Seven months after launching The Switch, the mood at the Richmond-based juice company is still effervescent.
Don't let the superhero illustration on his business card fool you. Or his delight at driving the company's colorful Land Rover. Or the playful design of The Switch's label, which is printed with the company's distinctive logo, a fierce-faced little bubble.
Bill Hargis is no eager kid fresh out of school, aiming to suddenly make it big in the juice world. He's a 38-year-old business expert who's worked for Lipton, Guinness and Miller Brewing Co. He knows exactly how tough it is to break into a competitive market where a single swipe of the Coca-Cola polar bear's paw could pop the Switch's bubble.
Yet Hargis' enthusiasm for the drink he helped launch in June is unabated. And that, coupled with tireless promoting and some hometown cheerleading, means The Switch is on the rise.
"Everything we've done, people told us we couldn't do," Hargis says starting with the basic challenge of adding fizz to 100-percent juice. One company had experimented with the concept decades ago, he says, but failed to pasteurize the juice. The effort was abandoned when bacterial growth caused bottles to explode.
But two years ago the man who later became Hargis' partner, Mike Gilbert, discovered a simple process for carbonating juice (he later patented it). Gilbert tried to pitch the idea to Richmond investors, but didn't convince them, Hargis says. That's when Hargis heard about Gilbert's efforts and introduced himself.
The two joined forces and found investors, including Johnny Johnson, owner of the Community Pride chain; Jim and Scott Ukrop of Ukrop's Super Markets; and Mark Warner now Virginia's governor-elect. Hargis declines to disclose how much capital it took to launch the company.
Now, Gilbert has become "Mr. Inside," the one in charge of production and accounting. Hargis is "Mr. Outside," roaming Richmond and now, the mid-Atlantic finding distributors for The Switch's five fruit flavors. Hargis, who used his contacts from the beer industry to get started, has since established ties with grocery- and health-food-store chains. Altogether, Hargis says, it's "a healthy, happy, fun, thirsty market."
The drink is now sold by thousands of vendors in Virginia, Maryland, Pennsylvania, a few New England states and West Virginia. A few weeks ago, crates of Switch arrived in Connecticut, Hargis says proudly. And he is negotiating with vendors in the coveted Boston and California markets, where he expects The Switch to emerge in January.
But, Hargis says, he'll never forget it all started at home. The first vendor of The Switch was Ukrop's, where Hargis says the drink now boasts a 4 percent market share of single-serve beverages, averaged over the past three months.
No, it doesn't sound like a lot. But, Hargis points out, that's out of 332 other single-serve beverages on the market.
"For a new product, that's pretty substantial," says Scott Ukrop, who's on the board of directors for The Switch Beverage Co. His personal favorite is the grapefruit-citrus. "Once you try it, you're kinda hooked."
At Ukrop's, 65 percent of customers repeat their purchase, Hargis says, according to data from the store's consumer-tracking valued customer cards. That's a favorable sign, according to John Sicher, editor of the trade journal Beverage Digest.
"In general," Sicher says, "in the beverage industry, one important indicator of success is a high repeat-purchase rate." It's far easier to get consumers to try a new drink once than to get them to come back and buy it by the caseload, Sicher explains.
Hargis is confident that more customers will. "It's what's inside the product that makes people repeat," Hargis says.
In other words: 100 percent fruit juice (fruit concentrate and sparkling water), natural flavor and color and ascorbic acid (vitamin C). "True to the Core " is the catchphrase printed on the label.
Hargis scoffs at brands that proclaim themselves wholesome yet deliver elixirs of artificial flavors and sugar. Especially irksome are the two Nantucket Nectars founders, who announce "We're the juice guys" in their TV commercials. "Well, what the hell am I if they're the juice guys?" says Hargis.
Well, he's definitely the underdog, and one with few colleagues in the independent-drink-maker world. While it looks as though there are dozens of independent drink companies, Hargis says, almost every one actually belongs to a huge corporation.
Nantucket Nectars? Part of Ocean Spray, which may soon be swallowed by Coca-Cola. SoBe? Pepsi's got it. Mad River teas and drinks? Coca-Cola again.
Those companies' muscle gives them the advantage in everything from advertising to product placement, Hargis says. Companies such as Coca-Cola and PepsiCo Inc. pay convenience stores for prominent shelf space in refrigerated cases, Hargis says paying some chains and individual stores as much as $5,000 to $10,000 per flavor. Start-ups like The Switch are often relegated to bottom racks, if they're sold at all.
But Hargis and Gilbert lucked out when local 7-Eleven regional managers agreed to give The Switch a chance, free of charge.
With Richmond businesses large and small selling The Switch, the only local disappointment has been the inability to sell or even give free samples of the drink at Virginia Commonwealth University, Hargis says. VCU's exclusive contract with Pepsi prohibits it.
Hargis admits somewhat sheepishly that the drink is manufactured in Pennsylvania; he says no factory in Virginia has the necessary equipment. But everything else comes out of Richmond. "Man, I just want to be an all-Virginia-everything company," he says.
But gaining a following in other regions will mean life or death for The Switch. Sicher estimates that at least several hundred efforts to create new drinks are launched each year. Most fail.
But success is possible, Sicher says, though its definition depends on a company's individual vision. "Do the owners want to build a business and make it a life's work, or do they want to build a business, sell it and reap the financial gains?"
Hargis admits The Switch might eventually consider an offer from one of those monster beverage companies, but for now, he and Gilbert want to do it themselves.
"I've never had more fun in my entire life," Hargis says.
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