CONCEPT: Transform a beverage distributor into a beverage-brand creator
PROJECTIONS: $10 million in sales in 1997, $21 million in 1998
COMPETITIVE ADVANTAGES: Ten years of distribution experience; experience with shoestring budgets
HURDLES: Catching the beverage fashion wave at a lower cost than anyone else
The CEO
NAME: Peter van Stolk
AGE: 33
FAMILY: Married, one daughter
PERSONAL FUNDS INVESTED: From van Stolk, $30,000; from other senior managers, $63,000
EQUITY HELD: 15%
SALARY: $37,000
PREVIOUS JOBS: Beverage distributor, ski instructor, marketing director for ski shop
*projected
| Financials |
1995 |
1996* |
1997* |
1998* |
| Sales |
$3,268,000 |
$2,500,000 |
$10,444,000 |
$20,740,000 |
| Gross profit |
$490,000 |
$402,000 |
$3,407,000 |
$6,844,000 |
| Operating expenses |
$1,584,000 |
$2,074,000 |
$2,590,000 |
$5,185,000 |
| Net profit (loss) |
($1,094,000) |
($1,672,000) |
$817,000 |
$1,659,000 |
Feedback: What the Experts Say
Is van Stolk wacky?
Many think so, and they find heretical his suggestion that brand equity isn't always sustainable. "Most smart companies try to build a brand as though it will be around forever," says Jim Mullen, president of Mullen Advertising, in Wenham, Mass. To Mullen, brands that are vital and living retain their value. "Tide has been around for 75 years," he says. "The actual contents have changed innumerable times, but the name has always meant cleaning power." Marc Johnson, president of Mad River Traders, in Stowe, Vt., agrees that it is possible to sustain a good idea, even in the highly fickle New Age beverage category. "It's not that it can't be done," he says. "It's just that no one has done it so far." Continual product and marketing innovation is the key, says John Blair of John Blair & Associates, a marketing consulting firm in Chicago. "And if you can't sustain it," he adds, "how promising was the idea in the first place?" "Enthusiasm and dedication are vital to launching a brand," says Russell Hopkins, president of the Beverage Network, a distribution consultancy in Skokie, Ill. "If word gets out that these are flashes in the pan, distributors won't put their resources behind them," he says.
Can van Stolk market successfully on a shoestring?
"Creating pull on a bootstrap basis is nearly impossible," says Jack Trout of Trout & Partners, a marketing-strategy firm in Greenwich, Conn. Without the proper resources, he says, even the best ideas won't get off the ground. And even if Jones becomes a hit, van Stolk will have to pump money into marketing and promotions to keep it going. Johnson concedes that "his packaging and imagery are terrific. From that he'll get people to try his product. But will they buy it a third and fourth time?" Mullen suggests that van Stolk continue the alternative distribution, invest in promotions, and build a cult following: "Make it important to a small group of people, and they'll make it important to a larger group."
Can one person generate a stream of hits?
Only if he's incredibly lucky. "Who's going to have a series of clever ideas in a seriously glutted market dominated by Godzilla and King Kong?" asks Trout. Even if 10% of his ideas worked out, van Stolk could consider himself extremely successful. And you're only as hot as your last hit. What happens when one of van Stolk's ideas fizzles? "Two losers back-to-back and you're out of business," Trout says.
If he builds them, will anyone come?
It's possible. Trout thinks an independent beverage-product-development company isn't a bad idea, especially since Coke and Pepsi don't seem to be very good at developing products themselves. "These guys are approached with a lot of ideas," Trout says. "For something to catch their interest, it would have to be dazzling." To increase the appeal to potential buyers, Blair says, van Stolk has to build a brand of choice for a select group of consumers and show that there would be cost efficiencies and upside potential for the buyer. "What can they do with the brand that van Stolk can't?" he says. "That's how you get the premium price."
Resources
For more information on building a brand, check out the " The New You," by Max Carey Jr. (August 1991). Carey stresses the importance of developing brand identity, whether you run a product-based or a service-based company. For some historical context and interesting case histories, try Managing Brand Equity, by David Aaker (Free Press, 800-223-2336, 1991, $29.95). It's a bit on the dry side, but it gives a good overview of brand management. For a somewhat less academic take, there's the classic Positioning: The Battle for Your Mind, by Jack Trout and Al Ries (Warner Books, 800-222-6747, 1981, $5.99). Eminently readable, if not downright breezy, this is one of those rare business books that's actually fun to read.
BEVERAGE NETWORK, Russell Hopkins, 4437 Concord Ln., Skokie, IL 60076; 847-673-4614 48
JOHN BLAIR & ASSOCIATES, John Blair, 100 E. Walton, Chicago, IL 60611; 312-587-8887 48
MAD RIVER TRADERS, Marc Johnson, P.O. Box 567, Stowe, VT 05672; 203-661-4105 48
MULLEN ADVERTISING, Jim Mullen, 36 Essex St., Wenham, MA 01984; 508-468-1155 48
TROUT & PARTNERS, Jack Trout, 2 Pickwick Plaza, Greenwich, CT 06830; 203-622-4312 48
URBAN JUICE & SODA, Peter van Stolk, 2055 Boundary Rd., Vancouver, B.C., Canada V5M 3Z1; 604-654-6050 48
