Beverage Industry

Case Study:

June 1, 2004

Case Study:

Fuze Beverage, Holiday Stationstores form healthy partnership
by Laurie Russo
In today's consolidation-heavy environment, it's not often that a relatively small, independent marketer gets the chance to waltz into a major c-store chain — and waltz out with equally major cooler space. Yet that's exactly what New Jersey's Fuze Beverage managed to achieve with Holiday Stationstores.
The Bloomington, Minn.-based retail chain, which boasts close to 400 stores (301 corporate, 91 franchise) in 12 states in the Midwest, Northwest, and now Alaska, liked what it saw of the healthy refreshment line, and took a chance. Holiday's Director of Direct Store Distribution and Franchise Marketing, Larry Mitchell, says, “It's a unique product — it's not a me-too. It's what we call ‘healthy-for-you.’ Customers are looking for healthy alternatives, and in convenience stores, there are usually not too many. This product created one.”
Fuze's colorful bottles contain 11 “Healthy Infuzions” of juice blends and teas, all loaded with vitamins, minerals and polyphenols, and separated by function into lines such as Refresh, Energize, Essentials and Slenderize. Two new varieties, Strawberry Melon (Slenderize) and Strawberry Guava (Refresh), are slated for the summer.
Mitchell's instincts told him to give Fuze four facings in 2003. Fuze Vice President of Marketing Jeff Powers recalls, “After the first year with no promotions, we found ourselves in one of the top positions of volume-per-facing for all of the new items, yet due to the Pepsi and Coke contracts, we were restricted by the percentage of the vault they controlled.”
With that in mind, Fuze considered itself fortunate that Mitchell had given over the four facings. But the best was yet to come.
“After the brand's success in 2003, [Holiday’s] new planogram was completed for 2004, and we had more than doubled our space to a full shelf in most, and a shelf and a half in the larger stores,” says Powers. Fuze, “the little beverage that could”, was now set to occupy nine facings in Holiday stores.
“We were doing well in Holiday stores. Fuze had already proved itself on its own merit, with no price promotions, so we decided to put a little oomph behind it by doubling the shelf space and implementing promotions," continues Powers. “Larry gave us prime position and agreed to promote our brand in key months to drive more sampling of the product.”
Sampling is always a bit easier when the product itself draws customer attention. “The packaging is outstanding, and it really stands out in the coolers. That alone sells product for us,” enthuses Mitchell. “So we've given Fuze very good positioning within the cold vault, and we're going to allow them to develop a special channel strip.”
Fuze is busy developing a die-cut shelf strip, which will give it the opportunity to use Holiday shelves to educate its consumers on the health benefits of drinking Fuze.
Holiday does not allow vendor point-of-sale materials without authorization. “Typically we have what we call a sales builder that we put in every cooler door, highlighting several brands. But now we're putting a Fuze-specific sheet highlighting that one brand for that month on a promotion, and that is unique for us,” Mitchell says.
Two 2004 Fuze promotions, implemented and executed by Mitchell, his assistant Cheryl Ackerman, and Fuze’s Todd Gibson, have stood out in both sales and POS innovation for the chain. One features a two-for-$2 price promotion (Fuze normally sells for around $1.29); the other, a new entry called “Fuel Up & Slim Down,” is a cross-promotion that takes advantage of the low-carb diet trend. Holiday has created a new low-carb sandwich, and the tie-in gives customers who buy it a 50-cent discount on any Fuze product.
The promotions have taken off. “The last four weeks [April-May] combined we have sold 50 percent of our 2003 product sales in the Holiday chain,” says Powers. “And one week in mid-May was our largest so far in the chain, selling more than 1,500 cases.”
The keys to the success of the Fuze/Holiday program? “Keeping the product in stock and monitoring the sales," says Mitchell. “We went through some growing pains like anything else, but we stuck with it and it worked.”
Instinct, he says, is one thing, but follow-up is crucial. “We ran the numbers. We scan in all our stores, so I watched the numbers, made sure we were doing what we needed to do. We got our days of supply requirements and our profit per SKU and all that. We continued to follow up to make sure those goals were met, and that's how we went from four to nine facings.”
Mitchell stresses that follow-up is essential to eliminating out-of-stocks because they kill sales. “When we keep up on service with Fuze and its distributors, we minimize out-of-stocks.”
So marketers, beware — sales are not the be-all and end-all. The popularity and sales of the product are only half the equation in a successful program. “The product can fly off the shelves,” warns Mitchell, “but if you leave the chain with out-of-stocks, you're not going to make it.”