A New England Tradition

March 1, 2007
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A New England Tradition
By JENNIFER ZEGLER

Polar Beverages marks its 125th anniversary with a look back - and forward
When pro sports teams get ready for a big game, the local politicos often agree to a friendly wager over the game. At stake is not money or team pride per se, but the area’s best known culinary exports.
This year, in the case of the New England Patriots’ loss to the Indianapolis Colts in the NFL AFC championship game, Massachusetts Lieutenant Governor Tim Murray paid the Hoosier state in Polar Ginger Ale.
Though not as nationally well-known as clam chowder or Boston baked beans, Polar Ginger Ale is a New England tradition. The beverage dates back nearly a century as one of the premier offerings when Polar Beverages was founded in 1882. This year, the Worcester, Mass.-based company marks its 125th anniversary and celebrates the iconic Ginger Ale that is now one of hundreds of products in the Polar portfolio.
As one of the largest independent soft drink bottlers in the nation, Polar runs a complex business that includes more than 15 partner brands and multiple private label accounts. In addition, the company owns the Polar brand of soft drinks, seltzers and mixers, as well as Adirondack soft drinks and Polar Spring Water. As the company celebrates this milestone, it continues to grow, making new partnerships as well as extending its portfolio and distribution network every day.
Regional heritage
For more than a century, the Crowley family has owned and operated Polar Beverages. The family has grown the business, and at the same time, remained loyal to its Worcester roots. Ralph D. Crowley Jr., president and chief executive officer, and Christopher J. Crowley, executive vice president and treasurer, are the fourth generation to run the company.
Polar Beverages began as a liquor and seltzer business in Mass-achusetts. The great-grandfather of the current owners, Dennis M. Crowley, purchased the business in 1916. At that time, the company imported mineral water and bottled seltzer water and ginger ale. Following an acquisition of a local water company, bottled water accounted for a large percentage of the business and included the use of a spring in Spencer, Mass.
“We still own the spring in Spencer that our great-grandfather purchased at the turn of the century, and our grandfather was president of the water company,” Ralph explains. “The city water at that time was not very good, so they would bottle the water in Spencer and bring it to the city on horse-drawn carriages.”
The high-quality spring water led to an expansion of beverages from its flagship Pale Dry Ginger Ale and helped the company transition out of the alcohol business.
“Our great-grandfather put together a terrific company until Prohibition dealt the company a financial blow,” Ralph says. “By the end of Prohibition, they focused on the soft drink and water business; and slowly the alcohol business seemed to go away.”
Ralph explains Prohibition caused the business to shrink, and it remained relatively small until the third generation of the family, which included Ralph and Chris’ father and uncles, built a new plant in 1969. Ralph Sr., Edward, Denis and James Crowley consolidated Polar’s operations in 1968 into its current plant in Worcester.
“At the time they were probably selling 300,000 to 400,000 cases a year, which can be a day’s worth of production now; and they built this plant,” Ralph says. “In the late 1960s and early 1970s, Polar was only sold in Worcester and the surrounding bedroom towns. The primary business was private label and a small amount of Polar. They were able to land the A&P and Hood private label accounts, and that was the catalyst to build a modern plant.”  
Polar’s strong relationships with supermarkets led to the growth of the Polar brand beyond Ginger Ale and Orange Dry. Polar expanded the brand into soft drinks, seltzers and mixers. In the late 1980s the company began to look outside its proprietary brand and private label base.
“We looked around in the ‘90s and Polar was growing like a weed, but we realized we needed to broaden our portfolio,” Ralph continues. “Starting when our [generation] took over the company, we have doubled the size of the company every three years, helped by completing more than 20 acquisitions.”
The company added 7 UP, Sunkist and A&W from Cadbury Schweppes Americas Beverages; and in 1996, Polar Beverages acquired longtime competitor Adirondack Beverages, Scotia, N.Y. Along with Adirondack, Waist Watcher, Clear ‘N’ Natural brands and private label accounts, the acquisition included a 600,000-square-foot production facility. This provided much needed production space, which was at a premium by that time in its Worcester plant.
The space squeeze also led to the company’s search for a new headquarters. Despite many offers from neighboring states, Polar Beverages opted to renovate an old plastics plant in Worcester for its new headquarters.
“It’s been difficult to expand here,” Ralph says. “We were being enticed by other states with tax incentives, labor incentives and very inexpensive electricity, but it was hard to say to our loyal employees, who helped us achieve the success we enjoy today, ‘Thanks, but with our growth we can no longer afford to stay in Worcester.’”
Not only is the Crowley family dedicated to its Worcester-based workforce, it also is dedicated to the community in which it has been a member for more than a century. The brothers are on many boards, and the company offers its support to many charities and events in Massachusetts.
