Can you believe we didn’t really discover vitamin C until the 1930’s? Well, Nile Foster, knew what to do with it.
Dave Young:
Welcome to The Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
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Dave Young:
Welcome back to The Empire Builders Podcast. Dave Young here alongside Stephen Semple. And Steven has just told me what today’s topic is and made the assumption that it’s probably something from my childhood and sort of… We were more Tang kids than Hi-C.
Stephen Semple:
Okay.
Dave Young:
So Hi-C is the topic and I’m probably a little old maybe because it was the little Hawaiian guy, right? Their TV-
Stephen Semple:
Yeah.
Dave Young:
… commercials were the little Hawaiian guy with the pow or something like he’d come and I remember what he would do, saki or something, but he was kind of an obnoxious little mascot. But this is a orange drink or a fruit drink for kids that had some vitamin C in it, which made it a health food.
Stephen Semple:
Basically.
Dave Young:
Yeah. But I was the Apollo generation, so the fact that the astronauts drank Tang-
Stephen Semple:
Yeah, that was the-
Dave Young:
… all I really wanted was some Tang.
Stephen Semple:
You wanted Tang?
Dave Young:
Mm-hmm.
Stephen Semple:
All right. Well, Hi-C is actually kind of a surprising story because it’s actually a story about a company that built a product around a technological constraint and then had to pivot as the technology eliminated that constraint, which is kind of similar to Swiss Miss. Remember when we did Swiss Miss, there was a couple of these technological changes that forced them to pivot. So Hi-C was launched in 1946 and originally as Hi-C orange. And then of course, as they added a bunch of other flavors, things like that, they eliminated the word orange from it. And it was created by Niles Foster in Florida and in 1954, it was acquired by Minute Maid for approximately $40 million. So they did really quite well. And it’s estimated that they were doing $5 million in sales at the time.
And then in 1960, Coke buys Minute Maid and Hi-C now finds itself with bigger distribution. So today Hi-C is a Coca-Cola brand. For generations of kids, it was this brightly colored fruit drink that we all grew up with. And frankly, if you ever ate at a McDonald’s, there’s reasonable chance that you had a Hi-C there. But Hi-C started with essentially a problem. And the problem was this, how do you give Americans orange juice when most Americans can’t easily store orange juice?
Dave Young:
Ah, okay.
Stephen Semple:
Even though it was launched in 1946, our story actually starts in the 1930s. Here’s the thing that I kind of found interesting is that basically vitamin C had only been identified as a vitamin in the early 1930s.
Dave Young:
So people are still getting scurvy or?
Stephen Semple:
Well, people knew that you should be having fruit, but they didn’t identify-
Dave Young:
Vitamin C.
Stephen Semple:
… vitamin C specifically. So vitamin C was discovered as a vitamin in the early 1930s. And then in 1941, the National Research Council published the first recommended dietary allowance. So for the first time, Americans were given specific guidance on nutrition, including vitamins. “Here’s how much you should consume.” So nutrition was now something that could be measured and that created interesting marketing opportunity because instead of simply saying, “This is good for you,” we can now say, “This gives you your daily allotment of vitamin C.”
Dave Young:
Your recommended daily allowance. Yeah, yeah.
Stephen Semple:
There you go. And this becomes important because along comes Niles Foster who’s working in Florida. Florida has lots of oranges, but there’s a problem. Orange juice is not the breakfast staple we think of today because fresh oranges were seasonal, fresh juice did not travel well, and storing and distributing juice was a huge problem. If you wanted orange juice, what happened in those days, you squeezed it yourself.
Dave Young:
Okay. So you got to get oranges to people. Yeah.
Stephen Semple:
Yeah. So he sees this opportunity. Could he create this affordable orange-based drink that tasted good, could sit on a grocery shelf, didn’t need to be frozen, and provided the nutritional benefit as outlined in the guidelines?
Dave Young:
Gotcha. Okay.
Stephen Semple:
So essentially what Foster did is he developed an orange drink made from water, sugar, orange juice, concentrate, a bunch of different citrus oils and fortified it with vitamin C.
Dave Young:
All right. And canned it?
Stephen Semple:
Well, the other challenge was vitamin C, which is ascorbic acid, is tart.
Dave Young:
Yeah. It would eat through a can.
Stephen Semple:
Yeah. So he had to play around a lot with the formulation and also a lot of it was adding certain oils and things like that. So basically you could put it in a can.
Dave Young:
Gotcha. Okay.
Stephen Semple:
Yeah. So he created this convenient, inexpensive, shelf-stable orange drink with vitamin C.
