The past year has been one of momentous change for Nor-Cal Beverage Co., Inc., a West Sacramento, Calif.-based beverage co-packer, distributor and vendor. After 70 years in the soft drink business during which three generations of the family-run company built a successful bottling and distribution operation, the Deary family sold its Cadbury Schweppes soft drink franchise last March. Nor-Cal is now strategically focused on solidifying its reputation as a world-class beverage co-packing operation and is making substantial investments in its production facilitiesto offer state-of-the-art services for an increasingly diversified beverage market. At the same time, Nor-Cal is branching out into the beverage marketing arena with its own energy drink brand, Go Girl.

Photography By Kevin Graft

Throughout Nor-Cal’s history, diversification has been one key to its continued success. Roy Deary started the business in 1937 as the Hires Bottling Co. of Sacramento with four employees and a small plant in downtown Sacramento, according to Roy’s son, Donald Deary, Nor-Cal president and chairman.

“Their sales the first year they were in business was about 20,000 to 25,000 cases and in today’s world we do that in about a third of a day in production,” Don notes. When Don and his brother, the late Grant Jr., took over the business in 1963, Don went into production and transportation while Grant took over the sales operations. The close family involvement continues today with the third and fourth generations of the Deary family now working in various positions at the company.

In the 1960s and ’70s, Don and Grant recognized the need to diversify the business and began adding vending services, beer distribution (see sidebar on Page 20) and contract packing operations to the company’s capabilities, and in the 1980s, a food service division was brought on board.

“We’ve always been strategically minded to diversify to the best of our ability. For most of our history we were the No. 3 bottler in our market and we saw it in our best interest to diversify, and beer distributing and vending were natural extensions of our soft drink business,” notes Roy Grant Deary III, executive vice president of sales and marketing and Grant Jr.’s son.
 

In 1974, Nor-Cal moved to a larger production and office facility in West Sacramento. The company now has more than 540 employees and operates two production facilities—one in West Sacramento and one in Anaheim—a 300,000-square-foot distribution center in West Sacramento and a separate beer distribution facility in Loomis, Calif.
In recent years, the Deary family faced the increasing challenge of operating an independent soft drink bottling operation in a consolidating and changing market—margins became slimmer while the price of raw materials and fuel costs continued to go up. Although the soft drink business was in their blood, as Don says, the family made the ultimate decision to sell its soft drink business.

“It was really an emotional decision for the family to take this step and it was one of the hardest days of our lives, I think,” says Shannon Deary-Bell, executive vice president of contract packing and manufacturing, and Don’s daughter. “We had many loyal and dedicated employees that had been working for us for 20 to 40 years. But it was the right decision ultimately, as our partner was no longer our partner in business. We were losing money every year and we just couldn’t keep going down that road.”

World Class Operations
As a contract packer, Nor-Cal is a major producer for Coca-Cola’s PowerAde and Minute Maid line of products, Hansen Natural Corp., Arizona Iced Tea and New Age brand vitaminwater as well as a number of energy drink brands. The proliferation of New Age beverages as well as energy drinks opens up vast opportunities for Nor-Cal as there is an untapped market for state-of-the-art co-packing operations on a national scale, says Grant.

“What we’re finding is that consumers are driving innovation and driving the trend for healthier, better-for-you products and today many beverage companies are marketing-driven companies, not production-driven. So there’s a demand to outsource production and it’s also been one of our core competencies for many years,” he remarks.

The company was able to use the proceeds of the soft drink sale to make a significant investment in upgrading its West Sacramento production facility.

According to Deary-Bell, a $35 million project to upgrade and improve the production lines is slated to be completed by late spring and, once completed, the facility will have the capability of producing 31 million cases a year. The company is installing three new lines at the West Sacramento plant—a hot-fill 24-ounce can line, a swing aluminum can line to run 8.4-ounce up to 16.9-ounce beverage containers both with hot, cold and carbonated capabilities and a combination glass and PET single-serve hot-fill line to run beverage containers from 12- to 34-ounces. The plant also has four aseptic box filler lines and two aseptic pouch filler lines. The company also is tripling the size of its blending capabilities and remodeling the filling rooms, according to Paul Orebaugh, vice president of engineering.