“It’s such a great community and we’re fortunate to be here,” Chris says. “Our father really set the legacy [of involvement] with his brothers.”
Most recently, the company has continued acquisitions and brand partnerships. In 1999, Polar Beverages acquired Venture Distributing, a leading New Age distributor in the Boston marketplace with brands such as Nantucket Nectars and Arizona. The company formed Northeast Retailer Brands LLC with Cott Corp. in 2001. The company then acquired Snapple of Boston in 2004, which brought Snapple, Glaceau’s Vitaminwater and Hansen’s Monster Energy brands to the company portfolio.
Complexity is key
Despite its more than 20 acquisitions in the past decade, the company continues to expand its business model as well as distribution area.
“We tried to build a business model that was so complex that the competition couldn’t break us,” Ralph says. “Our product mix is so diverse that we’re not reliant on any one segment of our business to make a living.”
Polar Beverages maintains relationships with each of the three major soft drink companies through various brands.
“It’s an efficient business now,” Ralph says. “If you look at the business model, we have the national brands segment, so the primary partner there is Cadbury. Those franchises include Sunkist, A&W, 7 UP, RC and Diet Rite. We’re the franchise bottler for [Coca-Cola’s] Seagram’s mixers in the Northeast. Interestingly, we have a relationship now with Pepsi because we’re the Izze distributor, and for the time being, Gatorade.”
Add the company’s proprietary brands into the mix and the product lineup is as varied as a beverage aisle. These multiple partnerships extend the company into markets beyond its home in New England. Not all of the brands in Polar’s portfolio are available everywhere in its territory, which spans Massachusetts, New York, Connecticut, Vermont, New Hampshire, Maine and Rhode Island. Some of its products, including Waist Watcher, a calorie-free soft drink sweetened with sucralose and acesulfame potassium, are available outside New England in Ohio, Pennsylvania, North Carolina, South Carolina and Florida.
Integral parts of the New England tradition Polar has created in its 125 years in business are its proprietary brands. Polar has grown Adirondack since acquiring the company in 1996 to revenue in the $100 million range. The Adirondack plant in Scotia, produces 50 million cases of Adirondack’s flavors, spring water, seltzers, sparkling water, Clear ‘N’ Natural and Waist Watcher brands.
As for its Polar brand, it boasts a dedicated regional following. Ralph explains that Polar seltzers are among the top 30 items sold in New England supermarkets.
“In New England, people are much more traditional about their consumption habits,” he says. “If you’re a retailer entering this marketplace and you don’t have Polar, consumers take notice of that. There is a litany of brands that the consumer here expects. We make the top 30 items in the supermarket. Polar’s growth continues to outpace the industry. Unfortun-ately CSD’s are declining. Luckily, we’ve been in double-digit growth for brand Polar for a very long time.”
Until the early 1990s the stars of the Polar brand were Ginger Ale and Orange Dry, which is a popular juice-added orange soft drink.
“We have some very unique products,” Chris says. “Orange Dry is basically orange juice, orange oil and carbonated water. In typical orange soda there are 56 ingredients. Orange Dry is a very simple, but very expensive product.”
Today the Polar lineup includes 49 flavors, seltzers, mixers, diet options, Cape Cod Dry sodas and spring water. Crafted for the New England taste, the offerings include Cream Soda, Raspberry Lime and Birch Beer. Each variety sports a loyal – and even local – fan base. Ralph explains that while Polar carries a higher price point than Coke and Pepsi, specific flavors have regional pull. In Rhode Island, Birch Beer takes up multiple facings in the supermarket in contrast to Gardner, Mass., where Strawberry is a favorite.
“We’re the company with a selection of flavors,” Ralph says. “We don’t try to take Birch Beer and sell it in Gardner and we don’t try to take Strawberry and sell it in Rhode Island. In this age, with as much consolidation as there has been in the supermarkets, people feel stronger about their individual taste than they ever have before and they want what they want.”
And the Polar brand continues to give customers what they want with new flavor introductions, including a Pomegranate Dry and a Blueberry flavor. Ruby Red Grapefruit soda will launch soon, and other trendy flavors are in the works. Polar’s internal innovation team as well as an outside advisory group generates new flavor and product ideas and has come up with more new product ideas for this anniversary year.  
“We have three pretty exciting new product lines for launch in 2007,” Ralph explains. “There’s Polar Classic and a couple others we’ll have to keep under our hat until mid-summer. They’re very exciting.”
Polar Classic is a commemorative line created to be part of the company’s anniversary celebration. Packaged in longneck retro-style glass bottles, the line includes historic Polar memorabilia on the labels. Both nostalgic and upscale, Polar Classic will be available in Root Beer, Diet Root Beer, Vanilla Cream, Orange Cream and Black Cherry.
