Up Close With- Hank's Beverage Co.: More than Root Beer
Hank’s first made a name for itself with Hank’s Gourmet Root Beer in 1995. Bill Dunman, founding partner and general manager for Hank’s, entered the beverage business as a non-alcohol beverage distributor in Maryland and met his current partners in Hank’s, who were in the beer distribution business in Philadelphia.
Together they formed a joint partnership in a new non-alcohol beverage distribution business. Although the group did well, Dunman and his partners realized they were missing a key product â€” brown bottled root beer. Both had distributed brown bottle root beers before and understood the potential in the product.
With other brown bottle root beers tied up contractually in the market and a desire to enter into the manufacturing side of the business, Hank’s felt that manufacturing root beer “was a relatively safe foray into the manufacturing side of the business,” Dunman says.
In 1996, Hank’s left the distribution business to focus entirely on beverage manufacturing. That same year, the company launched Diet Root Beer, Black Cherry and Vanilla Cream varieties.
“It gave us four flavors to go out there and really be a factor,” Dunman says. “It created a little position for ourselves and visibility in coolers, and we really considered that to be our starting point.”
Premium portrayalDuring the next few years, Hank’s added more flavors, reaching as many as 10 soda flavors at one point. But retailers only wanted to carry the top five or six flavors, so Hank’s evolved to the six sodas it offers now: Root Beer, Diet Root Beer, Vanilla Cream, Black Cherry, Orange Cream and Birch Beer.
With its original distribution network in Philadelphia, the lineup expanded through the East Coast and grew nationally. Hank’s Beverages now has distribution in 45 states, although the supply is limited in some states.
Root Beer, which holds 41 percent of the sales, is the leading flavor for Hank’s in volume through all accounts in the United States. Black Cherry, Orange Cream and Vanilla Cream have an equal share at close to 15 percent. Diet Root Beer sells well in supermarkets, especially in upscale areas, the company says. Additionally, Birch Beer, a Northeast regional flavor, is gaining popularity in other areas of the country.
The beverages initially launched in a long-neck stock bottle with a pressure-sensitive label.
“About two years ago, we came to the conclusion that we really needed to take the product and try to set it apart from a lot of the competition that was hitting the market,” Dunman says. “In the course of the past 12 years, it’s been a lot of new brands, and a lot of them were using the long-neck bottle that we were using, and the pressure-sensitive label wasn’t as exotic as it used to be.”
Hank’s contacted Saint-Gobain Containers Inc., Muncie, Ind., with the intention of creating a proprietary bottle for its product, and at the same time Dunman started working with Star Label Products, Fairless Hills, Pa., to develop a proprietary label system. It took Hank’s a year and a half to complete the project, and the result was a distinctively shaped 12-ounce brown glass bottle that is embossed with the Hank’s logo. The bottle features three raised oval panels, displaying a new metallic, pewter-looking, embossed body and neck label, and a back clear label presenting the nutrition facts. The embossed labels carry over the tactile feel from the glass bottle.
“We just tried to make the bottle as unique, upscale and premium as we could, because we found that consumers had a perception of quality gourmet products or old fashion-type products,” Dunman says. “They expected them in nostalgic-type bottles with embossing.”
The company’s hard work paid off with consumers following its May 2006 launch. Additionally, Hank’s new glass bottle won a 2007 Clear Choice Award for best Carbonated Beverage from the Glass Packaging Institute.
During the same time that it upgraded the packaging, Hank’s also reformulated its line to use sugar as its sweetener. It launched the new formulation with the new bottle.
“That was a huge move for us,” Dunman says. “...We were concerned about changing the product because people really liked the brand. We were also concerned about the effect that sugar might have on it, but it actually enhanced it.”
New GrowthWhile distribution and sales continue to increase for Hank’s Gourmet Beverages, the company feels more growth will come from line extensions than from adding new flavors, Dunman says. Hank’s recognized that consumers were looking for better-for-you, functional and natural products, and tried to incorporate these features into its new lines.
“What we saw is that brown bottle root beer is a fairly small niche, and there are quite a few really nice competitors out there,” Dunman says. “We decided to get away from that a bit with our line extensions. We didn’t want to go off the board so people didn’t associate the new products with Hank’s brand, but we wanted to go far enough out of the box to hopefully create something a little different, a little unique, and something with some novelty to it.”
For the spring of 2008, Hank’s will release Hank’s Gourmet Infusions, a line of sparkling, all-natural beverages with vitamins, calcium and antioxidants. The drinks, initially developed in Green Apple and Berry flavors, contain natural vitamin C, E, B12 along with calcium derived from skim milk and cream, and EGCG from green tea. The Infusions contain no preservatives, artificial colors or flavors, caffeine, and are low sodium, the company says.
The company is also in the development stages for another better-for-you, all-natural beverage line that will launch later next year.
“I think that one of the important things for us as a company is to create some new products,” Dunman says.
“...By opening up and trying to get into some of these other segments like the all-natural, I think it’s opening a lot of doors for us. It also brings some interest to our company, and hopefully people will recognize that we’re more than just a root beer company and that we are trying to be innovative with new products and work in a direction that we feel consumers are going. We want to be looked at as more of a beverage company than just a root beer company.”