For a second product, van Stolk sought to create a "foundation brand"--a nonsexy perennial product to provide a natural sales base for his company's efforts. Thinking nothing could be more natural than water, he introduced Wazu bottled water simultaneously with Jones in November 1995. His next, already-conceived product awaits the right time for its introduction.
How will van Stolk recognize the right time? He admits that a lot of timing is luck. But he says there are overt signs that an established brand is headed south: when formerly cocky suppliers suddenly start giving distributors free promotional cases or when the market becomes inundated with copycat products. "As a category gets saturated the lead brand falls," he says. Hundreds of clear clones emerged in 1993, followed shortly by the decline of Clearly Canadian. And all those me-too iced teas do not bode well for Snapple or Arizona. "Something is coming," he says. "Whether it's Jones or something else, it's time for the next big thing."
Competitive Edge. By not using the Jones name to launch his subsequent brands, van Stolk concedes, he's sacrificing much of the time and money he's invested in the process of creating Jones. So, for his strategy to work, van Stolk not only has to be able to create a continuing string of winning products but also must create them at a significantly lower cost than competitors can. Which means that van Stolk has to save money in every possible area.
Sales venues that charge slotting fees, such as supermarkets, are definitely out. "I can't play that game right now," he says. "Even if I could pay for the space, I'd have to create the pull, and that takes marketing dollars." So until he can afford the fees for Jones, van Stolk has targeted bagel shops, cappuccino bars, and Chinese restaurants, as well as such nontraditional venues as tattoo parlors, snowboard shops, and navel-piercing establishments--"anywhere Coke and Pepsi won't go or can't go," he says.
Van Stolk has also identified cost efficiencies in his production process. He took a lesson from Clearly Canadian, with its beautiful but expensive blue-glass bottle. "My gross margin today at zero efficiency is better than Clearly Canadian's was at its 1992 peak with revenues of $150 million," he boasts. For Jones Soda, van Stolk selected a standard bottle and an inexpensive paper label. To make those stock materials sexy, he chose vibrant artificial colors for his sodas and contrasted them with artsy black-and-white labels with 101 distinctive photos--from eight balls and stop signs to goatees and pierced navels--which he rotates in an effort to keep them fresh in the consumer's mind.
For marketing and product design, van Stolk also takes a grassroots approach, doing everything in-house or freelance. Design costs for Jones totaled $40,600; for Wazu, $20,000. Bootstrapped though the product was, Wazu's design won six awards from the International Bottled Water Association in 1995. "And that's by spending less than 1% of what Perrier spent on its shrink-wrapped bottle," he crows. The big guys, van Stolk is fond of saying, just don't get it. "Pepsi spent over $30 million on the national launch of Crystal Pepsi," he says. "It lasted six months. Your product has to have soul. You can't buy a soul."
Instead, van Stolk plans to borrow one. He calls it "grounding" the brand, which means associating Jones with things that are already cool to the hip Generation X demographic he's targeting. His efforts range from sponsoring "raves" (all-night dance parties) and midnight in-line-skating parties to getting Jones placed on the sets of the TV shows The X-Files and Spin City and the forthcoming movie Copland. "It's all word of mouth. That's your brand," he says. To encourage word of mouth, van Stolk plans to use on his labels photos that his customers have sent in, and he hopes they'll tell their friends to do the same. "I can't tell you Jones is cool," he says. "You have to hear it from someone you think is cool."
The Payoff. Van Stolk says he'll know he's doing his job right when he starts fielding offers from larger food-and-beverage companies to buy Jones. The precedent is certainly there; Snapple, Mistic, and Koala Springs were all sold to large multinational food-and-beverage companies, and Coke recently purchased Barq's Root Beer. So if Jones is the hit van Stolk expects it to be, there should be plenty of interested buyers to complete his strategic plan.
After product-introduction disasters like OK cola and Crystal Pepsi, Coke and Pepsi "won't be creating more brands," van Stolk argues, "they'll be buying them." And in his case, he says, "they'll be buying my ability to catch the attention of the consumer in a focused market. The cost of acquiring Jones will pale in comparison to launching another Fruitopia." Van Stolk doesn't expect to see any offers until Jones achieves sales of at least $50 million. "Before that," he says, "you're not even a blip on their radar."
The Bottom Line. Experiments have their price. For the past three years Urban Juice has posted a net loss. "We went from being a distribution company with no up-front costs to producing a product," explains van Stolk. "Timing is everything. If I miss the boat, I'm turfed." And the key to that timing is money, so far $3.4 million worth, which came in the form of a public offering. Tiny though Urban Juice & Soda yet may be, it's been publicly traded since May 1993. Van Stolk expects Urban Juice & Soda to see 1996 revenues of $2.5 million. But for 1997, he's projecting sales of 1.1 million cases of Jones and Wazu combined, worth more than $10 million. The key, he says, is signing up 200 distributors, including those in offshore markets, by the end of this month. Jones is currently available in the Northeast and on the West Coast of the United States, as well as in British Columbia.
"If I tank," van Stolk says, "it's not because Jones is wrong, it's because I don't execute it well." And then there's the challenge of creating a whole series of next big things. "The question is," he says, "Am I smart enough to do it?"
Christopher Caggiano is a staff writer at Inc.
Executive Summary
COMPANY: Urban Juice & Soda, in Vancouver, British Columbia, makers of Jones Soda and Wazu bottled water. (UJS on the Vancouver Stock Exchange)
