In Zone Grows in Ages and Stages

By Jeffrey Klineman

It’s a tossup as to which is harder for a parent putting an overtired child to bed, or waking one up after a long night’s sleep. For In Zone brands, however, the task was multiplied by a massive number of bottles: the management had to put an entire product line to bed, and then wake it from slumber ready to hit the shelves.

In Zone, a kid-centric beverage company that had thrived on the intersection of clever packaging and licensed properties like Bob the Builder, D.C. and Marvel Comic Superheroes, and Hello Kitty, to provide basic sweet juice, went pretty much dark for about a year in 2007, forced to the margins by a DSD business model that wasn’t working and a series of products that, while physically attractive, weren’t hitting home with consumers who were becoming more interested in nutrition.

It was a tough blow for a brand founded by serial entrepreneur Jim Scott, a Georgia native who had started businesses ranging from barbecue grills to the state’s largest moving company. But as with many entrepreneurial ventures, the energy to get things off the ground and the know-how to get things to fly right aren’t always included in the original launch plan. So after hitting on the clever idea that kids might clamor for a juice bottle topped with a sport cap shaped like a flying Superman or a baleful Clifford, the Big Red Dog, Scott wasn’t able to figure out a route to market strategy that could reconcile the line’s hefty licensing and manufacturing costs with the necessary volume.

Enter a new marketing chief, Samantha Hodgkins, who saw the potential for the line – if major changes could be made.

“The business had been growing from a sales and customer relations standpoint,” said the longtime CPG executive, who had worked for everyone from Kellogg to GP Newell. “But the company went ‘dark’ because an operational model hadn’t been set up.”

Burdening the brand was a heavy contract with Cadbury/Schweppes, which owned the Dr Pepper/Snapple distribution routes at the time. While Direct Store Delivery is often the key to expanding a brand, it wasn’t working in the channels it needed to succeed: grocery and mass. And the liquid itself was little more than sugar water, making it an okay treat once in a while, but not the kind of product that a caring parent could justify with the high price tag that accompanies the product’s character-focused “topper.”

It had a strong impulse pull, according to Tracy Strom, In Zone’s PR chief, but with a composition that was basically sugar water in a 12 oz. package, “we weren’t ready for what moms and kids needed.”

In other words, the brand was kind of like a supermodel: expensive, great looking on the outside, but you just knew that inside, there wasn’t much in the way of redeeming qualities.

So the strategy changed a bit – rather than just rely on its appearance, the brand had to work hard on what was inside. The formulation changed to 100 percent juice, and the emphasis was that the brand could sit at what Strom calls “the perfect intersection of healthy and fun.” In Zone also ended its DSD arrangements, plunked down the cash to lease warehouses in 7 key U.S. regions, and began warehouse delivery to many key accounts, particularly Wal-Mart, where placements have doubled annually since the re-launch – from 2 to 8, with even more expected next year.

While the bottle toppers remain the key driver for the kids to yank on parents and scream until they get what they want, the contents have been adjusted “to make it easier to say yes,” Hodgkins said.

Part of that adjustment came when the product was aligned to provide sizes and formulations that are more appropriate for three different groups of kids: the toddler (age 1-3), the preschooler (3-5), and the grade-schooler (5-10). While it’s easy to identify characters geared toward each group, the nutritional aspects had been given short shrift. Twelve ounces of sugar water might be okay for a 10 year-old, but it will send a 4 year-old through the roof. So now the youngest group gets 4 oz. of “Tummy Tickler Tots,” a reduced-sugar juice, while the preschool contingent gets 6 oz. of 100 percent juice. At the more robust Belly Washer stage, the grade-schoolers get 12 oz. of juice under a character like Batman or Spider-Man.

“Ages and stages,” says Hodgkins. “It’s what we live and breathe every day now.”

To hit the right consumers with that approach, however, the brand had to hit the right channels – particularly with a parent having to lay down $2-$3 to get the re-usable top (not to mention a stream of other characters to replace or augment the initial purchase). Wal-Mart remains a key customer, and many of the country’s top convenience chains are on board. But to make things really take off, a stronger grocery presence is the key.

What In Zone has going for it is that the licensed products work as their own marketing campaign. Rather than spend on advertising, a well-merchandised, well-placed shelf set of superheroes can cut promotional costs to the bone. Nevertheless, getting those slots can be expensive, running a close second to the overall cost of paying for licensing and production.

Another thing In Zone has going for it is momentum: sales have gone from $14 million upon re-launch to $75 million last year; the company is profitable, according to Hodgkins, and is trying to innovate by launching more functional SKUs like shelf-stable milks and sports drinks.

While dabbling in functionality has helped to sink other products, In Zone knows that any variation will come in within a tight range – the ages of 1 to 10. The brand, as its owners like to point out, is one of the few beverage companies whose sole purpose is to make products that only appeal to kids. It’s hard to imagine an adult clamoring for a limited edition Lightning McQueen juice, for example – although knowing that there’s only apple juice revving his engine can make ‘getting to yes’ a lot easier for the parent. And now profits are growing to the point where if the product is aimed at kids, the business itself is getting to be pretty mature, indeed.

“This is our coming out party,” Hodgkins said. “Our growth rate is high and it’s not driven by promotion. We’ve reached the point where we’ve got critical mass. And there’s a vision, a commitment, and a passion for the business.” •