Double-Cola Co.-USA

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Double-Cola Co.-USA

537 Market Street, Suite 100
Chattanooga, Tennessee 37402
U.S.A.

Telephone: (423) 267-5691
Fax: (423) 267-0793
Web site: http://www.double-cola.com

Wholly Owned Subsidiary of K.J. International Inc.
Incorporated: 1922 as Good Grape Company
Employees: 20
Sales: $21.1 million (2003 est.)
NAIC: 311930 Flavoring Syrup and Concentrate Manufacturing

Double-Cola Co.-USA is a producer and marketer of soft drinks, operating primarily in the cola segment of the industry. The company's products include its signature Double-Cola brand, Diet Double-Cola, eight flavors of Jumbo cola, and Double Dry Ginger Ale. The company also markets its Ski brand of citrus drinks, which includes Diet Ski and Cherry Ski. Double-Cola Co.'s beverages are distributed in the United States primarily east of the Mississippi River. Double-Cola Co. also sells its drinks abroad, doing business in the Middle East, South Asia, and South America. The company is owned by London, England-based K.J. International Inc.

Origins

The late 19th century saw the birth of an industry that became a battleground for dozens of companies, each vying for control of what, a century later, represented a more than $60 billion business. Supremacy in the U.S. soft drink market, particularly the cola segment of the market, involved a decades-long chase that pitted marketing strategy against marketing strategy and distribution might against distribution might, making for one of the classic battles in U.S. business history. Double-Cola Co. played a leading role in what industry observers often referred to as the "cola wars," becoming a fixture in the industry that survived the fiercely fought battle among Coca-Cola, Pepsi-Cola, and their rivals. Double-Cola Co.'s ranking as the fourth largest cola brand at the dawn of the 21st century was a testament to its success in the 20th century, but for some business analysts the story of Double-Cola was a story of missed opportunities, a tale of what the company might have become had it done things differently. Double-Cola stood as a financially healthy, venerable competitor in the soft drink market at the beginning of the 21st century—overshadowed by Coca-Cola and Pepsi, to be sure—but the natural inclination when examining the company was to determine why a brand that ranked as the fourth bestseller after nearly a century of existence trailed so far behind the market's two leaders. Double-Cola's missteps, and its successes as well, were intertwined into the history of cola itself, a chapter of U.S. business history that began with a pharmacist in Atlanta named John S. Pemberton.

In 1886, the race to capture market share in the soft drink market began. That year, Pemberton developed the Coca-Cola brand, creating a soda fountain drink that he marketed as a "brain tonic and intellectual beverage." His brand and company took advantage of the early start by quickly developing a national distribution system, gaining a lead on the rivals soon to materialize that it maintained for more than the next century. Other cola producers entered the market after Pemberton unveiled his "brain tonic," but the most historically important of the new entrants in the late 19th century was "Brad's Drink." The concoction of another pharmacist, a North Carolina resident named Caleb Bradham, Brad's Drink was renamed later, branded as Pepsi-Cola. Pepsi-Cola, introduced in 1893, never presented much of a threat to Pemberton's Coca-Cola. The brand limped along for more than a half century, not demonstrating any strength nationally until after World War II. Its weakness during the first half of the 20th century was one of the missed opportunities noted by Double-Cola Co.'s critics a century later.

Double-Cola Co. started much later than its two fiercest rivals, joining the soft drink market as a start-up well after Coca-Cola enjoyed national celebrity and Pepsi-Cola was preparing for its 30th anniversary festivities. The brand was started by Charles D. Little, who worked for the Cherco Cola Company. Little left Cherco Cola in 1922, and with the help of a partner, Joe S. Foster, developed his own soft drink brand, Good Grape. The pair named their company the Good Grape Company, establishing its headquarters in Chattanooga, Tennessee. In 1924, Little developed his first cola drink, Marvel Cola, and changed the name of the company to Seminole Flavor Company. Improvements were made in the formulation of Marvel Cola, changes that warranted the creation of a new, trademarked name, resulting in the introduction of Jumbo Cola, a soft drink packaged in a 7.5-ounce bottle that, with the assistance of Owens Illinois Glass Company, bore the first Applied Color Label in the industry. By 1933, Little believed he had achieved the perfect formulation for a cola, leading him to rename his beverage Double-Cola. The name of the new cola reflected another industry first for the young company, an industry first that would become an industry standard. Double-Cola was packaged in 12-ounce bottles, twice the size of other colas, a novelty that necessitated advertising on six-pack cartons that read: "This carton serves any number from 6 to 12, two glasses in every bottle."

