The Exchanges

Q Ok, for a couple of months, I mean, you put this out of your mind, I'm not gonna get into the tea business, Snapple's killing it, we're not gonna do it. What changed?

A I walked into a Seven 11 one morning, which I did every morning, to buy coffee on the way to the office, and they had Gatorade in a 24 ounce can. And I had never seen that before. I knew that 24 ounce can, because we, John and I delivered Schlitz Bowl, was in a 24 ounce can. They were the only brewery using that can. Uh, I buy the can. I take it back to the office. I look on the side. It's Reynolds Metals making it. We call up Reynolds. Reynolds says, you can put tea in that can, because that's what I asked. And I said, now I got the package. This, this, this, this will, this will be 50% larger than a 16 ounce Snapple bottle.

AI assessment note: “I walked into a Seven 11 one morning... they had Gatorade in a 24 ounce can.”

Q by the early eighties, um, things begin to shift because you actually decided to buy the license for, I guess, a failing brewing company. And, and at that time, you and John start to think about launching your own brand, which we'll get to what you started in just a second. But, but I'm wondering why, like, why did you guys want to move from distributing beer to making it?

A Well, cause we lived through a time where we always bought something from a distributor who bought it from the company that made it. Uh, we never bought it from the company directly. If we bought Budweiser or Miller was from a distributor and the distributors had, would have changing views on what they wanted to do. So we'd have, um, a good connection with a guy who sold Budweiser. Then he'd call us one day and says, I can't sell you anymore because and I suppose said, I didn't want us to do that any longer. So we're always on, on the edge about our future. So we thought if we had a brand that we owned, that we can control, it could be something that we wouldn't have the uncertainty that we had buying beer from somebody else and reselling it.

AI assessment note: “if we had a brand that we owned, that we can control”

Q know, again, given that there are unions involved and maybe some unsavory characters involved, like, it's, it's risky, right? I mean, I, Don, I read stories about your time in this business back in the day where, like, You were robbed on at least a hundred occasions. You, you were at some, one point held, held in a closet at gunpoint in your office. What, what happened? What's the story?

A Well, you know, we were a company and a business that dealt a lot in cash because that's how grocery stores paid. And, um, people who worked for us knew that we had a lot of cash coming in, um, and they told their friends about it over a bar or in a restaurant, and then they would come and stick us up. Um, the time where I was held up, I was, I was in our office and I was held up, um, and one of the guys I was with pushed the gun away from his head, then he hit him over the head with the gun, and, um, And I believe I, I kind of cooled the situation down by kind of talking to these bad guys in a very fatherly way. Um, and then when they left, they put us in the closet. Then when they left, I said, why'd you do that? He said, I don't like a gun to my head. And I said, who does? Nobody likes a gun to their head.

AI assessment note: “The time where I was held up, I was, I was in our office”

Q Right, so Schlitz had been doing it, but Gatorade in a can, and you said, wait a minute, we can sell it for the same price? How could you sell it for the same price if you're offering, you know, eight more ounces of, of, of product?

A Well, glass bottles were historically more expensive with a lug cap. They run slower, uh, in the beer business that we knew, uh, you know, we knew the speeds of cans was faster. Uh, plus the fact, cause we were, you know, just looking at pure margin. We've said, if, if we can be competitive and get people to buy it, then we'll figure out what we got. Uh, I wasn't so focused on, well, how are we going to make a, you know, killing on it? The question was, can we get some consumers to buy it? See it and buy it. And I thought this was the angle. Bigger can, very, you know, stood out in the cooler, unique, different, um, and we, we entered the market with that big can.

AI assessment note: “glass bottles were historically more expensive with a lug cap. They run slower”

Q Was it hard to do? I mean, or was he basically, he knew what he was doing, and you could just kind of taste it and say, ah, add a little bit more lemon, add a little bit more sweetener.

A Uh, the flavors he brought in, uh, at first were terrible, and I said, hey, Joe, I mean, I want tea, and he said, oh, you really want tea, but it was interesting because, you know, the typical response in the flavor category was, uh, you know, you don't have to put a lot of tea in on a tea, you just put flavor, you can kind of Fake it up. And then I realized that what other guys are not doing is putting real ingredients in because, you know, they choose to go a less expensive route. And we then said, let's make a great tasting tea. We came out with lemon and razz. Those were the top two flavors for Snapple. Great tasting raspberry flavor. Put it in a great looking can and put it on the shelf next to Snapple at the same price.

AI assessment note: “the flavors he brought in, uh, at first were terrible”

Q United. Okay. And how quickly did it become profitable?

A You know, we, we lived off it, so it was profitable from day one, you know. Um, but we were always reaching further than our finances were able to keep up with us, so, you know, we had some difficult times where there were some sleepless nights about how to meet payroll and how to pay the electric bill. Um, and that went on, I, you know, I tell people, they say, well, you're an overnight success. I said, yeah, we were 20 years of nights because the, you The first 20 years of our business prior to Arizona was a struggle. It was, you know, we did business, we, we supported our families, we pay for our homes and things like that, but it was always, we're always on the edge.

AI assessment note: “we lived off it, so it was profitable from day one”

Q Ok, but so, how have you kept it at a 99 cent suggested price all these years?

A I'm asked that question like 10,000 times, right? And my normal reaction is, I don't know how I do it. But that's not true, right? The facts are, there are multiple things you need to do behind the scenes in order to give consumers and continue to give them value. Because often times companies say, the best thing to do, or the easiest thing to do is to raise the price. Go into a customer and tell them, hey, it's going up on March first. But to me, as a salesman, that's the worst day in your life, because you don't want to tell a grocer or a customer, by the way, you have to pay more, and then you have to charge more to your customer walking in the door. And can I do it forever? I don't know, but we're going to continue doing it as long as we can.

AI assessment note: “there are multiple things you need to do behind the scenes”