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2020 Beverage Bottler of the Year: Refreshment Services Inc. (RSI) Key West

In the picturesque, laid-back beach town of Key West, Fla. (population 25,200), residents and about 1.5 million vacationers alike are “Loving the Conch Life,” enjoying beautiful sunsets and delighting in roosters freely roaming city streets and bars at Florida’s southernmost point, lying roughly 90 miles north of Cuba.

Located in this unlikely locale — with the nearest competition about 40 miles away — is Refreshment Services Inc. (RSI) Key West. A privately held independent bottler of Purchase, N.Y.-based PepsiCo Inc., RSI has been quenching the thirst of residents and visitors for more than 51 years.

With the marketing theme of “Lovin’ the Conch Life,” RSI Key West is firmly entrenched in the community. In fact, someone born and raised in Key West is considered a “conch,” while those who have lived in the seaside community for many years are considered a “freshwater conch,” according to Mike Bartel, corporate vice president for RSI Key West.

Indigenous to Key West and the Caribbean, conches are mollusks that live in large, solid pink-and-orange-colored shells that eat algae and other tiny marine plants, Bartel says.

“People in Key West love their way of life and given that we’ve been here for 50 years, we consider ourselves part of the conch life — even though we are a ‘freshwater conch,’” Bartel explains. We developed the theme of ‘Lovin’ the Conch Life’ to help celebrate the laid-back lifestyle of the Keys.”

Engrained in the community since the Vecchie family purchased RSI Key West in 1969, RSI — the smallest of the six locations under the RSI umbrella — does much more than annually distribute 350 SKUs of PepsiCo carbonated soft drinks (CSDs) such as Pepsi, Diet Pepsi, Mtn Dew, Dr Pepper, along with Aquafina, Bubly, Gatorade, Lipton teas, Dole juices, Rockstar energy drinks and ready-to-drink (RTD) Starbucks coffees, Bartel says.

“We are part of the community,” Bartel stresses. “Our employees shop and support the stores and restaurants where we distribute products. We support local charities like Catholic Charities, St Mary’s Mission, Wesley House family services and the no-kill Florida Keys SPCA shelter, which cares for dogs, cats, rabbits and even a rooster before they find their forever home.”

We “win with purpose,” he says, pointing out that PepsiCo is a global leader in the convenient foods and beverages sector with a product portfolio of 22 brands that each generate more than $1 billion in estimated annual retail sales. The soft drink giant also maintains a “winning with purpose” vision to win sustainably in the market and embed purpose into all aspects of the business.

“To us, winning with purpose means a strong commitment to being and staying local,” Bartel explains. “Being involved in your communities, supporting local charities and fundraiser groups, working with our customers and helping them achieve their goals, being flexible, listening to our employees and customers on what needs and ideas they have. To me, winning with a purpose means always willing to listen.

“Listen to our customers, listen to our communities, listen to our employees,” he continues. “… We don’t want to be just another business based in town — there are countless ones of those. We want to be an integral part of the community. We want to be a neighbor. We want to play a small role in helping our customers and communities get better. We want to make a difference.”

With a rich history, commitment to ensuring its customers receive fast, quality service while being more than just a another business in the community, RSI Key West has emerged as an exemplary bottler in the South. This, as well as its dedication to its community and the diversity of products it distributes, is why RSI Key West has been named Beverage Industry’s Bottler of the Year.

Four generations of leadership

A true family operation, RSI Key West was purchased in 1969 by the Vecchie family, who actually invested in the Pepsi business much earlier — some 85 years ago — in 1934 in rural Taylorville, Ill., before quickly expanding its soft drink operations to Springfield, Ill., in 1936, Bartel says.

“The next purchase was Tallahassee, Fla., in 1965, Key West in 1969, then during the 1980s, Quincy, Ill., and Burlington, Iowa were added,” Bartel says. “The final two purchases were in 1990 when Decatur, Ill., and Terre Haute, Ind., became part of RSI.”

Headquartered in Springfield, Ill., Bartel brings five years of PepsiCo experience and 31 years of executive leadership with RSI to the position he loves. The vice president annually travels about 35,000 miles a year by car and has logged countless airline miles overseeing Pepsi operations at the aforementioned RSI Key West and five other Pepsi bottlers: Refreshment Services Pepsi of Quincy, Ill., which includes a warehouse in Macomb, Ill.; Refreshments Services Pepsi of Decatur, Ill.; Refreshment Services Pepsi of Terre Haute, Ind.; Refreshment Services Pepsi of Burlington, Iowa; and Refreshment Services Pepsi of Tallahassee, Fla.