Little's company did well during its second decade in business. Once he was comfortable with the formula for Double-Cola—a formula that remained unaltered throughout the company's existence—he added a range of flavors. By the early 1930s, Seminole Flavor Co. marketed Double-Cola, Double-Orange, Double-Lemon, and Double-Grape. In 1934, the company added Double-Dry Ginger Ale and Tonic Water to its product line. Staying financially solvent during the Great Depression was, by itself, a laudable achievement, but critics pointed to the 1930s as when Little made one of his first mistakes. Vending machines emerged as an important revenue source for soft drink companies during the 1930s, but Little failed to exploit the new market niche. He had a cabinet and refrigeration unit made by Westinghouse, but when the vending mechanism was added, it failed to work, performing horribly in the humidity of textile mills in North Carolina, where Double-Cola enjoyed a strong following. Little refused to invest any capital in developing a working vending machine, not wanting to risk losing the money he had accumulated.

Double-Cola in the 1940s

The 1940s brought difficulties to Seminole Flavor Co. and marked the decade of Little's most glaring miscue. The company's major obstacle during the decade was caused by sugar shortages during World War II, a restriction that affected every soft drink maker in the country. Seminole Flavor Co. was hit doubly hard by the shortages, however, because of the 12-ounce bottles it used, a fate shared by Pepsi-Cola, which had begun using 12-ounce bottles in the late 1930s. Other soft drink companies, Coca-Cola in particular, began using smaller bottles when sugar was rationed, enabling them to meet demand and expand distribution, but executives at Double-Cola and Pepsi-Cola believed the larger bottles were integral to their marketing strategies. Double-Cola marketed its beverages as "Double-Good, Double-Cola," while Pepsi-Cola advertised its drinks as "Twice As Much For A Nickel, Too." Both companies struggled to meet demand during the war years, Pepsi-Cola more than Seminole Flavor Co., an inequity that set the stage for what many industry pundits charged was Little's greatest failure.

By the 1940s, Coca-Cola was far in the lead, making Seminole Flavor Co.'s nearest rival Pepsi-Cola. Both companies were approximately the same size, but unlike Seminole Flavor Co., Pepsi-Cola was suffering mightily, teetering on the brink of bankruptcy on several occasions during the 1940s. Little had a chance to eliminate Pepsi-Cola and gain control of its distribution system, but he failed to pull the trigger. A Marquette University professor, Joyce M. Wolburg, interviewed several Double-Cola Co. executives for a case study published in the Winter 2003 issue of the Journal of Consumer Affairs, interviews that revealed the opportunity missed by Little. The company's one-time vice-president of sales, John Kirby, told Wolburg, "He [Little] had a chance to have bought enough stock in the Pepsi-Cola Co. to control it for about a quarter of a million dollars." Kirby continued: "But he told me 'I've got a good cola, I don't need that.' And that's the way he felt. I asked him, 'Could you have done it without jeopardizing the backing you needed to continue to grow the brand as it was?' And he told me, 'In 1946, I was ahead of everyone else.' "

Pepsi-Cola survived the 1940s and went on to mount a serious assault on Coca-Cola. Alfred Steele, appointed as chief executive officer in 1950, was expected to liquidate the company, but instead he made it his goal to pursue Coca-Cola. He introduced new bottle sizes, emphasized supermarket sales, and created new marketing campaigns, realizing a 300 percent increase in sales by the end of the decade. By the mid-1960s, the soft drink market was a two-horse race, with Pepsi-Cola having made up considerable ground and Double-Cola Co. relegated to the tail end of the pack. Coca-Cola controlled 33.4 percent of the market, followed by Pepsi-Cola with 20.4 percent. Seven Up and Royal Crown were tied for third place with 6.9 percent of the market. Dr. Pepper brought up the rear with 2.6 percent. Double-Cola was unranked, not given an industry position until 1980, when the company held onto 0.6 percent of the market.

While Pepsi-Cola galloped ahead during the 1950s, Little's company celebrated its own achievements, although the possibility of gaining a strong market position essentially had disappeared. In 1953, Little changed the name of his company, dropping Seminole Flavor Co. in favor of Double-Cola Co. In 1956, perhaps the most significant development of the second half of the century occurred when Little introduced a new brand. Ski, a citrus soft drink made of natural orange and lemon flavorings, made its debut in 1956, becoming a popular favorite.