“We’re looking to have the ultimate flexibility to package canned containers, PET and glass and provide our customers with the ability to pick and choose from different labeling options,” explains Orebaugh. “Our blending facilities are going to be fully automated and computer controlled so that we will have a world-class operation with the latest technology.”

Nor-Cal’s production facility in Anaheim, Calif., which it bought in June 2001 and made extensive upgrades to, was one of the only co-packing facilities to receive The Coca-Cola Company’s E3 certification, which recognizes a high level of quality, environmental and safety standards. Between the two production facilities, Nor-Cal projects that it will be producing around 65 million cases a year by 2009 with estimated sales around $200 million.

Nor-Cal believes strongly in exceeding customers’ expectations for quality and service and it achieves this through its exceptional operations, yet at the core of the company’s work ethic is a dedication to family values. Many of Nor-Cal’s employees have been with the company more than 30 years.

“This is a very hands-on family. They tend to take care of the people who work for them and they have compassion and loyalty to their employees,” says Orebaugh.

In fact, it’s not uncommon to see one of the Dearys on a forklift in the warehouse or out on the production line.
“My Dad and my uncle always had an open door policy and never expected their people to do anything they wouldn’t ask themselves to do and we grew up with that entrenched in us. We believe in and have the same work ethic as they did,” Deary-Bell remarks. “And I think there’s a common respect with our employees and if you don’t have that common respect, I don’t think you’re going to be successful.”
 

The Deary family ultimately believes that its family-run heritage gives it a distinct advantage in the beverage industry.
“No. 1, we’re more flexible, and No. 2, there’s a stake in the ground because we’re rooted to the communities that we work in,” remarks Grant. “And there’s a legacy, a sense of pride and stability and we have an ownership mindset.”

An Energizing Enterprise
As a co-packer for numerous energy drink brands, Nor-Cal witnessed the continued growth of the energy drink category and, in an ongoing effort to diversify its business, decided to develop its own brand. Go Girl launched in 2005 in the Sacramento area and is available throughout California, Nevada and Hawaii, with plans to eventually expand the brand nation-wide by the end of 2008. Packaged in a distinctive 12-ounce pink can, Go Girl is specifically targeted to women as it’s sugar-free, has only 3 calories per serving and contains, along with caffeine and taurine, an appetite suppressant ingredient, Super Citramax. Go Girl also donates a portion of its case sales to breast cancer research.
“We saw an opportunity to differentiate ourselves by coming up with a unique, niche targeted energy drink that would serve the female market. About 30 to 40 percent of the energy drink consumer market is female, but nobody was targeting them,” asserts Grant.

The company worked with several flavor houses to perfect the unique flavor profile and Nor-Cal has been successful in gaining grocery store distribution for the brand.

“That’s where we separate ourselves from the crowd. When we go to a wholesaler, our biggest selling points are, No. 1, we have a good product, and No. 2, we already have built-in grocery chain distribution,” remarks Gordon Guzenski, director of business and brand development.

And Grant believes Nor-Cal’s 70-year history as a manufacturer and distributor gives the brand a distinct advantage in the marketplace.

“We haven’t just jumped into this game. We’re no fly-by-night. We know the business—we know it on the manufacturing end and the retail end and we know our route-to-market core competencies,” he asserts.

This spring Nor-Cal plans to begin test marketing Go Girl Glo, a line extension with a pomegranate and starfruit flavor profile. Go Girl Glo also contains added calcium, vitamin E and aloe vera, which is good for skin and hair health, and will be packaged in a teal can with a portion of case sales going towards ovarian cancer research and awareness.

With the upgraded West Sacramento plant scheduled to be up and running by late spring and the Go Girl brand charting strong sales, Nor-Cal is strategically positioned to achieve new levels of growth. And as it moves into a new phase of its beverage business, Nor-Cal proves its possible to successfully evolve while remaining true to its family legacy.

From Beverage World January 15, 2008