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Faygo Beverages Inc. Business Information, Profile, and History

company soda line detroit

3579 Gratiot Avenue
Detroit, Michigan 48207-1829
U.S.A.

Company Perspectives:

We care more than others think is wise, We risk more than others think is safe, We dream more than others think is practical and ... We expect more than others think is possible (National Beverage Corp.).

History of Faygo Beverages Inc.

Faygo Beverages Inc. is a regional soft drink bottling company based in Detroit, Michigan, that distributes its products to stores in 33 states, with Michigan, Ohio, Indiana, and western Pennsylvania its primary sales area. In addition to sodas, Faygo also makes non-carbonated sweetened fruit-flavored drinks and seltzer waters. Faygo products are sold at a lower price than national brands, and many flavors are directly inspired by popular competitors such as Mountain Dew, Dr. Pepper, Vernors, and Canada Dry Ginger Ale. The company was purchased in 1987 by National Beverage Corporation of Florida, which also owns West Coast soda maker Shasta and several other beverage companies.

Beginnings

Faygo was founded by two brothers, Ben and Perry Feigenson, who had immigrated to Detroit, Michigan, from their native Russia. Trained as bakers, the Feigensons adapted the flavorings of some of their cake frostings and, under the name Feigenson Brothers Bottling Works, began to bottle strawberry, fruit punch, and grape-flavored soft drinks in November 1907. They would manufacture a batch of drinks, then close the production line and take their products around on a horse-drawn wagon to sell them, as the beverages contained no preservatives and were best consumed fresh. They charged three cents for one soda, and a nickel for two. In the winter, when beverage sales dropped, they also sold bread and fish to make ends meet. To save money the brothers and their families lived above the small bottling plant.

Over the next decade the soda business grew, and the Feigensons were soon able to buy their own homes. They also hired their first employees and bought a second horse-drawn wagon for deliveries. New flavors were added, including Sassafras Soda and Lithiated Lemon, which used lithium salt as a flavoring agent. Taking a cue from the sound the carbonated beverages made when a bottle was opened, they also began calling their products "pop." The company's success was such that a new plant was needed, and one was built on Beaubien Street in Detroit.

In 1921 the firm abbreviated its name to "Faygo" because it fit more easily on the bottles. The Feigenson brothers also purchased their first delivery truck and began to make home deliveries in 1923. A vanilla flavored soft drink, a seltzer water, "Ace Hi" (an imitation of the popular soda NeHi), and the destined-to-be classic Rock & Rye flavor were introduced during the 1920s as well. Rock & Rye, a fruity, spicy soda, took its name from the popular jazz-age drink of Rye whiskey served over a "rock" of sugar. In 1935 Faygo moved its operations to a larger bottling plant on Gratiot Avenue in Detroit.

The 1940s was a decade of transition for the company. The postwar years saw a new generation of Feigensons enter the business when Perry's son Mort and his cousin Phil joined the firm. Television was also beginning to take hold with Americans, and the company decided to begin advertising in the new medium. Faygo hired the Detroit-based W.B. Doner Co. to create the spots. New flavors developed during the decade included chocolate creme, a richer-tasting root beer, and Uptown, a lemon-lime soda inspired by 7 Up.

Television Leading the Way to Greater Success: 1950s-70s

The early 1950s saw an increase in television advertising and the debuts of animated characters The Faygo Kid and Herkimer the Bottle Blower. Spots featuring the former used the memorable tagline, "Remember Black Bart? Which way did he go? Which way did he go? He went for Faaaaygoooooo!" In ads featuring Herkimer, the character changed from tired to energetic after taking a sip of the fizzy beverage. The Faygo Kid ad was later inducted into the Advertising Hall of Fame. The company also sponsored the popular children's program of comic Soupy Sales, who pitched the company's soda with the line, "George Washington may be the father of our country, but Faygo's the pop." The television advertising went over well, and Faygo solidified its position as a leading beverage maker in Michigan and several surrounding states. In other developments of the 1950s the company upgraded its manufacturing plant and installed new water treatment equipment. More flavors were also created, including Black Cherry and Faygo Tango, an imitation of the popular grapefruit-flavored Squirt.