Company Perspectives:

Like your favorite pair of blue jeans, we've been around for a while and have remained a favorite. Day after day you try us on for size and are pleased with the results. A consistent source of comfort that makes you feel your best. Like the pockets, the belt loops, the durable material, our standards are built to last. Different tastes for different styles—the choice is personal. No matter what the weather, we're always cool—in fact, double cool. Take a sip from the can that's dressed to symbolize good times. Aaaaahhhh, it's Double-Cola.

For roughly two decades after the introduction of Ski, Little's company endured difficult years—in large part because of the absence of Little. In 1962, the year a diet version of Double-Cola was introduced, Little sold his company to Fairmont Foods Company, ending his involvement during Double-Cola Co.'s 40th anniversary year. The sale to Fairmont Foods marked the beginning of a series of ownership changes, each negatively influencing the promotion of Double-Cola's line of beverages. Fairmont Foods acquired Little's company for quick gains, draining its cash reserves and refusing to invest in the company's long-term health. In the late 1970s, Fairmont Foods sold Double-Cola Co. to a group of private investors who almost immediately sold the company to a Canadian firm, Pop Shops International. Double-Cola's brands received scant attention under Pop Shops' control, playing a subsidiary role to the Canadian company's other brands. Stability did not come to Double-Cola until London, England-based company K.J. International Inc. acquired the Chattanooga soda operations in 1980. K.J. International remained Double-Cola Co.'s owner into the 21st century, renaming the company Double-Cola Co.-USA.

Staying Alive in the Late 20th Century

As Double-Cola Co. repaired itself under the purview of K.J. International, the company faced a future in which it would have to pay the price for the mistakes that held its growth in check. Little's inability or unwillingness to seize opportunities that might have greatly increased the stature of Double-Cola Co. left the inheritors of his business in a perpetually precarious position. Coca-Cola and Pepsi-Cola were locked in a battle for domination, but small soft drink companies like Double-Cola Co. faced a daily battle for survival. As Double-Cola fought to survive, competition intensified. During the 1980s, Coca-Cola and Pepsi-Cola expanded their product lines, adding an array of flavors that took up more space on retail shelves and left less room for Double-Cola Co.'s brands. Conditions did not improve during the 1990s, as the company fought to hold onto the tiny sliver of the market it held, a percentage that ranged between 0.3 and 0.5.

Double-Cola entered the 21st century successfully waging its battle to stay alive. The company's beverages, once distributed nationally, were sold in the United States primarily east of the Mississippi River. Internationally, the company recorded varying degrees of success in 17 countries, focusing its efforts in South America and South Asia. By this point, as its 80th anniversary neared, the company's share of the $62 billion soft drink market was negligible, pegged at 0.1 percent, but the executives in Chattanooga were mindful of their position and using it to shape their strategies. Two executives explained their feelings to Wolburg in her Winter 2003 Journal of Consumer Affairs article, offering a sense of the perspective that Double-Cola Co.'s officials had on the company's future progress. "Coke and Pepsi have financial resources that we will not be able to match," former president L. Edward Shanks said. "If we go into any market . . . and try to do it head to head with either of those companies . . . we will lose. We've got to be selective about the things that we do—be very focused, and show a high degree of flexibility." John Kirby, the former vice-president of sales, added to Shanks's statement, "Unlike Coke and Pepsi, we do not need to own the entire market to be profitable. We are just looking for a fair shot at store space and displays, a good campaign of awareness, and we believe the product will sell on its own."

Principal Competitors

Cadbury Schweppes plc; The Coca-Cola Company; PepsiCo, Inc.

Key Dates:

1922:: Charles D. Little and a partner, Joe S. Foster, found Good Grape Company, Double-Cola Co.'s earliest predecessor.
1924:: Good Grape Company changes its name to Seminole Flavor Company.
1933:: Double-Cola is introduced.
1953:: Seminole Flavor Co. changes its name to Double-Cola Co.
1962:: Little sells his company to Fairmont Food Company.
1980:: K.J. International Inc. acquires Double-Cola Co.
1996:: Cherry Ski is introduced.
2001:: Caffeine-Free Ski is introduced.