility?”

“Actually, we can.”

This, one imagines, is the conversation that took place in 1994, between Randal Ius and Gregor Robertson. The two shared a deep concern for the environment, a passion for food and a knack for sales. And Robertson owned an organic farm. Happy Planet Foods was born; Ius and Robertson started selling carrot juice.

‘Sounds a little out there, but first-year sales hit $400,000. Today, Happy Planet is the fastest-growing company in BC, with 50% annual growth and 1999 sales of $3.5 million. It produces 18 beverages, introduces new flavours each year and is known as the innovator in the super-premium juice and smoothie category. Its products are sold at 550 locations, including Starbucks, Safeway and Save-On Foods, plus just about any store serving the ‘alternative’ market in Vancouver, Victoria, Whistler, Calgary, Edmonton, Toronto, Seattle and San Francisco.

The organic food movement has grown steadily since the ‘60s, fueled by an ever-increasing horror of chemicals and a more health-conscious society. It used to be, though, that organic foods weren’t very appealing. And they commanded no respect. Happy Planet (HP) has changed that, at least in the beverage category.

Most of HP’s products fall under the category of New Age beverages knows as ‘functionals’ or ‘nutraceuticals’, a segment which is growing faster than any food category in North America, and which accounted for $350 million in sales in the US last year.

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Functionals have something useful and/or beneficial added to them—minerals, vitamins, herbs etc. Happy Planet has five such beverages: Extreme Green (passion fruit, green micro-nutrients), Abundant C (strawberry, guava, Vitamin C), Spirulina Soul Food (pineapple, coconut, spirulina), Thinkgo (raspberry, mango, ginkgo biloba) and Dot.calm (papaya, pear, St. John’s Wort).

It then has ‘Organics’, which are beverages certified to contain at least 95% organic ingredients, and which may or may not be functionals. In Happy Planet’s case, they are. There is Green One (mango, plum, green micro-nutrients), Essential Echinacea (guava, strawberry, Echinacea), Power Plant (banana, strawberry, soy protein). These are just general descriptions—if you look at the full ingredient list of Radical Response, it says Apple, Plum, Apricot, Guava, Banana, Grape Seed, BetaCarotine, Citrus Bioflavinoids, Milk Thistle, Chlorophyll, Zinc, Manganese and Selenium.

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Then there are the ‘Naturals’, which are strictly thirst-quenchers and include Lost Lagoon Mango, Sunset Beach Strawberry, Righteous Raspberry, Lemon Made and O Cranada. These are the lowest-priced Happy Planet products; organics are the highest-priced.

“Naturals are the entry-level products,” explains George Noroian, HP’s President & CEO. “But people want organic and they’re prepared to pay for it. And there has been an explosion of interest in functional beverages, so our more expensive products are our biggest sellers. People don’t mind paying more if they’re getting more. Not only do we have functional ingredients but, unlike SoBe or V-8, which have 10% juice and 90% water, we offer the actual fruit—we don’t add any water. Each 16 oz. bottle contains five whole fruits, so one bottle meets Health Canada’s recommended daily intake of fruit and vegetables. Our beverages are heartier and healthier than anything else available.”

What Happy Planet adds to its juice is closely regulated by the Canadian Food Inspection Agency and Health Canada, which set guidelines for what additives are allowable, and at what levels. (Americans are more lax—Odwalla adds far more vitamin C to its products than Health Canada would allow.) As we now know, too much of a good thing can be dangerous, so Happy Planet has to constantly consult with Health Canada, as well as herbalists and naturopaths, and it has a microbiologist on staff. For in-depth information, consumers can find product literature wherever HP juices are sold, and 10,000 people consult HP’s cheerfully uncomplicated web site (www.happyplanet.com) each month.

Happy Planet uses no concentrates, preservatives, additives or genetically-modified organisms. Two-thirds of ingredients come from Canadian farms and all ingredients come from sources known to use fair trade practices. The company claims to not use any paper from old-growth forests and says it gives 10% of its net profits to environmental and humanitarian causes.

But staying with the organic thing proved to be harder than at first thought. “All-organic is not possible due to availability and price,” says  Noroian. “Organic farming is much more expensive. Pesticides cost far less than natural controls and, where in conventional farming you pick a field twice, in organic you have to pick it four or five times. That means more labour and a substantial price differential—organic bananas cost twice as much as conventionally-grown bananas. If all of our products were 100% organic, they’d be out of the acceptable price range.

“So we take a pragmatic approach. As much as possible, we deal directly with farmers to guarantee quality at the most reasonable price. And as our purchasing power and the demand for organic ingredients increases, we transition ingredients to organic—now, all of our plums and mangoes are organic, as are most of our oranges. Between 40% and 60% of our ingredients are organically grown and as the economics work more in our favour, we’re able to make an even better product at an acceptable price.”

