Before you read on, check out our introduction to this series, An Insider’s Guide to the Beverage Industry.
In the early ’90s, Mark Panely decided to launch his company, Journey Food and Beverage Co. He began his “journey” with a year-long trip around the world on a bicycle. From his travels, Panely devised an idea for an all-natural, healthy soft drink that would be bursting with flavor, an energetic label, and a message that consumers could embrace.
Unfortunately, following the development of two distinct product lines, Journey Food and Beverage Co. was unable to maintain its business model and partnerships, eventually shutting down completely. Considering Flavorman was new to the beverage industry at the time, working with Panely and his company was an important lesson in consistent production and sustainable relationships. Journey Food and Beverage Co.’s success and failure can teach us that an idea in itself is not enough to guarantee the success of a company and its products. Flavorman CEO Dave Dafoe shares his insights:
Why did Journey Food and Beverage Co. come to Flavorman?
Mark Panely was not exactly new to the beverage industry. Before Journey Food and Beverage Co., he had developed a line of flavored juices and ciders, called “After the Fall” that were eventually sold to J.M. Smuckers. Mark came to us because he heard about the flavor development work we do and had an idea we could turn into a reality. We developed a line of four “soft brews.” He was fascinated by the idea of extracting botanicals [flavors] and brewing them. Following the development of his first line of drinks, he generated a second line that involved working with less expensive ingredients and more cost-efficient bottling.
Why was this company not successful?
Journey Food and Beverage Co. was unsuccessful for a few reasons. Panely had an affinity for ingredients that were high quality and expensive, and wanted a product that possessed a bold flavor. He was not shy about the way this product tasted. He would say “when I taste that, I want it to hit me in the gut.” When we got to the first production, we batched it just as it was formulated, according to all the specifications, but he was not satisfied with the flavor. We ended up changing the formula, which increased the cost significantly, and went outside of the nutrition panel. This not only altered the process, but damaged the relationship with the contract manufacturer, who was not pleased to be waiting around for a final manufactured product.
The situation was similar for the other beverages in the product line. We adjusted almost every aspect of the original product – from flavor, to carbonation, and sweetener. He made several batches of these products, and every time, the formula was altered. Eventually, Mark Panely realized that the cost for additional vanilla was more than he was selling the cost of a single drink. With every case he sold, he was losing two to three dollars. In order to correct the mistake from his original line, he created a second batch of drinks that were more cost fixed and were placed in aluminum cans rather than glass bottles. Along the way, Panely lost many of his distributors. So even though the product was reinvented and the costs were lower, there were still formula changes and a mismanagement of inventory that ultimately caused the closure of the company.
What is your advice for managing partner relationships?
To put it simply, be consistent. From the development of the beverage to production and sale, it is important to work with experts who can develop the desired formula. Once that formula is developed, it should be final. It needs to be manufactured several times before any changes to the formula are made. Over time, consumers will be able to provide feedback about the quality of the product and their overall satisfaction. The second precautionary step is to manage inventory correctly to ensure you do not run out of your product. If you run out of a product needed by a distributor, your shelf space will quickly be filled by someone else. It is important to be consistent with your product in every way.
What was your favorite part about working with Panely and his company?
Working with someone with such marketing talent was an incredible experience in itself. Panely was set on making a product that his consumers would love, that was interesting and creative, and had a positive message. He was more than capable of running the front half his business all on his own,but looking back on this experience, a business partner could have been beneficial to Panely and helped his company achieve major long-term success.
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