Dave Young:
All right. Then way earlier than I figured.
Stephen Semple:
Yeah. And what should he call it? He called it Hi-C
Dave Young:
Because it had high concentration of vitamin C.
Stephen Semple:
Yeah.
Dave Young:
Okay.
Stephen Semple:
And it’s funny because normally having the benefit built directly into the brand name is often not good because if he called it high concentration of vitamin C, Hi-C was kind of, while it’s sort of what it was at the same time, it was such a simplification of the name. I though it was great.
Dave Young:
Yeah. And it locks in that benefit, so it’s easy to understand, but it also just has a cool feel, like you say it pretty easily. Yeah.
Stephen Semple:
Yeah. So he knows a product, but he needs to make it. And he’s not a wealthy guy. He couldn’t finance factories and things along that line. So he took a page from Coke and he licensed it. But here’s the problem with taking a canned drink national. America’s big. Shipping heavy cans filled with liquids thousands of miles is expensive. So his expansion model was basically contract packers around the country. Hi-C provided the formulation and the standards, but local and regional processors could produce the product. But the other thing he allowed them to do was produce the product closer, not only closer where the markets could be sold, but he also allowed them to do regional things. So in other words, if you’re a place that had lots of strawberries, you could do a strawberry version of Hi-C.
Dave Young:
Okay. That’s really interesting because you give up a certain amount of control there. I mean, a lot.
Stephen Semple:
Yeah. So for example, one of the first ones to do it was a co-packer in Geneva, Ohio, which did, because there’s lots of grapes growing there, did a grape drink one. So Hi-C developed a grape drink. And then there was a Michigan operator who did apples and cherries. So it led to all these Hi-C flavor variations.
Dave Young:
Well, see, and this is another key point about why I didn’t become a Hi-C fan as a child. Nebraska had corn and beef and nobody wants either of those in a drink.
Stephen Semple:
Could be.
Dave Young:
I mean, a warm cup of boullion is all right sometimes.
Stephen Semple:
Now, here’s what things get interesting. So Foster is building out Hi-C, getting it popular and whatnot, and there’s a technological revolution. Refrigeration ownership explodes.
Dave Young:
Okay. Yeah.
Stephen Semple:
So remember, the problem was no refrigeration made, canned juice. But by the 1950s, refrigerators were almost in every household, right? Yeah. So that changed what food companies could sell, and guess what ended up happening?
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell]
Dave Young:
Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.
Stephen Semple:
In 1950s, refrigerators were almost in every household, right? Yeah. So that changed what food companies could sell, and guess what ended up happening? 1946, along comes Minute Maid shipping frozen concentrated-
Dave Young:
Orange juice. Yeah.
Stephen Semple:
Yeah. So now family… Right. And then along comes Tropicana. Anthony Rossi starts processing citrus in Florida and he creates this flash pasteurization and you got Tropicana Pure Premium. So now you’ve got all these competitors coming in competing with Hi-C, and essentially the technology was eliminating the need for Hi-C.
Dave Young:
Yeah.
Stephen Semple:
This is a pivotable moment. Hi-C could no longer win by simply saying, “We make orange juice convenient.”
Dave Young:
All right.
Stephen Semple:
Right?
Dave Young:
So what was their next pivot?
Stephen Semple:
Yeah.
Dave Young:
Because they’re still around.
Stephen Semple:
Yes. So what Hi-C leaned into is something that competitors weren’t owning. It wasn’t just simply orange juice. It was fun plus flavor, plus convenience, plus vitamin C. The brand advertised aggressively, aggressively the fun factor, and the other combinations of juices that there were. So in 1954, Minute Maid comes along and acquires the company, and then, as I said, then Coca-Cola came along and acquired Minute Maid, so it’s now all part of the Coca-Cola machine, and it continues to expands flavors. It’s got orange pineapple, pineapple grapefruit, Florida Punch, peach, grape, apple cherry, all these sorts of things. So it’s less reliant on orange juice and it’s really a fruit drink brand.
Dave Young:
So I want to fact check myself on something I said earlier. That little Hawaiian guy, that was Hawaiian Punch, not Hi-C.
Stephen Semple:
Oh, that was Hawaiian Punch. Okay.
Dave Young:
Right?
Stephen Semple:
Right.
Dave Young:
But yeah, that’s what popped into my head.
