Entrepreneurs seeking out a product niche are well advised to stay away from the dog-eat-dog world of soft drinks. Dominated by global multibillion-dollar soda giants who have a strong hold on distribution channels and pour hundreds of millions into advertising, the category is a formidable challenge to even the most experienced marketing minds.

All of which provided a wonderful opportunity for a former Canadian ski instructor who never went to college, let alone studied marketing. Peter van Stolk, the 40-year-old founder of Jones Soda, was quick to learn the rules of the industry and then ignore them. Since he began selling his iconoclastic drinks out of ice chests in snowboarding shops and tattoo parlors in 1996, he's sold 187 million bottles. In explaining the runaway success of the brand, van Stolk is the first to admit, "The world doesn't need another soda." But what young cynical consumers apparently did need was a brand with which they could identify. Van Stolk gave that to them quite literally. He created a virtual community of fans who gather at the company's website to chat, blog, enter contests, share movie reviews and download freebies. Unlike the slick Madison Avenue spin of huge competitors, Jones Soda -- without any money for advertising -- created a cool under-the-radar appeal by urging fans to send in photographs to the website to use as bottle labels. The Seattle company now has over a million submissions and has used 4,372 of the photos. Consumers collect the ever-changing labels and trade them in web chat rooms, and even have their own Jones Soda custom labels specially made for them.

"We allowed the labels to be discovered and that gave consumers a sense of ownership. It makes it more relevant to them and provides an emotional connection," van Stolk explains. "With big soda brands, the 'Britney Spears model' -- paying a lot of money to some hot artist to sponsor your beverage -- is just so done. The wonderful thing about our competitors is, for all the money they have, they should be thinking more originally but they don't. If they ever do, I'm dead."

Don't expect to read about van Stolk's demise any time soon. He is widely thought to be one of the savviest Generation Y marketers around. The fastgrowing category of consumers, aged 12 to 24, currently numbers over 50 million in the U.S. Using the company's website as a primary marketing focus, van Stolk's engaged that elusive consumer segment at a grassroots level, creating a kind of brand loyalty that bigger competitors spend millions for and don't achieve. Those consumers are fueling the growth of the New Age beverage industry, generating almost $10 billion in annual sales. At Jones Soda, customers who love flavors like Crushed Melon, Fufu Berry and Happy have pushed sales from $2.4 million in 1997 to $20 million in 2003. This spring Starbucks began selling some Jones Soda flavors, joining distributors like Safeway, Albertson's, Barnes & Noble and local gourmet and health food stores. In addition to its flagship soda, Jones sells caffeine-infused WhoopAss and Energy drinks and Jones Juice, which offers fortified juice combos like Purple Carrot.

Jones Soda is still a mere shadow compared to its giant competitors. But while those companies chase hordes of consumers, van Stolk has finely focused Jones as a lifestyle brand for those who find their pastimes, if not their values, in alternative sports. Customers share many of the same characteristics of the brand itself, an irreverent aggressive underdog not afraid to take risks in competing against larger forces. The company's slogan urges: "Run with the little guy." But like global soda makers, van Stolk knows his product is not just about sugar and carbonated water. A founding premise at Jones is, "For today's youth market, every brand is an accessory and every purchase makes a statement."

Given that fashion positioning, it's not surprising that Jones' product development is slightly different from the industry status quo, with an emphasis on combining great taste and great looks. "Our competition spends over a billion dollars a year. We can't play by their rules," van Stolk emphasizes. "When you're marketing without money, you have to stay true to the fact that you need to make an emotional connection."

Van Stolk gave up his life on the ski slopes in 1987 and started Urban Juice and Soda Co. in Vancouver, after realizing the potential of emerging alternative products in the beverage category. He became a successful distributor of established brands in western Canada but decided he wanted to strike out with his own formulations. Van Stolk originally wanted to name his company Smith Soda, liking its ubiquitous quality and populist feel. With that name already taken, he settled upon Jones instead.

A photographer friend, Victor John Penner, suggested Jones Soda use his images as labels. Van Stolk liked the idea but felt it could be used even more effectively. "I said 'No, dude, we've got to open it to everyone.' So it just sort of happened like that," he recalls. "Lots of things in branding are like that."