A new line of "Royal" flavors was introduced in the early 1960s, which sold for a slightly higher price. One of these, Royal Hawaiian Pineapple Orange, turned out to be a near disaster for the company on its initial run. The pineapple extract used in the flavoring, which was obtained from the Dole company, had not been sterilized, and a few days after the product hit the stores bottles began to explode on shelves and at the factory. The flavor extract had turned rancid and was generating a buildup of gas in the bottles that caused their tops to shoot off. Faygo quickly recalled the product, and Dole supplied enough sterilized juice to cover the company's losses. After the problem had been corrected, the flavor went on to become a popular one. Other new varieties of the early 1960s included Frosh (a Fresca imitation), Moonshine (inspired by Mountain Dew), Dr. Mort (like Dr. Pepper, and named after Mort Feigenson, by now the company's president), an apple-flavored soda called Eve, a ginger beer named Faygo Brau, and a nonalcoholic, wine-like soda called Chateaux Faygeaux. As with many other flavors that were introduced over the years, a number eventually fell by the wayside, Frosh being the most durable (though Moonshine and Dr. Mort were both revived years later). The 1960s also saw Faygo introduce a full line of artificially sweetened diet sodas, which soon came to account for half the firm's revenues. At the end of the decade the company changed the name of one of its original and most popular flavors, Strawberry Soda, to Redpop.

Faygo began advertising its products on broadcasts of Detroit Tigers baseball games in 1965. As the geographic reach of the ads exceeded the company's distribution, the firm's ad agency duly tried to have the spots canceled on stations that were beyond its service area. When they were unable to do so, they suggested that Faygo try distributing its soda to these places. The company took up the challenge, and in so doing created a new distribution method. Rather than trucking its products to each individual store, the firm now began to ship much of its output directly to the warehouses of wholesale food brokers. Faygo also ramped up production of disposable containers for use by its more distant customers. The move paid off, helping sales jump from $6 million in 1966 to $20.4 million in 1971.

A new series of television ads that began airing in the early 1970s spawned a hit song of sorts for the company. The spots featured a character named Great Gildersleeve singing a song called "Remember When You Were a Kid," while riding on the boat that took Detroiters to Bob-lo Island, an amusement park on the Detroit River. Viewers began requesting a copy of the song, and the recording was pressed on 45 rpm records, 75,000 of which were sold for 25 cents each. The company's diet soft drink line also remained popular, and Detroit Lions football player-turned actor Alex Karras was signed as its spokesperson. Faygo's advertising presence remained strong, with 4 percent of gross revenues typically channeled into this area.

New Deposit Law Causing Problems: Mid-1970s

In the mid-1970s Michigan passed a beverage container deposit law which drastically affected the company's fortunes when it was implemented in 1978. Betting that the public would prefer returnable cans, Faygo geared up for its production by adding new production lines. But glass returnables, which got a strong push from Pepsi and Coke, turned out to be the choice of consumers, and Faygo had problems switching its plant back to bottles. The company's bottom line took a hit for several years before the situation was resolved.

Faygo had retained ad agency W.B. Doner since the late 1940s, but in 1975 decided to look elsewhere after what seemed to be a creative dry spell. The company went through five firms before returning to Doner in 1980. The agency soon came up with spots for Faygo's diet line that featured nationally known comedienne Joan Rivers. Though her fee was considerably higher than what the company had previously paid for talent, the expense was approved by Mort Feigenson, and the spots did well for the firm. Feigenson prided himself on getting the most for his advertising dollar, and was insistent on making Faygo's ads look as good as those of national competitors such as Coke and Pepsi.

