Forward Flavor Thinking

September 1, 2006
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Forward Flavor Thinking
By ELIZABETH FUHRMAN
Cheerwine's Cherry Different' approach keeps the southern icon growing.
Cheerwine’s 89 years as a brand provides Carolina Beverage Corp., Salisbury, N.C., with many choices of what it wants the brand to be. Brand recognition offers consumer loyalty, but also allows a brand to reinvent itself to reengage old consumers and entice new audiences. Carolina Beverage enacted exactly this kind of reinvigorating relaunch.
“Cheerwine is this real refreshing, change-of-pace, gotta-have-one just-to-get-this-unique-flavor brand that people have a really big loyalty to,” says Mark Ritchie, Carolina Beverage president. “That’s really what has sustained us for nearly 90 years.”
This year the company redesigned its packaging for the first time in more than 10 years to include cherries, part of Cheerwine’s signature flavor, and add a seal that reads “The Original Since 1917.” In the ever-growing category of cherry-flavored soft drinks, this was Cheerwine’s effort to stake a claim as the original cherry-flavored soda.
“The whole industry is turning away from just colas to flavors,” says Cliff Ritchie, president of operations and Mark’s brother. “The only brands that are growing in carbonated soft drinks are flavors.”
Cheerwine’s dominate flavor, wild cherry, is blended with other flavors to create a rich, bold, complex flavor that is coupled with a sparkling effervesce, Mark says.
“Explaining the flavor is a challenge because it is so unique,” he says. “Cheerwine’s authenticity and unduplication, combined with its flavor profile, make it a true ‘high concept’ brand rather than a category redundant brand. The best way to describe Cheerwine is that it tastes like Cheerwine.”
The soft drink does not foam like a root beer or cola; it sparkles, the brothers say. “It’s got carbonation, but it’s not foam, so it doesn’t give you the heavy feeling that many foaming drinks do when you drink right out of the can or bottle,” Mark explains. “That has led to our success and our high index in cold bottle sales.”
Cheerwine is finding success overall. Available in 12-ounce cans, 20-ounce and 2-liter bottles, and glass bottles, Cheerwine has been up 11 percent, 16 percent, 6 percent for the past three years, respectively. This year sales are currently enjoying a 6 percent increase, and the company is on pace to see a 10 percent increase by the end of the year.
Growth in the large, three-company dominated soft drink category, which is flat to negative, is not easy. Carolina Beverage meets the challenge by focusing on the value Cheerwine can bring to its distributors, such as the strength of Cheerwine’s branding, its unique flavor, and its aggressive funding and competitive cost to give distributors bottom-line impact, Mark says. Carolina Beverage looks for distributors who will partner with it, commit to its programs and fill consumer demand.
“Finding and creating that partnership and commitment that we need around the brand sums up that we are a long-term minded company,” Mark says. “It is a very big industry with some big brands, and getting our share of voice to keep some attention around the product is the biggest challenge we have. What we have found in our value story is when that attention is applied, the brand responds very well.”
Southern favorite
The dark burgundy drink’s new “Cherry Different” marketing campaign certainly matches the company’s mentality. As one of the oldest continuously family-managed soft drink brands in the United States, Carolina Beverage strives to keep that reign running and growing.
The Ritchie’s great-grandfather Lewis D. Peeler became a local bottler of Mint Cola in 1913 as well as an investor in the Mint Cola Co. of Salisbury, spawned by a syrup cpmpany in Kentucky. As the local bottler, Peeler ended up becoming the general manager of the local syrup company too. When the Kentucky parent company went bankrupt during World War I, Peeler decided to create a new beverage. One of the problems during World War I was a sugar shortage, and Peeler combated the challenge with a wild cherry flavoring that possessed a natural sweetness. He blended the wild cherry with several other ingredients to create a new product with a distinct red color and sparkling effervescence. “It’s where the ‘Cheer’ part of the name came from,” Mark says. The “wine” part of the name evolved from the beverage’s dark burgundy red color and a trend at the time to name products by what they looked like.
Cheerwine was created in 1917, and by 1924 the southern icon had become popular enough for the company’s name to be changed to Cheerwine Bottling Co. Peeler died in 1931 and his son and the current owners’ grandfather, Clifford Peeler, managed the company from 1931 until 1992, when he turned the presidency of the bottling company over to Cliff, who entered the business in 1976. Mark took over leadership of Carolina Beverage Corp., the syrup arm of the business, in 1992. Both Cheerwine Bottling Co. and Carolina Beverage Corp. are wholly owned by descendents of Peeler.
