IN AN AGE WHEN MANY BRANDS supplement their on-shelf sales with online availability, FRS is doing the opposite.
The FRS Company spent most of the last decade building an online presence for its quercetin-based nutritional supplements. Its now-ubiquitous online banners feature brand-evangelist and board member Lance Armstrong, offer free samples and lead curious consumers to a smartly-finished website and online store. Through that portal, the company mainly sells chews, powders and drink concentrates. While FRS has long offered an RTD option, the realities of its mail order business focused sales on products that required less postage.
Now, FRS has gotten serious about getting its drinks into coolers. First, the company hired Carl Sweat, a veteran of Coke pickup FUZE, to head up DSD operations, while buttressing the move with Armstrong-centric television ads. But even more importantly, it has announced a major distribution deal with Pepsi Beverages Americas (the new combined PepsiCo/Pepsi Bottling entity) in which the product will be distributed in most of the country outside the Western U.S., where it has struggled to grow in retail locations.
In the West, particularly California, the brand’s focus seems to have created some positive response: one long-time distributor reported that the brand’s sales nearly doubled its previous year volumes. But the success of FRS as an internet-based marketing phenomenon has complicated its DSD ambitions for a long time and may be part of the reason for the alliance with PBA. Up until now, new consumers whom the brand might have picked up in-store would then have the opportunity to bypass it via a drop-off from Federal Express. But with the distribution breadth of its new partner, FRS should be able to create a national imprint with gapless coverage. That, combined with the brand’s long history and persistent online advertising can create what founder Simon Good calls a “tailwind” in new markets and with new retailers.
Armed with that tailwind, the company has stepped up its efforts to address mainstream retailers and consumers. In addition to splashing Armstrong across TV screens, it expanded its roster of athlete spokespeople to 20. The full cast includes Los Angeles Laker Derek Fisher, 2009 Major League Baseball Rookie of the Year Andrew McCutchen and pro volleyball players Brooke Hanson and Nike Lucena. Meanwhile, Sweat has increased on-the-ground support through sales staff like glaceau veteran Tim Redmond and FUZE veteran Todd Gibson as the brand moves into mainstream grocers like Safeway in California and Publix in Florida.
Cary Seyl, director of marketing for Pacific Beverage in Santa Barbara, said FRS recently sent a crew drive through his territory. Correspondingly, in March, he enjoyed his best month of sales with the product to date, with recent months seeing 70-90 percent year-over-year sales growth. Not only has the brand added additional retail placement in mainstream retailers, but its volume has grown in enduring strongholds near gyms and universities. Seyl said he expects to see the upward trend continue.
“I think there’s great potential that it may be just on the edge of really taking off,” Seyl said. “I’m kind of interested to see what Mr. Sweat has in mind over the long term.”
On a store level, Mike Gibson, Nutrition Lead at Sports Basement in Sunnyvale, Cali. said he’s seen interest in FRS increase over the last year.
“I’m sure it doesn’t hurt when you have Lance Armstrong as the face of your company. Most consumers will try things based on what their favorite athletes use,” he said. “You will generally see FRS at more races now than you have before, which, in my opinion, means they are doing a good job trying to get their product noticed.”
The brand also boasts a handful of enduring advantages. Its central ingredient, quercetin – included mainly for its endurance-enhancing properties – has been investigated for a wide range of health benefits including boosting the body’s immune system. The flavonoid even earned attention from the American Cancer Society for its potential effects on caner. Armstrong, whom Forbes once called the most influential athlete in America, lends credibility to the brand, and FRS has also collected a spectrum of unpaid athlete evangelists. Women’s soccer star Christie Rampone, for example, recently told Shape magazine that she couldn’t live without the product. Additionally, due to its history of online sales, FRS maintains a database of existing “core” customers that can be activated when the company secures distribution at a new chain.
“As soon as those stores are set, we can knock an email out,” Goode said.
Despite the appeal of instant customer activation, Seyl at Pacific Beverage said FRS’ enduring online presence both helps and hurts.
“As a wholesaler, we need to see the transition of that customer base,” Seyl said. “If we can capture a percentage of that internet business, we’d be pleased.”
But Goode said FRS’ direct sales shouldn’t concern retailers and distributors. He cited an adage in the direct response business that one remote sale will translate to eight at retail. While heavy users may find financial merit to purchasing bulk powder or concentrate online, Goode said, as long as consumers can find the same product in their local stores, they tend to favor convenience over marginal savings.
The brand’s biggest challenge may be its sophistication. Seyl, whose company also distributes Red Bull, noted that FRS sells poorly in his stores that move the largest volumes of the banner energy drink. Based on that, he opined that it may not perform well in Middle America.
Sweat said he’s comfortable with the product’s sophistication. Every area, no matter how much of a Red Bull stronghold it may be, has enclaves where more sophisticated products flourish, he said.
Up until now, the solution has been to try to avoid a scattershot approach by targeting markets for maximum efficiency, but the days of FRS working with specific retailers’ customer profiles to determine exactly where and how the product should be positioned within chains will likely take a back seat to the number-crunchers from PBA – not necessarily a bad thing, however, given the brand’s low in-store profile to date.
In the mean time, FRS is using the legacy of its online business to fuel consumer education. Goode described many of the brand’s returning customers as “hard core” athletes that FRS can use as a bridge into the mainstream market. FRS has built rapport with repeat customers, Sweat said, and aims to turn them into brand evangelists. The company has nudged that strategy with pre-mainstream forays into local sporting events, cycling clubs, and gyms within the targeted market. On broader scale, they advertise FRS as Lance Armstrong’s “secret weapon,” and drive consumers to educate themselves at FRS.com.
Those efforts will benefit from a recent $23.1 million cash infusion from its existing investors. Sweat said he planned to put that cash toward marketing, personnel – both on the street and national level – and on ensuring production so that the brand’s supply is “ready as the wave comes.”
With the PepsiCo alliance, it appears that the wave has appeared on the horizon. And just in time. Even before the PBA deal, FRS had tried to extend its reach into a growing number of mainstream outlets, but those had mostly centered on the GNC and Vitamin Shoppe end of the retail spectrum. It will be up to the PBA sales crew, however, to energize its presence in Safeway, Publix, Duane Reade, Quick Trip and Target, the large national accounts that will ultimately determine its ability to fulfill its potential.
But what the deal indicates is that FRS does indeed believe that its greatest potential lies at the retail level, and its RTD product is the key to realizing retail success. The brand’s site currently features videos with Fisher, Hanson and others drinking the RTD product and explaining why they use it. Given the company’s history in mail order, the powders have long been cheaper to ship and RTD has lagged behind. Obviously, its now going to be front-and-center.
Sweat said FRS’s future innovations will likely stay close to its quercetin core, but he wants to be ahead of the game. Other companies have already started selling quercetin-based products, and while he expects to have a formulation advantage (quercetin lends a particularly tricky flavor to work with, he said), he wants to make sure his company maintains that edge.