About three and a half years ago, two young men from California's dusty Central Valley started delivering a new, low-alcohol beverage to local liquor stores in a 1953 GMC truck. Today, their lightly carbonated, tangy concoction of cheap white wine and fruit juices, called California Cooler, is distributed in 49 states and has become a shining star in the wine industry.
In this short time, California Cooler Inc. has developed into the state's fourth-largest wine shipper, with 1984 sales through August totaling $72 million, according to Jon A. Fredrikson, a San Francisco wine-industry consultant, who calls the company "the Apple Computer of the wine industry." And California Cooler pioneers Michael Crete and Stuart Bewley, both 31, think they have only begun to tap the market of consumers who are ready for something different than wine, beer, or soft drinks.
The drink may not suit everyone's taste. The lemon-lime, grapefruit, and pineapple-flavored drink has all the oenological complexity of Ripple. But all-natural California Cooler is a winner with Americans who like their beverages cold, sweet, and, presumably, healthy. Retailers and beverage analysts say it tastes far better than the 40-odd cooler clones that have sprung up.
Taste alone, however, has not been the secret to California Cooler's success. Crete and Bewley didn't even invent the drink. Homemade coolers have been around for years -- so long that Crete's parents called them "Okie cocktails," a reference to the poor migrant workers of the Depression. Crete created his first batch of cooler at a beach party during his college days in the early 1970s, and for years he made up small batches just for parties. He finally gave in to friends' suggestions and decided to offer the potion for sale, scraping together $5,000 and teaming up with Bewley, an old high school chum, to get the company going. The marketing strategy they worked out -- perhaps the crucial element in California Cooler's success -- was to package the drink like beer and sell it through beer distributors.
Although other pop-wine drinks, such as Boone's Farm Apple Wine, had appeared before, they were always packaged and distributed like wine.But California Cooler, sold in a 12-ounce green bottle and sheathed at the neck with gold foil, is a dead ringer for an imported beer. It is aimed not at the snobbish market of wine-sippers, but at the broader market of beer and soda gulpers. Crete, who had been a wholesale beer and wine salesman, decided that beer distributors could provide the means to reach that mass market. By selling through beer distributors that call on every outlet from mom-and-pop stores and bait shops to Safeway Stores, California Cooler was presented to a universe of parched throats that no other wine product, save the ubiquitous Gallo, could fine.
"This is a thirst-quencher you consume just like a soft drink, versus something you swirl with a steak or lobster," says Crete, sitting in his office adjoining the company's stainless-steel storage tanks in a Stockton, Calif., industrial park. Crete and his partner make no attempt to veil their disdain for the aura of snootiness surrounding the wine industry. "We don't want any of this 'gold medal, silver medal, we will sell no cooler before its time' stuff," snorts Bewley.
Besides providing access to the mass market, beer distributors offered the young company several other advantages over wine wholesalers.Beer salesmen carry fewer items, for example, so a new brand like California Cooler was less apt to get lost in a blizzard of competing labels.
Moreover, Crete and Bewley felt strongly that the cooler would often be an impulse buy, particularly in the summer heat. That meant it had to be well stocked in retailers' refrigerated sections, a beer route salesman's home turf. And, finally, they thought the beer salesmen had more in common with the retailers to whom they wanted to pitch the product.
"A beer route salesman is a down-home good ol' boy," explains Crete, who once sold Coors beer. "They're very good at relating, and that's very important."
California Cooler's founders showed that they could be good ol' boy salesmen, too. After selling just 700 cases in five months off the GMC truck in 1982, Crete used his beer contacts early to sound out Adolph Coors Co. distributors in the San Francisco Bay area.
While passing out taste samples, he and Bewley talked up the California Cooler's solid, if short-lived, sales history, especially a spurt of 10-case-a-week sales to each of the company's accounts during the 100-degree summer days in Central Valley. They also told the beer distributors that their product's classy packaging would help support retail prices -- and hefty distributor markups -- in line with those for imported beer. This was a powerful lure to the wholesalers since profits on domestic brews, their mainstay, were withering in the heat of the market-share war among major breweries.
Crete stressed California Cooler's simplicity. "It is packaged just like beer, it can be warehoused and handled on the trucks just like beer," he says. "There was nothing they had to do differently." Still, they got quite a few turndowns, Bewley recalls. Wholesalers wanted to know about advertising support and production capacity, two subjects to which the partners had given little thought. They quickly learned to promise point-of-sale displays and to talk about their plans to expand their bottling capabilities.
One of the first distributors they signed up was in the Napa Valley, California's premier wine-making region. "To be in Napa Valley and carry a wine that doesn't have a Napa label is kind of ridiculous," says Clark Miller, a former defensive end for the San Francisco '49ers who is now a Coors wholesaler in the Napa Valley. "But I liked the product for being all-natural and [having] no additives or preservatives, and I liked [the company]."
Miller also liked the aura of an imported beer conveyed by California Cooler's packaging. "This was the time the super premium beers were super popular," he recalls, "and this tied in with that image." But he had reservations about whether the product would sell, so he ordered only 150 cases in May 1982 and put them into just 40 accounts.
It took nearly a year, he recalls, before California Cooler sales really rocketed. Here again, though, Crete and Bewley's decision to use beer distributors paid off. Beore long, Miller and a few other distributors in northern California were spreading the word about their hot new product throughout the tightly knit network of Coors distributors. "When they get something that works," says Bewley with a satisfied smile, "they call their buddies." Soon, California Cooler had penetrated major southern California markets; by spring 1983, it was in Texas and Arizona. Now it is available through 500 beer distributors in every state but Oklahoma, where state liquor laws keep it out.
That national distribution has become particularly important in light of the way competitors are plunging into the market. So far, California Cooler is thought to control about two-thirds of the market. According to Crete, half the company's competitors, including some established wineries, are using beer distributors. Heublein Inc. introduced a cooler about a year ago, and Joseph E. Seagram & Sons introduced its own version last fall. There is even talk that three major brewers have plans for citrus-flavored coolers made with beer instead of wine.
What has drawn that competition is the heady pace of California Cooler's sales increases: From a paltry 700 cases in 1981 to 80,000 in 1982, sales grew to 6.7 million in the first eight months of 1984.
Most of that growth has come from expansion into new markets. But even in California, sales for the first eight months of 1984 were up 136%, according to analyst Fredrikson. "It just continues to grow and grow for us," said Michael Haarstad, merchandising manager for Liquor Barn stores, a Safeway Stores Inc. unit that operates in California and Arizona. "Coolers are a natural to tap the person who doesn't drink wine, from construction workers to housewives."
That natural connection, bolstered by their beer-distributor network, has paid off for Crete and Bewley. Until 1984, when the company budgeted some $9 million for television, radio, and print ads, California Cooler barely got around to advertising.