In 1947, six employees in a wooden World War II Army hangar in Mississippi began distributing Canada Dry products. Today, that small operation has grown into a three-generation, family-run PepsiCo Inc. franchise with 328 SKUs. Gulfport, Miss.-based Allen Beverages Inc. has weathered hurricanes and more to become one of the South’s leading distributors of Pepsi and Plano, Texas-based Dr Pepper Snapple Group (DPS) products.
“It was founded in August of 1947 by my dad, Cleve Allen Jr., an attorney who purchased the facility on 47th Street from the city of Gulfport for $1. There were six employees and an old surplus World War II Army truck,” explains Drew Allen, president and chief executive officer, who assumed leadership of the company in 1991, shortly before his father’s death.
“About a week after my dad came into the beverage business, the 1947 hurricane hit, and he lost about half of his business,” Drew Allen says.
With resilience and a commitment to customer service, Cleve Allen Jr. slowly built the business back up, adding Nesbitt Orange in 1948, followed by a few other flavors. But the company’s big breakthrough came in 1955 when it added Purchase, N.Y.-based PepsiCo products, Drew Allen notes.
“Harry England, a neighboring Nesbitt bottler over in New Orleans, called my dad and said, ‘Jim Mango is in my office right now, and he wants me to have a Pepsi franchise for south Louisiana. He wants to talk to you about the Gulf Coast,’” Drew Allen explains. “…So Mr. Mango came over and talked to my dad, who said ‘First off, I want to tell you, I’m not a rich person. I don’t have a lot of money,’ and Mr. Mango said, ‘Well, I think you’ll like what I’m getting ready to tell you. You could move the production operation over to your facility in Gulfport. We have some vending machines out at Kessler Field, which was an Air Force base. And we’ll put those on an open-end note, and you can pay those off whenever. If you want, we’ll give you the franchise.’ So that’s how we got into the Pepsi business.”
From that unexpected gift, other Pepsi brands were added to the warehouse, including Diet Pepsi and Mountain Dew in the ‘60s, and the purchase of 7UP from a Coca-Cola bottler in 1991, which the company stopped distributing in the late 1990s when Pepsi released Sierra Mist, Drew Allen notes.
With a rich history and strong resiliency, Allen Beverages has emerged as an exemplary bottler in the South. This, as well as its dedication to its community and the products it distributes, is why Allen Beverages Inc. has been named Beverage Industry’s Bottler of the Year.
Growing market share
Nearly 70 years later, Allen Beverages has grown from six employees and one truck to 80 employees and more than 25 trucks, including 16 side-loaders, four bulk trucks, several tractor/trailer rigs and dozens of support vehicles, including presale vans and pickup trucks, Drew Allen notes.
From a 40,000-square-foot warehouse on 11 acres of land, the company distributes an average of 165,000 cases monthly, or 1.79 million cases annually, of carbonated soft drinks (CSDs), juices, bottled water, and ready-to-drink (RTD) coffees and teas throughout Mississippi’s six southernmost counties — Pearl River, Hancock, Stone, Harrison, George and Jackson — which cover 100 miles from state line to state line, Drew Allen says.
To ensure its products are delivered efficiently, Allen Beverages has 11 bulk routes that service Wal-Mart, Sam’s Club and other large-format stores; 10 presale routes that use side-load trucks to service small-format stores, including dollar stores, gas stations and convenience stores, and schools; and four (with a fifth to be added) full-service routes to ensure 3,000 vending machines are stocked, Drew Allen says.
With a rich portfolio, the company’s SKUs include Pepsi, Diet Pepsi, Mountain Dew, Mug Root Beer, Sierra Mist, Lipton Tea, Aquafina Water and Starbucks RTD coffees. From the DPS portfolio, the company also distributes Sunkist, Canada Dry and Hawaiian Punch products.