From these six independent Pepsi distribution centers scattered across the Midwest and South, today the fourth generation family run Pepsi bottler operates around 75 routes covering more than 4,000 retail customer locations and services 2,000 vending and foodservice accounts. On a given day, RSI employees handle an average of 650-700 SKUs of CSDs, still and sparkling waters, and more, Bartel says.

Yet, Bartel explains that to streamline operations, RSI stopped running bottling and canning lines in the mid-1990s; when it joined Watertown, Wis.-based Wis-Pak, a manufacturer and distributor of PepsiCo and other leading soft drink brands with manufacturing facilities in Watertown and La Crosse, Wis.; Mankato, Minn.; Norfolk, Neb.; Quincy, Ill.; Dyersburg, Tenn.; Hattiesburg, Miss.; and Flagstaff, Ariz.

Joining Wis-Pak has worked “extremely well” for RSI. “Currently each of our locations receive the majority of product from Wis-Pak, a dedicated production company owned by many independent Pepsi bottlers,” Bartel explains. “It’s an incredible operation that has allowed us to focus on the distribution and building of our brands with our customers and communities [since] we no longer have to worry about the logistics and issues associated with production.”

From a 10,000-square-foot warehouse — the smallest facility and the smallest warehouse — RSI Key West distributes a wide range of Pepsi soft drinks, Dr Pepper brands and both still and sparkling waters including Aquafina and Bubly. RSI also has access to Wis-Pak’s brand lineup including Klarbrunn water, Vita Ice, Bubbl’r water and Ubr water, Bartel adds.

“Aquafina is our top-selling brand in Key West,” he says. “It outsells Pepsi and Mtn Dew. And because Key West is in the eye of hurricanes, Aquafina flies off the shelves when tropical storms are predicted.”

With operations in the Midwest and South, geographic-wise, Refreshment Services Pepsi’s six territories cover more than 21,000 square miles, servicing many rural towns along with numerous small- and medium-sized towns along the route, Bartel says.

“In Florida between Key West and Tallahassee, we cover almost 7,000 square miles,” Bartel explains. “[In] our Midwest locations, we cover over 14,000 square miles of territory. … One interesting fact of RSI is that none of our territories are contiguous to one another, so we operate each one independently. Out of our six locations, we compete again five different Coke competitors, which again speaks to the need of operating each location independent of the others.

“We are fortunate that we have great leaders and people in each of our locations that are not afraid to make decisions and take some risks,” he continues. “I’m proud of the fact that each location is a full-service facility. We handle all the deliveries to our customers out of each warehouse along with a fully staffed service repair department and a fully staffed office to best meet our customer needs. The one thing most of our customers talk about when asked about RSI is our customer service and response time — from emergency deliveries to fast response time when [fountain and vending] equipment goes down.”

Getting Pepsified

RSI Key West runs six routes through one country, Monroe County, Fla., and handles the needs of close to 300 customers while ensuring that more than 250 coolers, fountain units, and vending machines are well-stocked.

“People here believe in us,” says Nancy D’Amato, who has handled on-premise sales and customer development for RSI Key West since 2012. “The other guys have a lot to worry about when they see us coming into town.”

For instance, Dave Thibault, co-owner of Island Dogs Croce Properties, ran out of Coke products for its busy bar fountain service on a Friday, and the previous vendor said they’d “catch up with him” when they came through Miami in a week, he explains. “I couldn’t believe it. … My next call was to Nancy, and she said she’d help us out. She pulled stock from the warehouse and came right over,” Thibault says. “We were Pepsified, and they’ve been taking care of us ever since.”

For D’Amato, providing excellent customer services to new and old accounts is an integral part of her job. “In the case of Island Dogs and so many restaurants and bars in town, we try to make changeovers as easy as possible, and the majority of our customers have never looked back,” she says. “We also frequent all the local establishments in town and, really, our clients become our friends.”

RSI Key West General Manager Norberto “Flaco” Cabrera, who retired in December after 24 years with the company, notes that RSI Key West dominates the fountain business. “Our bars and restaurants are stocked with Pepsi products,” he enthuses. “… Competition is tough. Key West is a small island — really there’s no room here to grow, so any growth we realize is by taking it from the competition.”

