Bottoms Up!

With consumers craving soda substitutes, these entrepreneurs are serving up alternatives in the new-age beverage market:

and possibly shut down their production line for days. They said it just wasn’t worth it.”

Working her connections with the co-owner of the Hyde Park Co-op, an in-town grocery store, Frederick-Sowell found one co-packer willing to take a chance on her. Finally, after eight months of tasting, testing, and tweaking, she launched her first three flavors: Southern Style, Autumn Nectar, and Unsweetened Tea in November 1998. Jewel-Osco, a supermarket chain in Chicago and part of the Supervalu chain, picked up her product and by April 1999, the teas, retailing for $1.19 to $1.69, hit the shelves in all 200-plus stores.
Today Magnolia Spice Teas are available in about 20 states and several other stores including select Wal-Mart locations, Kroger, Giant, and Costco. The five-employee company earned about $500,000 in revenues in 2006 and Frederick-Sowell projects to make $2 million in 2007.

“I think the beverage industry is one of the most challenging aisles in the grocery store because the giants out there named Coke, Pepsi, Schweppes, and Snapple have 50 to 60 years of experience and unlimited capital, so they rule the category. It’s a miracle that we have survived for nine years,” she says. “But I think the reason we’ve been kept by major retailers is our unique taste profile.”

Water, water Everywhere …
In the summer of 2004, while out in California on business, public affairs executive Gretchen Cook-Anderson was struck with an innovative idea. But, unlike many entrepreneurial endeavors that are born from brainstorming sessions with colleagues or dinnertime talks between family and friends, hers evolved within moments as she stood in line at a Santa Barbara delicatessen.

Waiting to place her order, Cook-Anderson noticed a table full of pregnant women just a few feet away. A mother of twin boys herself, she smiled at the women who sat gingerly around the table, their bellies protruding as they laughed and talked. But when she saw what each of them was drinking, Cook-Anderson began thinking of a new beverage that she could bring to market that would specifically target pregnant women and nursing moms. “At that moment of seeing those women, each with a different brand of water, I realized that there must be something to this whole thing about pregnant women and increased water intake,” she says.

She immediately went online to see if there was a water product specifically for pregnant women and came up empty. Seeing the demand and lack of supply, she drew up a business plan and carried it to longtime friend Angela Patterson to get her thoughts.
Patterson, an attending neonatologist for Washington D.C.’s Washington Hospital Center, said there was one big problem: that she hadn’t thought of it herself. Both women were on board with the idea and ready to hit the ground running. Neither knew anything about the beverage business, but with Patterson’s 15-plus years in dealing with mothers and babies she felt she could–at least on paper–come up with a water-based formula that would contain all the vitamins and minerals beneficial to expectant and lactating

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