Cheerwine Bottling Co. originally bottled in Salisbury but then moved filling to a 150,000-square-foot bottling facility with an additional 300,000 square feet of warehouse space in Charlotte in 1991 under the Independent Beverage Corp. name. The bottling company, which Cliff manages, now includes 10 warehouses in both Carolinas and Georgia.
In addition to the Cheerwine brand, the bottling company is the franchise owner for a number of Cadbury brands, including 7 UP, Canada Dry, A&W and Sunkist. Independent Beverage Corp. bottles these brands and other contracted brands, which are distributed through the Carolinas, Georgia and Virginia.
New consumer targeting
Carolina Beverage is focusing on growing Cheerwine in its current distribution area and in new areas.
“In our heartland, people have consumed Cheerwine from cradle to grave,” Mark says. “It’s a high-share brand right here. As we move to new territories, we realize that we need to be very efficient and try to identify the most likely new consumer and focus our marketing efforts around that.”
Until this point, marketing has been directed just to the mass market. Now the company is focusing on two key consumer types in two different ways.
“We’re marketing to people who are more interested in flavors, who are a little bit more adventuresome; people who are a little bit tired of more mundane soft drinks,” says Tom Barbitta, vice president of marketing. “We’re trying to get to know flavor seekers in a big way.”
Because it wants to reach flavor seekers and the fact that the company wants to be identifiable to new consumers in the expanding list of beverages into the cherry-flavored category, Cheerwine updated its packaging in April. The new look incorporates cherries into the logo, which have been missing since Cheerwine’s original packaging.
“We definitely returned to our roots of incorporating cherries into the logo again to define the cherry flavor,” Mark says.
As the company expands beyond its own region, it has seen the need to define the Cheerwine flavor for flavor seekers.  “Cheerwine is not simply another cherry soda — the flavor is very unique, Barbitta says. “As a result of other entries coming into the cherry segment, Cheerwine benefits as awareness of the segment grows. It’s a popular flavor category. There is a lot of momentum around cherry, so we really felt safe in defining Cheerwine as a cherry soft drink although it is a one-of-a-kind cherry soft drink. Our advertising is all about being ‘Cherry Different.’”
At the same time the company updated its graphics, it also updated its Web site as part of its plan to attract new consumers and to target another consumer group: 18 to 24 year old males. Along with the Web site, Cheerwine began two marketing campaigns, each involving the Web site, to create an all-encompassing marketing experience on multiple fronts, which the company calls “Cheerwine 360.”
The first program the company conducted this summer was called “Random Acts of Sampling.” Cheerwine recruited college students to roam the Carolinas in a Cheerwine-decorated van and offer free, cold Cheerwine soft drinks wherever they found thirsty consumers.
“This sampling was about engaging consumers on their terms,” Barbitta says. “A consumer would be at the lake, a park or beach, when they were really needing a cold drink but weren’t expecting one at the moment. That was really Cheerwine’s opportunity to engage them.”
The young people the company hired for the sampling also reported a blog on the Web site. Knowing the personality of the brand, the young adults wrote about their tour, posted photos and posted hints of where they might be going next.
“This was our attempt to create a true granular/unmarketing program,” Barbitta explains. “We purposely created this program around engagement rather than overt marketing.”
Another promotion Cheerwine conducted with the use of its Web site was Backstage VIP, a free music give-away. Since the company updated its graphics to be more contemporary, it sought a marketing campaign that was as relevant as its new graphics. Consumers buying Cheerwine could go online and enter a code from under the cap or inside a 12-pack box and try and win a free song from featured musicians. The promotion’s prize package included travel to a concert and a backstage pass for one consumer a quarter. The promotion also gave away free CDs and autographed guitars, and one in 10 consumers won a song.
Along with these promotions, Cheerwine’s new Web site features a page called Idea Central. When consumers write in, the message gets sent to Barbitta. Consumers write about Cheerwine, about the blog or about what they may have seen during the summer.
“It gives us a chance to stay really close to our consumers and reply to each one of them,” he says. “It’s another advantage of our size.”
The biggest complaint — or compliment — the company receives on its Web site is that consumers can’t find Cheerwine where they live now.
