By Anna Pulley
By Erin Sherbert
By Chris Roberts
By Erin Sherbert
By Rachel Swan
By Joe Eskenazi
By Erin Sherbert
By Erin Sherbert
But if cracking the code of Coke's taste was easy, competing with Coke and Pepsi in the marketplace proved difficult. In the long run, 80/20 Cola likely would have died due to lack of interest; but the reason it lasted less than six months is the reason most cola brands can't compete with Coke and Pepsi: profit margins.
Houston seemed like the best place to ship the first few thousand cases in the late spring of 2000. Skyy's representatives in Texas were eager to give it a shot; as Weiner explains, "People drink a lot of cola down there." There was no fanfare, no "80/20 Cola Day" -- just a bottler and distributor hired out to handle the cola. There was little advertising, and the only interview Kanbar did was with the trade magazine Beverage Industry; Skyy launched its Skyy Citrus vodka at the same time, and he told the magazine that his favorite drinks were a Skyy Citrus martini and "80/20 Cola served ice cold." And 80/20 would be selling for less than Diet Coke, so consumers could appreciate the value.
"I didn't know what the margins were -- I could've found that out in a minute," Kanbar laments. "I thought Coca-Cola makes a dollar a case! Sell a 24-pack, and they make a dollar! So, fine, I'll make 50 cents! That's a hell of a business! I didn't know it was a dime!"
Actually, as Jason May recalls, the profit margin on sodas is closer to a penny a case. Making 80/20 Cola profitable would mean selling in mass volume. Selling in mass volume would mean a nationwide or large regional rollout -- not just Houston. A large rollout would mean mass advertising. Mass advertising would mean a huge financial outlay -- not to mention competing against Coke and Pepsi for ad space, bottling, distribution, and other mechanics of the soda industry that Coke and Pepsi have a lock on. "I think what happened was that it was put to rest before the investment was too heavy," says May. "It was a big learning experience for everyone, and what everyone realized was that a one-penny-per-case margin is not something you want to work on, unless you have the volume that Coke and Pepsi have, and this particular product wasn't going to get to that level."
"Cola's so cheap that unless you're Coke or Pepsi, and you have your own distribution network, you can't distribute a cola," says Weiner. "It doesn't work."
"Don't go into a business where you don't know the margins!" says Kanbar. "Sometimes," he adds, "you get a little cocky."
By July, Kanbar had pulled the plug and Weiner had left to pursue his own company. Kanbar kept a few cases of 80/20 Cola for himself and donated a few pallets to the San Francisco Food Bank. The rest of the supply was shipped to surplus goods stores and sold at a loss.
Shortly after the 80/20 Cola project was scrapped, Russ Weiner left to create Rockstar, an energy drink that he's begun to sell on the West Coast. While Weiner was the ostensible president of 80/20 Cola, Rockstar was his passion; he'd seen how well nutrient-packed "energy" drinks like Red Bull were selling in clubs and decided to get in by making a drink that tastes just like Red Bull, but sells at the same price in a larger can -- which Weiner argues is a better value for club owners. Weiner had also seen how the big soft drink companies were muscling into energy drink territory. PepsiCo recently purchased Gatorade and South Beach Beverages' SoBe line of teas; Coca-Cola, which failed in its attempt to buy both those companies, is now test-marketing KMX, an energy drink set to compete directly against Red Bull.
\rIt's the same cola war. Only the flavors have changed.
Weiner believes in Rockstar the way he never believed in 80/20 Cola. While 80/20 was flopping, he was trying to convince Maurice Kanbar to get behind Rockstar instead, but Kanbar demurred. "He's very intelligent and has done a lot of amazing things, but energy drinks are just not his thing," says Weiner.
Weiner harbors no resentment toward Kanbar; indeed, he cites Kanbar as a genius, a true mentor, and an inspiration for the way he wants to handle his drink. About six months ago, he pushed Kanbar one last time to get involved in Rockstar, and Kanbar responded with what Weiner now recalls as the best advice he's ever gotten: "If you're really passionate about something, and you really want it to succeed, you need to invest your own money in it."
Kanbar employee Jason May remembers talking to Weiner the day after he wrote a large check to get Rockstar's production moving. "We were talking, and Russ said, "Fuck, Maurice is so right. I know what he means now. I just sent the biggest check I ever wrote in my life, and I can't stop thinking about this thing, no matter what I do.'"
Maurice Kanbar moved on as well. There are a lot of things at Rex Products to move on with, after all. First is the Bajaj scooter line, which he hopes will be available this summer. "Importing the Bajaj scooter, I want to tell you, it's fun," he exclaims. "I can't wait for the EPA to approve the bloody thing so I can buy one and throw away my Yamaha! I love this machine. I love this machine!"