Allen Beverages also has a partnership with Watertown, Wis.-based Wis-Pak, a manufacturer and distributor of PepsiCo and other leading soft drink brands with manufacturing facilities in Watertown and La Crosse, Wis.; Mankato, Minn.; Norfolk, Neb.; Quincy, Ill.; Dyersburg, Tenn.; Hattiesburg, Miss.; and Flagstaff, Ariz.
“Wis-Pak has a production facility with us and Brown Bottling out of Jackson, and they helped fund our production facility in Hattiesburg, Miss., which is 70 miles north of us,” explains Andrew Allen, assistant general manager.
According to Andrew Allen, partnering with Wis-Pak gives Allen Beverages more leverage in the market because Wis-Pak has a research and development (R&D) department. “It’s brands like Hogwash, which is a kid’s squeeze-top, 10-ounce drink, that competes with [The Coca-Cola Co.’s] Tum-E Yummies,” he says. “We carry Doc360 for Pepsi distributors that do not carry the Dr Pepper franchise, but it gives you a product in that category to compete, to help fill a void for the customer.
“We carry Wis-Pak’s Vita Ice, a vitamin-enriched, zero-calorie sparkling water, as well as übr, a pH-enhanced electrolyte water,” he continues.
Allen Beverages’ Top 5 brands are Mountain Dew, Pepsi, Aquafina, Diet Mountain Dew and Diet Pepsi. Andrew Allen notes that Mountain Dew Kickstart has been a good innovation as well.
“Anything that Mountain Dew comes out with will sell in our area. It’s a winner,” Andrew Allen notes. “Kickstart is a hybrid cola with 10 percent juice that people buy in the morning to ‘kickstart’ their day. Two years ago, PepsiCo came out with night-time beverages in black cherry and lime-aid, and they’ve expanded it on the hydration side with coconut water.”
Andrew Allen also notes that Mountain Dew Kickstart is expected to roll-out three new flavors in 2016: Watermelon, Grape and Blood Orange. “The cost of goods (COG) are good with this brand, allowing us to have a fair play in margin.”
Another brand that has shown recent growth for Allen Beverages is DPS’ Canada Dry Ginger Ale. “…Our Canada Dry Ginger Ale is growing every month because people are starting to look at it not as a soft drink, but as a healthy-for-you beverage because it’s made with real ginger,” Andrew Allen explains. “It doesn’t have as much sugar in it, but it still tastes good. It’s kind of ironic because it was the first beverage we started distributing in the 1940s.”
Although soft drink sales are declining or flat in most of the United States, Allen Beverage’s General Manager Andre Davis notes that its beverage sales are up approximately 3 percent this year. “We’re at 17 months of growth and volume over the last two years,” he says. “We’re growing our market share and taking it from our competition. We’re very proud of that fact.”
Under the tutelage of the Allen family and their hard-working team, Allen Beverages has grown its business by 12 percent between 2010 and 2015, according to Brett Hollifield, franchise development senior manager, south region, for PepsiCo North America Beverages (PNAB). The company distributed 1,466,000 cases in 2010, 1,477,100 cases in 2013 and is on track to distribute 1,641,800 cases by the end of 2015, Hollifield says. “They have grown the business by 14.1 percent over the past two years (2014-2015), and have increased their Per Caps by +10.5 over the past
52 weeks,” he says.
Andrew Allen notes that PepsiCo’s participation in national programs, such as being the official soft drink of the NFL, has “given us a big stick to go out in the market and sell.”
“Football, even college football, is huge in the South,” Andrew Allen says. “So if we approach a store manager and say we want to build an NFL display and have it be up through the whole season, they are pretty apt to give it to [us] because it’s the NFL — a multi-billion dollar brand.”
Allen Beverages’ success also is influenced at the local level because of its employees. “Our employees want to grow the business,” Drew Allen says. “They don’t want this to simply be a 9-to-5 job. They work as long as it takes to make it happen.”
‘Best of the best’
Recently, the company was awarded the 2014 Donald M. Kendall Bottler of the Year award from the PNAB for its commitment to execution, relationship-building and community involvement.