Former Sales Manager Jason Murphy, who recently was promoted to general manager, notes that the RSI Key West market isn’t easy. “It’s a stressful market even though we’re in paradise, right?,” he says. “We’re head to head trying to get new business anyway we can.”

Along that line, Murphy says he’s most proud of the fact that after 25 years, the Key West school system now stocks PepsiCo products. “We only have one high school in town, so getting that account is something I’m really proud of,” he says.

As to which SKUs are the most popular in the RSI portfolio, Bartel suggests that it all comes down to location — the Midwest or South, pointing out the “tremendous difference” between the two geographies.

He explains that CSDs comprise 75 percent of sales in the Midwest, while only 50 percent of sales in Florida are from carbonated drinks. Water is very strong in Florida, he adds, with 23 percent of the RSI’s overall revenue coming from water as compared with the 9 percent of water sales at RSI’s Midwest locations.

New age beverages like healthy, functional teas comprise 16 percent and 27 percent of sales in Midwest and Southern territories, respectively.

“The Top 3 brands in the Midwest are Pepsi, Mtn Dew and Dr Pepper, while Aquafina, Pepsi and Mtn Dew are tops in Florida. Our sparkling water brand Bubly also is doing well, far better than we anticipated since it launched in 2018,” Bartel says, noting that the power of PepsiCo’s “Super Bowl Sunday” marketing catapulted Bubly and several other water brands.

Super sales from Super Bowl

As one of the most watched sporting events of the year, Super Bowl Sunday LIV — sponsored by Pepsi as the Official Soft Drink Sponsor — will take place on Feb. 2 at Hard Rock Stadium in Miami. The event is expected to garner considerable publicity for Pepsi brands seeing how last year’s NFL game was watched by 98.2 million fans, the lowest TV audience in more than a decade, according to New York-based Nielsen.

PepsiCo has been the Official Soft Drink Sponsor of the Super Bowl since 2002, and the Super Bowl Half-Time Sponsor since 2013, with football fans already buzzing about the 2020 half-time show featuring Jennifer Lopez.

This triple-digit, million-dollar marketing initiative by PepsiCo provides “great exposure” for existing PepsiCo brands and newer brands the company wants to focus on, Bartel explains.

“We have always featured Pepsi and we always will, but last year the Super Bowl gave us the opportunity to showcase Bubly, our newest entry into the sparkling water category,” he says. “Before that PepsiCo used some of the Super Bowl spots to gain exposure for LifeWTR.

“The Super Bowl is an incredible launching pad for our new brands or introducing new campaigns or line extensions on existing brands,” he continues. “We are then able to activate our Super Bowl activity at store level with retail displays and account specific promotions around the Super Bowl.”

“For the Love of It”

Not only is “For the Love of It” PepsiCo’s current rebranded slogan, Bartel says he “loves” that his company is keeping up with consumer trends for healthier products by producing new better-for-you products and smaller 375-ml can sizes. He also notes that sales of reduced sugar and zero-sugar beverages are seeing strong growth.

“Mini cans and smaller pack sizes are doing very well for us and we are seeing strong growth trends on those,” Bartel says. “Our zero-calorie brands are also showing strong growth led by Pepsi Zero. We have had several years of double-digit growth on that brand.

“… Over the years, we have added many water brands and non-soda brands to our portfolio,” he continues. “Today we offer eight different water brands, Lipton tea products, Gatorade, Starbucks, Dole juices, Ocean Spray, Rockstar and Propel to name a few. We have a very diverse and robust line of beverage products to meet our consumers’ needs.”

At RSI since 1988 and in the Pepsi business since 1983, Bartel says he has a true passion for his job. “I love the business, I love RSI, I love the Vecchie family,” he says. “I love the competitiveness of the business. I love the wins. And we learn from our losses. … It is still a great business where you can still stay local, be creative, help customers, help communities, help consumers and help our employees.”

Bartel also credits the strong partnership of PepsiCo. He says: “They bring us outstanding brands in an ultra competitive industry that is constantly changing. … If you look at our portfolio over the past 15 years, I would put that total portfolio up against any other soft drink or beer company in the United States.”

In the future, Bartel anticipates continued growth along with continued challenges as the company builds the next generation of leaders for RSI and the Vecchie family. He concludes, “RSI is 85 years young. The way I see it, we have at least another 85 years to go.”

 

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