“We are certainly seeking to partner with distributors so we can meet that demand for people who are wanting to get it,” Mark says. “It is a challenge to find the right partner who is willing to do the grassroots sampling and get people introduced to the unique taste.”
Cheerwine’s highest volume is in the Carolinas and surrounding region. Although Cheerwine is in parts of 23 states now, it can be a challenge to find it easily in some of those regions. “It is a matter of working with our distributors to partner in ways to improve that and build mass,” Mark says.
Deliberate expansion
Carolina Beverage increased distribution in the Carolinas in the mid ‘90s when it acquired several of its distributors to create its own bottling group. It consolidated independent businesses throughout a large part of the Carolinas, Georgia and Virginia.
“We felt that it was very important to us to be able to manage our own backyard,” Cliff says. “We control our sales force and focus it on Cheerwine. We don’t have to depend on someone else.”
The Ritchies think of their companies as a three-legged stool, with each leg important to the success of Cheerwine. “We are a brand,” Mark explains. “We are a manufacturing company with our plant in Charlotte, and we’re also a distribution company that not only distributes our brand, but the brands of other companies. With this, there is a real solid business proposition for long-term growth of the brand.”
For the brand, Cheerwine so far this year has been far outpacing the soft drink category. “We are growing this year in an industry that is currently still seeing negative numbers,” Mark says.
Diet Cheerwine switched sweeteners to be sweetened with Splenda in 2000, a move the company believes has helped contribute to the diet version’s growth. The company attributes Cheerwine’s overall growth to the momentum around cherry flavors for the past five years, and its investments into the brand to keep Cheerwine fresh.
“We think of it as 90 years young, not 90 years old, and we operate as entrepreneurially as we can,” Mark says. “We try never to get stale and to always think we’re in start-up mode.”
For the distribution leg of the stool, the company’s investments in operations have helped to build Cheerwine in the Carolinas and the surrounding region. Because Cheerwine is the company’s lead brand in more than half of its geography, Carolina Beverage Corp. has perks that other brands of its size don’t have. For instance, its fleet operation is Cheerwine identified, as are its vending identification, coolers and menu boards and it has distribution in fast-service restaurants. Cheerwine’s marketing promotions, television and radio ads, and other programs are possible because the drink is a leading brand in the region, but still would not be possible without ownership of its distribution system in the area, Mark says.
The fact that the manufacturing leg supplies distributors within a 300-mile radius makes it convenient for the company to get Cheerwine on a shipment that may be full of other products that an independent distributor is getting from the manufacturing plant.
“That helps Cheerwine grow because we’ve made it convenient for these distributors to get it in their area for a reasonable price,” Mark says. “Cheerwine is very competitively priced from a supply standpoint.”
In terms of expanding distribution geography, last year, Cheerwine entered into a distributor partnership in the Upper Midwest with the bottling co-op WisPak Inc., which is licensed by the Pepsi-Cola Co. to produce its brands. With just 15 months in the region, Carolina Beverage is focused on helping its Midwest partners develop Cheerwine demand. Cheerwine backed the launch of its 12-pack cans and 20-ounce regular and diet versions with radio commercials, truck signage and sampling, including having the Cheerwine van in the area to conduct Random Acts of Sampling.
“With those partners that have participated in our programs and done that grassroots efforts, we have seen some very good success,” Mark says.
The other area that Carolina Beverage is committed to is its traditional partners in the Southeast where Cheerwine continues to grow. “It isn’t all about new geography,” Mark says. “We’re growing right here in our heartland, and we’re certainly very focused on Virginia and Georgia, which are the neighboring states that are working with us.”
Cheerwine currently has 37 distributor partners, including its own system. Covering a geography of 35 million people, Cheerwine is in more than 20,000 accounts, which doesn’t always mean in a highly visible way. “It’s our challenge to get into a higher share of those accounts and increase visibility,” Mark says.
“We say that Cheerwine can be successful anywhere in the United States,” he continues. “It doesn’t have one particular demographic. It is as broad as any brand in the marketplace. As a small company, we have to be very focused on how we grow.”
In the next three to five year plan, Carolina Beverage has some very aggressive commitments and an overall mission to double its business, Mark says. With the new packaging, new “Cherry Different” positioning and new geography, “We’re going to work real hard to bring that to life,” he says.

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