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Happy Planet’s production takes place in 13,000 square feet of space on Vancouver’s east side. Bottles are of high-density polyethylene (which is more environmentally-responsible than glass). All apples are BC-grown and processed in Vancouver; other fruits arrive in the form of purees from trusted sources in places like Fiji, Ecuador and Hawaii. As Noroian explains, the logistics can be nightmarish.

“When you’re dealing with organic fruit, the quality changes from year to year. So there’s a much bigger effort involved in sourcing ingredients, and we have to do a lot of taste-testing and keep buffer stocks on hand. We try to maintain consistency, but sometimes we have to change recipes to accommodate changes in ingredients. Consumers notice if there’s a change in quality. They want their juice a certain way and demand consistency. Our on-going challenge is to keep our ingredients within an acceptable specification, to minimize variation in the final product, and to reflect the reality of variability of organic ingredients.”

Distribution is also a challenge. Because these juices have to be kept cold.

“Our products are fast-pasteurized. The process kills the worst bacteria but it doesn’t totally degrade the enzymes and the goodness in the fruit,” says Noroian. “So the juice is still a live product. If it’s allowed to warm up it will begin to ferment after one day.”

The HP juice has a shelf life of 21 days, and much effort goes into making sure it’s kept cold. There are refrigerated Happy Trucks and, if need be, HP will provide retailers with refrigerators. Noroian says it’s worth the cost. “We sell a unique product and no one benefits if it’s not kept cold. Besides, the fridges, because of their size, get prominent store placement. They’re great billboards.”

The Starbucks approach to selling Happy Planet is even better—Starbucks keeps the bottles in ice-filled baskets beside the cash register. On the other hand, the freshness aspect has backfired. Some grocery stores stock it, not with beverages—where people looking for something to drink will gobut in the produce department, alongside the bags of salad.

Noroian notes that the freshness aspect has also retarded expansion somewhat.

“Our current focus is to expand our geographic reach, to where we’re well-established in the 15 main Canadian markets, and more established in California. But because our products have to be kept at a certain temperature and have to be rotated, we have to take a more hands-on approach to distribution. We have people in New York who want to carry our juice, but we aren’t there yet.

“Our growth it also closely tied to demographics. These juices are expensive to make, expensive to buy and are not considered staples. They appeal to a specific type of consumer. So we look carefully at the demographic and psychographic profiles of every location we’re in. It would be problematic to engage a chain like 7-11 when our product is only suitable for certain of its locations. Our experience with Safeway has been very positive because Safeway knows its customers, understands our product and knows where it will and will not sell.”

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Noroian says that HP’s placement in Starbucks two years ago was an important turning point.

“Starbucks is a credible company and its seal of approval gave us credibility. It was excellent from the marketing perspective as well—people saw us in Safeway, then in Starbucks. We already had the neo-hippy, alternative affiliation; Starbucks gave us the mainstream cross-over. Now, our customer base is broader—it’s people with more disposable income, people who are physically-active and health-conscious, families, and everyone who insists on exceptional quality.”

Unfortunately, squeezing out a marketing budget has always been a problem for Happy Planet. “Our products are expensive to make and deliver,” explains Noroian. “There’s not a lot of money left for traditional marketing. So there’s always been an emphasis on the guerrilla element, just to get the juice in people’s faces. We build awareness and maintain our retailer relationships by doing a lot of store sampling, couponing and specials. We run print ads in holistic lifestyle magazines like Shared Vision and trade magazines such as Grocer Today. Will we ever buy billboards? That would be a stretch. For us, the most potent way to market is to spread the word and get other people to spread the word.”

Happy Planet spends about $40,000 a year on advertising. But, believe it or not, the company has eliminated its marketing director position. Instead, it has taken the PR route.

“Our PR firm helps with strategizing and program implementation, developing stories about the company when we do product launches and reaching people who may want to do articles on the juice or health food industry,” explains Noroian. “PR is a relatively inexpensive way of getting exposure. There’s no guarantee that you’re going to get ink, and you have no control over it, but we think you still get more bang for your buck.”

When he joined the company two years ago, HP’s former marketing director, Steve Everitt, found that his first order of business was to revamp the company’s visuals. 

“We had our juices sitting at the Starbucks tills,” he recalls. “If you asked 100 people if they’d seen the juice, they’d say yes. If you asked them what the name of the juice was, few would be able to tell you. The globe logo wasn’t working. So we brought the name off the logo and created a new wordmark. And we simplified the image by choosing popular colour schemes and a clean font as our headline. Also, previously, the materials carried images of all kinds of fruit, and leaves. We changed that to feature individual pieces of fruit. And we saw a great increase in name recognition. The wordmark is much more powerful because of its simplicity, cleanliness and legibility.”