Drew Allen and his team — including son, Andrew Allen; daughter, Grace Allen, receptionist; nephew, Wesley Batson, a vending manager; and sister, Christie Batson, who works part-time logging vending machine locations — were delighted when they learned they were one of the three finalists.
“Wow, man, we’re nominated for something that I didn’t think we’d ever get,” Drew Allen says. “The duo of Andrew and Andre, who joined the team in 2010, as well our middle management team and all of our employees, have done an extraordinary job, and I’m very proud of them.”
The award was presented in September 2015 during a recognition ceremony at the PNAB national bottler meeting by Kendall, former chairman and chief executive officer of PepsiCo; current PNAB Chief Executive Officer Al Carey; and Mario Mercurio, senior vice president and general manager of PNAB’s Franchise Business Unit.
“Pepsi’s independent-bottling partners are extraordinary businesspeople,” Mercurio said in a statement. “No one franchise has performed more remarkably in the past year than Drew and his Allen Beverages team. They bring a high-share mentality and expertise to a comparatively small market, providing outstanding customer service while giving back generously to their community.”
Drew Allen says his dad always prided himself on giving back to the community — something he has instilled in his family and organization. “We ring bells for the Salvation Army, and give a great deal of product and money to support worthy causes,” Drew Allen says. “As Bottler of the Year, PepsiCo gives $5,000 to the charity of our choice. We selected Feed My Sheep, which serves 1,500 meals a day in Gulfport.”
Allen Beverages’ generous nature and entrepreneurial spirit are nothing new for the bottler. When Hurricane Katrina hit the Gulf Coast in August 2005, the team at Allen Beverages barely missed a beat, despite the fact that the roof was blown off of the facility’s 10,000-square-foot expansion.
“It took the entire roof off the new part, but we were lucky we hadn’t taken down the end-wall and could distribute out of the old section,” Drew Allen says. “The storm came in on a Monday and we delivered our first products to Wal-Mart in D’lberville, Miss., on Wednesday. We were able to get going within a day.”
In recognition of Allen Beverages’ perseverance and dedication, Wal-Mart named the company their Direct Store Delivery (DSD) Vendor of the Year in 2005. Due to the thousands of volunteers who converged on Gulfport to help in its rebuilding efforts, sales of single-serve 20-ounce Pepsi products in vending machines, gas stations and convenience stores grew by one-third in two consecutive years, Drew Allen notes.
The company also is making sure that future generations will thrive in a competitive beverage marketplace. As a member of the Next Generation Bottling Group, Andrew Allen and blood relatives within their respective independent PepsiCo bottling companies are poised to assume leadership of their family-run operations someday.
Andrew Allen says he’s learned firsthand the importance of building relationships from his dad and by studying all facets of the business from the ground up. “Regardless of what department you work in, this business is a relationship business,” he says. “We have guys who have been in this business for 30 years, who have developed relationships with people, who have moved up in their business.
“….Now that guy is a district manager, and the relationship we established with our customers moves on,” he continues. “So, whenever [we] have to get something in their stores, as far as displays, it makes selling them on our products, our brands — Pepsi — that much easier because [we] have a relationship with them. They know that [we’re] going to treat them right. They know [we’re] going to stock their shelves properly; everything is going to be topnotch, professional and executed to the best of our ability.”
Locally owned, local innovations
Andrew Beverages has thousands of vending machines throughout southern Mississippi. “[Single-serve sales are the] lifeblood of beverage distributors,” Drew Allen notes. “It’s where a lot of profit is made for a company.”
As the coast’s only locally owned and operated soft drink distributor, Allen Beverages provides full-service vending and fountain products to restaurants, businesses, schools and casinos in Biloxi, Miss. It also offers presale bulk merchandise delivery, services 3,000 vending machines; 40 large-format stores, like Wal-Mart and independents like Froogels; small-format stores, like Dollar General; independent gas stations; small mom-and-pop stores; and restaurants, including Little Caesar’s and Pizza Hut.
