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Over There

Beverage maker bypassed the problems of U.S. expansion by marketing overseas.

When your sales are blocked at home, foreign markets may be the answer

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Santa Fe lives up to billing.

The sky is clear, the natives friendly, and the town gorgeous. Everything -- including the Woolworth's in the heart of the city -- is done in pinks and flesh tones with contrasting dark blue or brown trim.

No, there's no doubt that Santa Fe is a wonderful place to be -- unless, of course, you're trying to sell a mass-market product. The problem is, there's no mass to market to. The town -- including all the writers, artists, and leftover flower children who call it home -- has only 55,980 people. And with a population of some 1.5 million, New Mexico ranks 37th nationally -- great if you like open spaces; awful if you're trying to sell all-natural juices and sodas, as Richard Becker is.

Becker, 36, is president of Blue Sky Natural Beverage Co. The $1.8-million company was started by his brother-in-law, Robert Black -- a former California meat processor who came to Santa Fe to study at one of the town's massage schools -- and Becker's sister, Marla, a therapist, who is very fond of natural products.

Upon moving to Santa Fe in 1980, Marla was surprised to learn there was no fresh juice to be found anywhere in town. Could we, she suggested to Black, provide some?

And so Blue Sky was born. The juices were a hit, and the natural sodas, which were added later, fared even better.

But today -- nine years after the Blacks began squeezing juice by hand and delivering it in ice-laden coolers -- Blue Sky has captured just about all the sales there are to be had in "The Land of Enchantment."

The solution, of course, is to sell elsewhere. Obvious? Yes. Simple? No.

There's a reason words like "battle" and "war" are used to describe the $40-billion soda-pop industry. If you choose to enter the fray, you never know where the next shot will come from. Not only do you have the established armies of Coke and Pepsi doing everything in their power to fend off new combatants, but you also must worry about the retailers. Slotting fees -- basically a charge for renting supermarket shelf space -- have become commonplace.

It takes an awful lot of money to expand beyond your home base, and, says Becker, "we just don't have it."

But Becker, an attorney by training, has figured out a solution. He's bypassing all the problems that an aggressive U.S. expansion would cause by going overseas -- specifically to Japan. Starting from a tiny base, foreign sales are up twentyfold in three years, and, says Becker: "I can see this being a very significant, if not the most significant, part of our business in the future."

It's an interesting marketing strategy. Most people see exporting as a way to increase volume. And Blue Sky does, too. Last year shipments to Japan accounted for 10% of sales. But for Blue Sky, going international is also a way to hedge its bets.

With more and more natural sodas, sparkling waters, and flavored waters -- many of them produced by huge beverage companies -- entering the U.S. market, Becker sees going international as a possible escape route. If things get too intense here, he can focus over there.

There are other benefits, too. Foreign sales generate good press. And there's the Back to the Future aspect of all this. While all-natural everything has become virtually pass here, it's still a relatively new idea in Japan.

"In a funny way, selling overseas lets us turn back time," says Becker. "It's too late to apply what we've learned over the past 10 years to the market opportunities that were available in the United States in 1981. But it's not too late to do that in Japan. When it comes to no artificial anything, it's 1981 over there."

All this seems very well thought out -- now. It wasn't in the beginning. In fact, Blue Sky had never given international sales a thought, until the state planted the idea.

Every other year, the Western U.S. Agricultural Trade Association takes a booth at the Anuga Trade Show in Cologne. The man on the other end of the phone back in early 1985 was wondering if Blue Sky would object if the New Mexico Department of Agriculture delegation took a couple of six-packs with it to the upcoming show?

Well, no, came the response. Let us know what they think.

"They like it," state reps reported back, "especially the Japanese. Why don't you think about attending Foodex, the huge food trade show later this year in Japan? We'll give you space in our booth."

Becker went, poured what seemed like thousands of gallons of samples, and came back with a connection that led to an order for 1,000 cases. That was no big deal. Still, it was fun to tell people you were selling overseas. Says Becker: "We thought of it as a hobby."

When sales passed 5,000 cases -- or about 3% of total revenues -- two years later, Becker started reevaluating that hobby. All of a sudden, he had a reason to.

For one thing, Blue Sky had come close to saturating the New Mexico market. And despite the company's attempts at national distribution, in-state sales still accounted for more than 40% of revenues.