Van Stolk had limited capital and most of his early design decisions were driven by a shoestring budget. It took $250,000 to create a bottle mold, for instance, and he knew he would need a big inventory, so he picked something in stock. The shape and clear glass of a Jones Soda container -- resembling an old Corona beer bottle -- showcases the neon drink within and its photo labels, most often printed in contrasting black and white. Flavors like Blue Bubble Gum are bright blue; Bug Juice is a milky, greenish white.

While the labels, which have been designed inhouse, have remained in essentially the same format since the start of the company, van Stolk argues that continually switching out photographs keeps their appearance fresh and interesting to consumers. "We're always changing -- that's who we are," he says. "It's about fluid branding versus static packaging. Traditional brands don't have that design to work with. They keep trying to revamp."

Although an instinctive marketer, van Stolk goes straight to the source when it comes to product development and marketing. Customers have the final word. He's been trying to kill off the brand's Blue Bubble Gum flavor for the past three years, he says, finding it undrinkable, but fans of the super-sweet drink have convinced him otherwise. (In contrast, his favorite flavor is Green Apple.) Still, he has little time for the kind of conventional focus groups that direct every decision made at larger competitors. "I believe focus groups are junk. They only justify what you want to believe is true," he contends. "We go in [to talk to kids] with no agenda. You're so much more successful if you don't fall in love with your own ideas."

Even though Jones Soda doesn't have the kind of TV budgets of its industry peers, it is unlikely van Stolk would use much media advertising anyway. His target consumers are increasingly hard to find through conventional mass media as they spend more time on the computer. So Jones Soda's marketing has been more promotions-driven, with the company establishing street credibility with this generation of young consumers, who are cynical of conventional advertising and media savvy beyond their years. Jones Soda was one of the first companies to enter into sponsorship deals in alternative sports, backing snowboarders, skateboarders and BMX [bicycle] riders. (It has since expanded its sponsorships to include a young ballerina, spelling bee contestants and a 10-year-old gospel singer.) Three brightly-colored, flame-covered Jones RVs travel the country, bringing product samples to people at sporting events, concerts and county fairs.

On the company's website, fans can follow the activities of the Jones RV team, watch videos, listen to music, enter contests and buy merchandise like Jones-branded hats and T-shirts from the Jones store. They can get to know company staffers through breezy, self-written bios that provide essential information like Zodiac signs. Consumers also can use the website to submit photos -- children's birthday parties, family functions, pets, corporate gatherings -- to have the company manufacture customized bottles. Jones Soda likes to describe itself as the first "audience participation" player in the beverage category.

"Van Stolk found that everyone who comes in contact with Jones can make it their own," observes Ernest von Rosen, the company's web designer. "Customers can hold up a mirror and see whatever they want, and that has become the brand and it has worked very well."

Jones entices fans with free stuff, which costs the company little since consumers download and print it themselves. "I have to keep things cheap and easy," von Rosen continues. "Anytime I can develop a prize package that is electronic and downloadable, that gives me the biggest bang for my buck. I can make 5,000 people happy for the cost of a couple of hours work." The company is very good about generating free media too, with journalists drawn to the quirky image of Jones Soda. Last November, for instance, it manufactured 6,000 bottles of Turkeyand- Gravy soda. Less than two hours after appearing on the Jones website, the Thanksgiving-in-a-bottle drink sold out. (Some entrepreneurs put their bottles on eBay, with bidding hitting $63 for a two-bottle set.) The soda flavor generated ink across the country, the UK and Europe.

Even as larger companies are eyeing Jones Soda's success in grassroots marketing, van Stolk is looking at expanding its customer base. Jones Soda brand is "a state of mind" as much as a demographic, he says. So while Jones has been associated with boards, blades and bikes, he sees the company's expanded distribution bringing a more varied customer base. "I think we can go mainstream but remain really cool. It's like VW. They've gone from the Bug to introducing a $100,000 car."

He's also thinking about a larger product base. "I'm not very smart -- I'm just learning the beverage industry. If I took what I've learned already and put the Jones brand into clothes, I think we'd be more successful. Now we have the middleman [distributor] in our model; next we'll sell directly to consumers."

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