“For example, we have 13 different Wal-Marts in our area, three neighborhood markets and 10 Supercenters…and we have 37 people out in the market — five pre-sellers, 10 route guys, five full-service drivers, 11 merchandisers, four supervisors and two area managers — all working to leverage the Pepsi brand, packaging and promotions,” Andrew Allen says. “Our strategy involves separating each channel — bulk, large-format, foodservice, etc. — with a different manager and supervisor managing each channel.”
Creating co-branded signage also is a viable way of building lasting relationships, Andrew Allen notes. Allen Beverages’ Roland printer helps the company create custom point-of-purchase (POP) signage for its customers. “If a gas station wants a sign with his name on it, we’re able to create it.” We’re the only [PepsiCo] distributor in Mississippi with neighborhood markets, the smaller boxed stores competing with other grocery chains and dollar stores,” he explains. “A customer had a 30-foot cold vault beer area that they wanted signage for. We created a custom sign that ran all the way across the top. It turned out really cool.”
Allen Beverages’ relatively small market enables it to focus on its customer service and efforts to grow market share through innovation. For example, although Biloxi, Miss., is the second largest city in Allen Beverages’ footprint, the distributor was challenged when it tried to get its products into Biloxi schools — until Andrew Allen designed a custom-label water bottle.
“Wis-Pak has a custom logo for their water, and the superintendent loved that idea,” Andrew Allen explains. “I incorporated the Biloxi Indians’ logo on 20-ounce bottles of water that they sell in vending machines in six schools and at football games.
“We also go into the Biloxi market and sell cases at convenience stores,” he continues. “We had to gain incremental space for it since we can’t take away the Aquafina space, but a dollar is donated back to the Biloxi school district for every case that sells. It’s a win-win for everyone.”
Bottled water is a winning beverage, according to Andrew Allen, who notes that case sales generated 45-50 percent growth in 2015. The bottler also is experiencing strong performance from the sports drink and RTD coffee categories. “Gatorade is growing 5 to 10 percent a year, and all [of] our Starbucks’ Frappuccino brands are up, too,” he says.
Keeping tabs on market trends and staying flexible is important in the beverage business, according to Davis. “We have to manage more than 300 SKUs, and we can see that increasing to 400 SKUs in the next three to five years,” he notes.
“We usually keep 12 varieties of the energy drink Rockstar, and we’ll rotate them out with the lowest volume ones and replace them,” Davis adds. “They send us two to four different flavors [every] year, and we taste them and rotate them through so we always have new products. Consumers have short attention spans and want new beverages to try.”
To keep track of the growing number of SKUs and orders, the pre-sellers and merchandisers of small-format and large-format stores use a T-Com, a handheld system that enables them to enter, save and send orders through a cell tower directly to Allen Beverages’ computers.
“Once the order is received, we print the order out and if our day crew has time, they will pre-build those trucks for bulk delivery of a lot of product going to one specific large-format store,” Andrew Allen explains. “These guys are usually here ready to go by 4 a.m., and our route trucks leave by 6 a.m.”
As consumers continue to push away from CSDs because of better-for-you beverage trends, Drew Allen predicts that the company’s non-carbonated offerings — bottled water, RTD teas and coffee — will continue to gain market share.
“CSDs are starting to become a treat,” Andrew Allen says. “Luckily the brands our consumers are steering toward are still teas and waters. We have the best tea on the planet, Lipton tea, and we have Starbucks.”
To keep pace with the planned addition of 75 SKUs, Drew Allen anticipates adding an additional 20,000 square feet to the warehouse in the next three to five years. “We’ve got the land to grow here,” he says. “PepsiCo has a knack for growing and coming up with innovative new things to sell.
“We will keep pace,” Drew Allen continues. “We’ve had some home runs from the parent company because PepsiCo’s good-for-you products are growing exponentially. I think we have a great future — we’re going to keep hitting home runs.”