Everitt joined Happy Planet just as Starbucks started carrying the HP line. This began a year of significant growth, when HP juices increasingly turned up in locations more concerned with branding and style. There was no direct competition; sales were increasing weekly. Then, in 1999, SoBe and Snapple’s ‘natural’ brand extensions appeared.

“All of a sudden, we had direct competitors,” says Everitt. “None of them were 100% juice with herbal ingredients—they were vaguely similar, but thinner and cheaper. SoBe, for example, has herbal ingredients but only 10% pure juice. It won on price—it was SoBe’s 20 oz bottle for $2.19 vs. our 12-oz bottle at $2.99. Our sales went up, our retailer numbers rose, but our growth leveled out. Without lots of cash, it’s hard to combat that competition. We had to just stay the course.”

Where Odwalla would spend between 4%-7% on marketing, Happy Planet allocates 1.8%-2.2% of gross revenue. Everitt stretched this budget by gang-printing vast quantities of p.o.p. materials (posters, brochures, shelf talkers, stickers). Product launches were creative and inexpensive—when O Cranada was launched, 150 media members received buckets filled with ice, cranberries, juice and the relevant literature. Dot.calm was launched with images on CD-Rom, literature printed to fit the CD case and juice packed in ice-filled Tupperware containers. The kits looked expensive, but cost only $5 each.

Everitt also maximized exposure by managing an exhaustive contra program. “You always have to make more juice than you could sell; every week, I would end up with anywhere from 500 to 2,000 bottles of juice to work with. So I would give juice to Greenpeace, the David Suzuki Foundation, the Evergreen Foundation. They’d serve the juice at their events and meetings; we’d get space in their publications. In two years, I negotiated 400 contra arrangements with 200,000 bottles of juice given out in exchange for ad and advertorial space. Vancouver’s a prime market for this type of approach. And when you don’t have lots of cash, it’s a great way to get the product into people’s hands.”

While Happy Planet gives generously to food banks, Everitt also worked, or was involved in, 75 events a year—the Children’s Festival, the Folk Festival, the Carnival of Souls etc. “We used any relevant occasion to reach consumers. We’d see a slight increase in sales following these events but the impact of events is hard to measure. People would see us everywhere but whether or not that translated into increased sales is unknown.”

Everitt was able to conduct some focus groups. “The focus groups were very useful—and produced surprising results. It reinforced what we knew; that our primary market was the health-conscious female age 25-39. What was surprising was that we thought our secondary audience was the age group of 40-55. In fact, our second strongest following is males 17-25.”

That became particularly apparent when Happy Planet was confronted by a large adversary in the form of Coca Cola. For obvious reasons, Whistler is one of HP’s biggest markets. Every store carries it and HP sponsors many sporting events there. But last winter, Coca Cola had Happy Planet bounced off the mountain.

“Coca Cola takes a very wide view when considering its competition,” says Everitt. “Some of its executives were up from Atlanta during the snowboard championships, they’d put a lot of money into Intrawest, they saw our fridges on the hill—next day, we were gone. Then they tried to have us removed from the University of British Columbia campus. The students found out, put pressure on the administration and we prevailed.

“That’s one occasion where the philosophy of the company came into play. For the most part, people don’t care about a company. They care about the product. The only time the philosophy comes into play is when consumers are faced with competing products. If the taste and price are equal, they’ll look down the line for reasons to choose and they’ll choose the company that’s committed to positive things. Happy Planet has that in spades. It will hopefully be a long time before the corporate philosophy has to win out again. In the meantime, Happy Planet has to focus on the fact that it’s not selling a company or an idea, it’s selling juice.

“We’d run into trouble trying to sell the fact that HP juice is the best in Canada and part of a healthy lifestyle—while also telling people about the company message of sustainability and commitment to the earth. That company message clouds the marketing message—the consumer wants to know that the product tastes good and is good and is worth the price. We had three or four totally unique types of users. Some were attracted by the health aspect, some by the organic aspect, some by the meal replacement aspect, some by the corporate ethic. It was always difficult to hammer home all the real benefits to everyone.

“I felt that we had the largest growth potential in the mainstream grocery business, considering that the natural food business is 10% of the market in Canada. And if you want to go mainstream, you have to do consumer advertising. And Happy Planet is still a small company with a small marketing budget and distribution covering a large geographic area.”

For his part, Noroian is undaunted. “So far, we’ve been experimenting and developing the brand. Now we’ll focus on more robust growth, availability and new markets. In the more distant future, we’ll expand into products like baby food, nutritional bars, soup. For now, we’re committed to being the best at what we’re doing.”