Stephen Semple:
Right, but one example they did really well on the kids’ flavor, characters, all the other stuff is in 1987, Hi-C created Ectocooler as a promotion tie-in with the real Ghostbusters, and it was supposed to be temporary, but it was loved so much that it ran for quite a while as people are drinking this gobbly, gooey, green looking looking stuff. So Niles Foster started Hi-C to solve a practical problem involving orange juice nutrition and shelf stability that then later got technology, took all that away, but kids are still drinking it because along the way, the product was able to pivot and the brand has continued to survive.
Dave Young:
I don’t want some orange juice. I don’t want a glass of orange juice. I want something fun as a kid.
Stephen Semple:
But I think the thing is, the first lesson was the innovation, right? But then the second thing was they didn’t confuse the solution with the business. When refrigerators came along, they couldn’t look at themselves as being, “We’re in the shelf stable orange juice business.” Instead, they’re able to go, “We’re in the fruit drink business.”
Dave Young:
Well, and then they figured out juice boxes, right? They figured out how to put this stuff into individual servings.
Stephen Semple:
Yes.
Dave Young:
That had to be big because now you can put it in a lunchbox.
Stephen Semple:
Yes. But the product survived. They were able to change their thinking away from the original problem they were trying to solve, and they were able to pivot away from that and do other things. I though it was interesting because it paralleled a lot of the Swiss Miss challenges, right?
Dave Young:
Sure. Yeah. You have to be able to react and adjust and pivot. I mean, pivot is just, “Hey, conditions have changed. What are we going to do to keep the company alive?”
Stephen Semple:
Technology in this case, technology has come along and removed the problem that we were originally trying to solve. So what do we do now?
Dave Young:
Yeah. So what about your childhood? Did you drink Hi-C? Did they have it up in the northern reaches of Canada?
Stephen Semple:
Oh, yes. Yes, we did. So I definitely remember Minute Maid Orange Juice because I remember making the orange juice and you’d wait for the plop. That plop.
Dave Young:
Took a long time for that giant frozen chunk of juice, and then you had to use a big wooden spoon to crush it and mash it into the water. Hi-C would be a lot more convenient.
Stephen Semple:
I definitely remember Minute Maid. And then I remember apple juice being kind of the other thing. I don’t think we had Hi-C around much. We were not big on things that had sugar added in my household when I was growing up.
Dave Young:
I think what my mom was doing was… I remember chewing a lot of vitamin C tablets.
Stephen Semple:
Right.
Dave Young:
So I think she was just getting us our vitamin C in a different way and we weren’t on the Hi-C path.
Stephen Semple:
Right. But it’s funny, I do remember the odd time when we’re talking about Hawaiian Punch. I do remember the odd time Hawaiian Punch making its way into the household.
Dave Young:
Yeah, this stuff was always just too sweet for me. I like sweet stuff, but the sweet drinks, a little too much sometimes.
Stephen Semple:
Yeah. So again, and this is an example of… It’s interesting when we think about technology, and there’s always the obvious things that technology is going to impact, but it’s interesting that we’ve now done a couple of food businesses where these food businesses were created because of either technological challenges or technological changes. It’s very easy when we see technology coming to see the things it’s going to eliminate. It was easy if we’re sitting here in the 1930s, economists in the 1930s at the beginning of what we call the second industrial revolution. At that point, something like 33% or 35%, something like that, of people work directly in the agricultural industry. And so it was very easy for economists to go, “The economy’s screwed because these jobs are going to all disappear.” And they were right, they did, because today it’s what? 5% of people work directly in agricultural industry.
Dave Young:
Yeah, yeah.
Stephen Semple:
But what’s often hard to see is what are all the new opportunities that happen? I was reading somewhere that if we go from 1920 and we go from 1920 to the year 2000, something like 60% of the jobs that we do didn’t exist. And some of them are ones that are surprisingly… like heating and air conditioning repairman. That job didn’t exist. We don’t think about that as being an opportunity that was created by the industrial revolution, right?
Dave Young:
Yeah, for sure.
Stephen Semple:
And this is the reason why some of these predictions can be hard to call, but also the reason why you’ve got to keep your eyes open to the opportunities.
Dave Young:
All right. Hi-C. Cheers.
Stephen Semple:
Hi-C.
Dave Young:
Cheers to you and may Coca-Cola carry the brand forward proudly or whatever.
Stephen Semple:
There we go.
Dave Young:
I don’t know. I don’t know if I… They don’t need our help.
Stephen Semple:
I’m not feeling the enthusiasm.
Dave Young:
They’re probably not listening to The Empire Builders Podcast to get their advice on how to manage the Hi-C brand, but it’s fun looking at it. Thanks, Stephen.
Stephen Semple:
Thanks, Dave.
Dave Young:
Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.
