Development Of Beverage Production Line
Still, Cable Car operated at a loss as development of its branded product lines and the process of establishing a customer base kept expenses high
. For the year ended June 1990 the company reported losses of $1.16 million on sales of $7.4 million, with 79 percent of sales originating from the distribution business. As the company's marketing programs produced results and the company adjusted overhead expenses in accordance with actual need, Cable Car realized a 64 percent increase in sales to $12 million for June 1991, and its net loss was reduced to $0.5 million.
Stewart's Original Root Beer was distributed in 13 states in 1991, and this figure was expanded to 26 the following year. Moreover, Cable Car began to penetrate the grocery store market, which accounted for less than 20 percent of sales. Most sales involved single bottles, including a 32-ounce 'jug' introduced in 1991 and designed to stimulate take-home sales. A private offering of stock in November 1991 and its oversubscription fulfillment in January 1992 raised $1.1 million in capital for continued expansion. Simpson became the majority shareholder, with a 15 percent stake in the company. In 1992 Inc. magazine ranked Cable Car the 30th fastest growing public company in the United States.
In partnership with Stewart's Restaurants, Cable Car developed two new soda flavors. In May 1992 the company launched Stewart's brand cream ale, diet cream ale, and ginger beer, a non-alcoholic beverage with a strong ginger zest. Advance orders of the products were higher than expected. Cable Car also signed a new licensing agreement with Stewart's Restaurants to market Stewart's
beverage production line as a fountain product in 15 states. To oversee these operations, Cable Car formed a new subsidiary, Fountain Classics, Inc.
Development of its branded beverages prevented Cable Car from expanding its distribution subsidiary. Subsequently, Shey Brothers was spun off, merging with AMCON, a wholesale distributor of groceries and health and beauty care products through eight states in the Midwest and Upper Great Plains. The Omaha-based company intended to continue Sheya Brothers' distribution in Colorado. The merger involved a stock exchange with distribution of AMCON stock to Cable Car shareholders. Sheya Brothers had accounted for two-thirds of Cable Car's revenues, so the spinoff resulted in much lower revenues on Cable Car's balance sheet. In 1994, the first fiscal year to end December 31, Cable Car recorded revenues of $8.2 million and its first net income of $721,695.
Cable Car launched several new branded products in 1995. Stewart's Country Orange 'N Cream debuted in May 1995 and quickly became the company's second best seller. The company expanded its Aspen brand with Aspen Spring Water, a noncarbonated spring water, and Aspen Extreme, a line of noncarbonated, fruit flavored sports drinks. At the behest of New England distributors, Cable Car developed a line of unsweetened seltzers. The company tested
filling machines in eight New England markets during the summer 1995. Also, the debut of a 16-ounce, barrel-shaped bottle of root beer attracted new business and increased sales.
In 1996 Cable Car introduced Diet Orange 'N Cream, Classic Key Lime, and Old-Fashioned Cherries 'N Cream sodas under the Stewart's name. Stewart's had in fact become so popular that Cable Car opted to sell off its Aspen Water and San Francisco Seltzer operations, which helped finance further development of the successful Stewart's brand. At this time Stewart's beverages were available in 40 states through over 200 distributors.
In November 1997, conglomerate Triarc Companies completed its acquisition of Cable Car in a stock exchange valued at $31 million. Over the previous four years Triarc had acquired Snapple Beverages, Mistic Brands, and Royal Crown Cola, as well as a chain of Arby's Restaurant franchises. Triarc allowed Cable Car, renamed Stewart's Beverages in 1999, to operate without changes or interference as a subsidiary of Snapple Beverages. Triarc intended to create a functionally integrated company, acquiring Millrose Distributors of New Jersey, the second largest distributor of Stewart's products, and California Beverage Company, which held distribution rights for the City and County of San Francisco.
Stewart's continued to expand as the fastest growing super-premium soda in the United States. Under Triarc ownership, Stewart's distribution had expanded to all 50 states, as well as to Canada and the United Kingdom. Sales increased 13 percent in 1998 and 17 percent in 1999. While single-bottle 'cold vault' sales in convenience stores and delicatessens comprised 75 percent of revenues, Stewart's attained a two percent market share of the market for
beverage packaging line in convenience stores, grocery stores, and mass merchandisers.
In 1999 Stewart's celebrated the 75th anniversary of Stewart's Root Beer with special promotions that emphasized the nostalgic appeal of drinking an ice-cold root beer in the summertime, particularly at a baseball game. A national promotion involved a drawing for trips to the World Series and the All-Star baseball games, while local promotions supported Little League baseball.
Stewart's continued to develop nostalgic yet unique soda flavors. The company introduced Classic Grape Soda in 1998 and Peach Soda in 1999. Triarc supported production of the new beverages with a $5 million construction project, building a dedicated production line for Stewart's beverages at the Millrose bottling facility. The new line allowed the company to refine operations and logistics in a manner that accommodated growth in volume.
In May 2000 Stewart's launched 'S', a line of low-calorie, gourmet flavored soft drinks and the first line of gourmet diet sodas on the market. Available in Black Raspberry, Orchard Peach, Ruby Red (grapefruit), Vanilla Cream, and Wild Cherry flavors, the S beverages were packaged in sleek bottles etched with an 'S' in white. Stewart's sweetened the lightly carbonated
beverage production line with sucralose and Ace K, artificial sweeteners that they believed tasted better than the popular aspartame. After test marketing in California, Stewart's initiated distribution in 35 markets, mostly in the Midwest and Mid-Atlantic states. Distribution channels included Safeway, Kroger, and Albertson's grocery store chains, as well as 7-11 stores in California and Florida. A four-pack of 11-ounce bottles sold for anywhere from $3.29 to $3.50, while individual bottles sold at delis and convenience stores ranged in price from 99 cents to $1.49.
In 2000, after only seven years in the beverage industry, Triarc decided to spin off its soft drink businesses. Toward that end, it reorganized the premium beverage companies--Snapple, Mistic, and Stewart's--and the line of soft drink concentrates--Royal Crown Cola, Diet Rite, RC Edge, and Nehi--under the Snapple name. Headquarters of the various operations were to be merged at Snapple's offices in White Plains, New York. Snapple announced its intention to go public in June 2000, but Triarc sold the company to London-based Cadbury Schweppes plc, a private company, for $1.45 billion the following October.
Cadbury Schweppes maintained that the Snapple Beverage Group would remain a stand-alone company, with Snapple, Mistic, and Stewart's serving as its brand names. Simpson, who had built Stewart's
beverage production line into the fastest growing premium soft drink company, and had remained as CEO of Stewart's during its tenure with Triarc, left shortly after the Cadbury Schweppes acquisition. New leadership took over in December 2000, as John L. Belsito was named president of the Snapple Beverage Group. Though its corporate identity was once again being restructured, Stewart's root beer and other soft drinks remained popular and widely available.
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