How Volt Survives By Fighting Giants

TALK ABOUT A REFERRAL.

When Owen Ryan explained his plan to move to North Carolina and found High Voltage Beverages with the intent of taking on Mountain Dew and Gatorade, his own doctor told him to get his head examined.

And why not? His business plan left him hawking two beverages types – citrus soda and sports drinks – in declining categories, both of which pit him in direct competition against PepsiCo, a company so large and powerful that Ryan compared it to Sauron, the bad guy from the Lord of the Rings. To top it off, Ryan was moving away from New York City, one of America’s most proven staging grounds for new beverages, to instead establish his Volt brand in the hills of the Southeast.

But – despite appearances – Ryan’s plan may make sense. He insists that, through positioning the brand as a rebellious upstart, Volt can slice off a piece of Gatorade and Mountain Dew’s combined $10 billion-plus yearly revenue. Both brands, he says, are losing their grip on younger consumers, and that’s where he is staking his claim. To that end, he’s built his base in North Carolina, brought in industry veteran Bill Sipper, adjusted the product and marketing plan to better address his target teenage boy consumers and, from there they’ve been able to gain distribution back in New York City. The next phase of his plan, he said, is to fight his way westward like a 21st century guerilla.

Ryan dreams that Volt will reach California one day, but whatever product bearing the Volt brand name arrives on the West Coast will bear little resemblance to his original concept. His 1997 application for the Volt trademark called the product an electrolyte replacement soft drink. He intended to label the products at different intensities, such as 6-Volt, 9-Volt and 12-Volt, he said. But that idea fell away, and, while Volt still produces sports drinks, it has shifted focus to energy sodas.

That shift in focus preceded a shift in marketing strategy. When Ryan first rolled out the product, he tried to reach his consumers over the radio. Volt’s ad portrayed old men reminiscing about drinking Mountain Dew, and set up Volt as an alternative to your grandfather’s soda. Ryan also finagled some TV spots on ESPN in Northern Florida. But while he was looking for the right crowd, he was doing so in the wrong place. Now, Volt has turned its attention to new media – an idea captain by Sipper, who has unleashed an army of work-for-free college interns to build up the brand’s online profile.

Starting in the Spring semester of 2009, Sipper unleashed his college minions on Facebook and Myspace –two of the internet’s most popular social networking sites. His team recruited followers, posted videos about Volt, and manned sampling events. Now his first team has moved on, and Volt is on its second crop of interns – including one in New York, to service Volt’s new territory.

“We’re constantly using college interns and I think it’s important that we continue to do that,” Sipper said. “They’re young. They get it. We don’t.”

But while Sipper has changed the brand’s approach to marketing, he’s kept Ryan’s original long-term plan. High Voltage Beverages will use New York as a foothold, Sipper said, but will then move westward state by state. Along the way, he said, the company will focus his efforts on markets that have a demonstrated penchant for citrus sodas.

He’ll also try to garner consumer interest through a constantly-evolving selection of flavors. In the last year, Volt has added four new flavors: Pineapple, Fruit Punch, Tropical Mango and Blue Melon. The brand now boasts six SKUs, and Sipper said he has a two-year inventory of ideas that will rotate in as old flavors rotate out.

If that sounds like what Mountain Dew has been doing with its limited-edition flavors like Game Fuel, Livewire and Pitch Black, that’s because it is. Harrison Krouse, general manager for North Carolina distributor RC Asheville, said that shows that Volt is keeping close tabs on its biggest competitor. And he expects Volt to continue to mirror Mountain Dew’s moves – not identically, he said, but approximately. If Mountain Dew comes out with a beverage in a particular color, he expects to see a new Volt flavor with the same color. It’s worth noting that Mountain Dew’s Game Fuel currently comes in blue and orange versions. Volt recently added a blue flavor, Blue Melon, and debuted its orange-colored Tropical Mango earlier this year.

That kind of variation, Krouse said, benefits the brands, the stores and the carbonated soft drink market as a whole. Most customers continually visit the same stores, he said. When coolers remain the same, they can lose a consumers interest almost to the point of practical invisibility, he said. Introducing a little variety on a regular schedule keeps a door from being stagnant.

So far, he said, that strategy has served Volt well in his territory.

“It’s not taking the market by storm yet,” he said, “[but] we’re happy with it.”

The next leg of the Volt plan puts the product in New York City, in Duane Reade pharmacy stores, which are known among beverage insiders as a proving ground for emerging beverages. It’s in these stores that Ryan and Sipper will find out if their brand is tough enough for the big city.

One point in its favor is that the brand has already proven tough enough to take on a PepsiCo legal challenge. Shortly after Volt appeared on the market, PepsiCo unleashed its lawyers on posters Ryan created for a Volt advertising campaign. The posters featured two crashing football helmets – one with a Volt Logo and one with a Gatorade logo – and the title “Let the Games Begin.”

PepsiCo issued a request asking High Voltage Beverages to cease using the posters on the grounds that they could create confusion, leading consumers to believe “that the Volt product is related to Gatorade.”

Ryan rejected the charge, telling PepsiCo’s lawyers “I can’t imagine any sensible and sober consumer coming up with preposterous conclusion.” He also offered to host a public, one-on-one, Volt versus Gatorade taste challenge.

PepsiCo didn’t write back.

And how’s this for scrappy? While PepsiCo brought the battle to Volt, Volt recently brought the battle to Coca-Cola itself. Shortly after Sipper took over as president, High Voltage Beverage filed a lawsuit against Coca-Cola over its Vault brand of high-caffeine citrus soda. The suit alleges that Vault sounds so similar to Volt that it amounts to unfair competition because it creates confusion in the marketplace – confusion made all the worse because Vault has performed so poorly since its launch in 2005.

Krouse said he’s seen first-hand evidence of that confusion. While trying to build the Volt brand in his distribution area, store owners have told him that they already tried carrying Volt and it didn’t stick. But they carried Vault, not Volt.

The suit is still pending, but, should it succeed, it could give Volt a boost, as it asks Coca-Cola to run a corrective campaign explaining that Volt and Vault are two different products.

Even without that kind of boost, the brand may eventually make its way to California.

“Quite honestly, I think it will take a number of years,” Sipper said, but Ryan has hope. Sprite, he noted, first appeared in the 1960s, but didn’t reach Los Angeles until the early 1980s. Today, things move a little faster, and Sipper has hard-wired the brand to the internet, one of the strongest and fastest growing forces of our time. With that plan, maybe it’ll take Volt less than two decades to go coast to coast. And, by the time it does, maybe it will carve off a significant sliver of Mountain Dew’s business.