Polar partnerships
The proprietary lineup is just one facet of Polar’s business, as it also has partnerships with Cadbury Schweppes and Cott as well as the bottling and distribution rights for Seagram’s for Coca-Cola and the distribution rights for Izze for Pepsi-Cola.
“We’ve figured out that if you’re the world’s tallest midget, you have to have big friends,” Ralph jokes. “So we’ve worked hard to keep good working relationships with our partners like Cadbury, Cott and our New Age brands. Let’s face it, despite the growth we’ve gone through, we’re still a relatively small company. In the scheme of things, there aren’t that many independent companies like ours, so having big friends is OK.”
The company’s partnership with Cott Corp. extended its private label reach in the region. Polar manufactures a majority of the private label products for retail supermarkets in its distribution territory. Ralph explains the private label business is more cyclical than the national brand business.
“Private label sales have cycles; the last time it took it on the chin was late 1990s when Coke and Pepsi were in a price war, and we were down 15 percent. We bounced back the next year,” he says.
The company also is active in the niches of CSDs in some territories, including the rights to Moxie.
“We say from Maine to Florida, but it’s really Maine and Florida,” says Gerald E. Martin, vice president of marketing and sales for immediate consumption brands. “It’s been a great brand for us that has a loyal base, and many consumers consider it an acquired taste.”
Polar also recognized the shift toward functional beverages in the late 1990s. This new market is an important area of expansion for the company.
“I think we’re going through a sea change now that we’re probably not going to return from,” Ralph says. “The consumer is definitely looking for functional beverages, and I think that’s going to be a permanent change to the industry.”
Following its success with Vitaminwater, the company continues to look into the latest New Age products with recent deals with HyDrive, a spring water-based energy drink by Inov8 Beverage Co., Rye, N.Y., and O Beverages LLC, the maker of fruit-flavored waters based in Cambridge, Mass.
Expansion plan
Though the Polar portfolio is vast, the company is not ready to settle.
“Our goal is to remain the largest independent and gradually expand,” Ralph states. “We want to outgrow the industry. We have good strategic relationships with our retail partners and the consumers, and hopefully we’re going to continue to meet their preferences.”
From his post as head of immediate consumption, Martin continually hears pitches from up and coming brands as possible additions to the company. Contenders have to meet a variety of criteria in order to join Polar’s lineup, including manufacturing options, geographic territory and marketing support.
“We try to be fair with everyone, listen to everyone’s pitch because you never know what the next Vitaminwater or Snapple is going to be,” he says.
In addition to new partner brands, the Crowley family has big plans for its proprietary brands.
“We want to expand our own brands,” Ralph says. “Several Florida retailers have taken us in. Food Lion has also authorized us. A lot of retailers like what we do, so we’re plugging away at that.”
With 125 years under its belt, there’s no stopping Polar, or the Crowley family, now.
At a glance
Polar Beverages Inc.
2006 sales: More than $275 million
Years in business:125
Distribution area: Mainly in New England and Upstate New York and in limited territories in Ohio, Pennsylvania, North Carolina, South Carolina and Florida.
Bottling facilities: 2
Cases produced annually: 100 million cases
Total facilities: More than 1 million square feet between the two facilities in Worcester, Mass., and Scotia, N.Y.
Distribution facilities: 6
Employees: 1,260
Changing with the times
The changes that have taken place during Polar Beverages’ 125 years in business would be too many to list, but the beverage industry – especially soft drinks – has seen major changes and the evolving industry landscape is a concern. In addition to the New England region’s bottle bills and escalating raw material prices, the fingerpointing over childhood and adult obesity issues is a focus. Ralph Crowley Jr., Polar’s president and chief executive officer, recently finished his tenure as the head of the American Beverage Association, which brought him to the forefront of the industry on such issues.
“First of all, it was a real honor to have the opportunity to chair the ABA,” Ralph says. “It was a pretty transitional time for the industry. I think we accomplished a whole lot as an organization during my term. Perhaps all the controversy and fighting obesity finally got us to work much more closely together, more than we had in the past.”
During his tenure, the ABA reached an agreement with the American Heart Association, the Clinton Foundation and Arkansas Governor Michael Huckabee on child obesity. The agreement with the Alliance for a Healthier Generation is intended to educate children on calorie consumption as well as exercise. In addition, the ABA previously agreed to a new school policy on beverage options, which included limiting full-calorie soft drinks to 50 percent of options in high schools. Beverage options in schools also are turning toward more low-calorie beverages, such as Izze sparkling juices and bottled waters.

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