Sale of Business to TreeSweet: 1986

As the second generation of Feigensons neared retirement age, they began to take stock of the company's future. Regional bottlers around the United States were in serious decline (dropping from 10,000 in the 1930s to less than 2,500 in 1983), and Faygo was facing increasing marginalization in the beverage marketplace. Though the company's products were frequently equal in quality to the big names, Faygo generally attracted customers by selling for a lower price and offering knock-offs of many popular national drinks. In 1986 the Feigenson family decided to sell the business to TreeSweet, a Texas-based juice maker, who initially vowed to make Faygo a national brand. However, a few months later TreeSweet sold the firm to National Beverage Corp. of Fort Lauderdale, Florida, a holding company which had been formed in 1985 to buy Shasta Beverages from Sara Lee Foods. California-based Shasta, like Faygo, was a regional soft drink bottler with a long history. Shasta had been the first company to put soft drinks in cans, which it pioneered in 1954. Under National Beverage, Faygo was mostly left to continue on its own path.

The mid-1980s also saw Faygo introduce a line of flavored carbonated bottled water, which became popular, especially in Michigan. The beverage marketplace grew increasingly diversified during the 1990s, and the company introduced a number of new products, including a line of non-carbonated drinks in 1996. Dubbed Ohana, it initially offered Punch, Mango Punch, Lemon Iced Tea, Lemonade, and Kiwi-Strawberry flavors. The following year, 1997, marked Faygo's 90th anniversary, and the company published a special recipe book in celebration that included dishes that used Faygo sodas as ingredients. By this time the company's sales were estimated at $100 million, and Faygo claimed a 12 percent share of the soda market in Michigan. The firm's beverages were still mainly produced at its Gratiot plant, which had expanded over the years to 300,000 square feet through the incorporation of adjacent bottling facilities once owned by Pepsi and Coke. The stitched-together factory was limiting the company's output, however, and a new site was being sought. Faygo sodas were also produced in 11 other plants around the country as needed, distribution extending to 33 states by this time. While continuing to ship in bulk to chainstore warehouses, the company maintained more than 50 trucks to deliver to smaller outlets.

In 1998 Faygo introduced a web site that offered its beverages for sale by mail to homesick midwesterners. The late 1990s also saw the company receive a spate of unanticipated publicity from the nationally popular Detroit shock-rap group Insane Clown Posse, who featured lyrics about Faygo in their songs and sprayed audiences with shaken bottles of Faygo soda.

Faygo's logo and packaging were redesigned in 2001 for the second time in a decade. The new look was a softer, more nostalgic one that capitalized on the firm's long history and good-time image. In the summer of 2001 a line of retro-styled 16 ounce glass-bottled sodas was also introduced. Sold at a premium price, the bottles (in a limited number of flavors) utilized the company's 1950s logo design. By this time glass bottles had declined to only 1 percent of the total market, down from nearly 9 percent a decade earlier, with plastic bottles and cans accounting equally for the majority of containers used.

Nearly a century after it was founded, Faygo continued to produce flavorful, moderately priced beverages for customers around the Midwest and Middle Atlantic. While it would likely never be a national presence in the highly competitive soft drink marketplace, the trend away from cola drinks boded well for the flavor-focused company. Its proud regional heritage and unique offerings such as Redpop and Rock & Rye earned it a warm spot in the hearts of both loyal, longtime consumers and a new generation of converts.

Principal Competitors: The Coca-Cola Company; PepsiCo, Inc.; Dr. Pepper/Seven Up, Inc.; Cott Corporation.

Chronology

  • Key Dates:
  • 1907: Ben and Perry Feigenson begin bottling soft drinks in Detroit.
  • 1921: Company changes name to Faygo.
  • 1935: Operations move to larger plant on Gratiot Avenue.
  • 1950s:Use of animated television spots helps boost sales.
  • 1960s:Company introduces diet soft drinks, which soon comprise half of sales.
  • 1961: Royal line is introduced; Orange Pineapple flavor is recalled after bottles burst.
  • 1965: Distribution expands after ads begin to run on Detroit Tigers' broadcasts.
  • 1978: Michigan container deposit bill is passed; Faygo has difficulty adapting.
  • 1986: Feigenson family sells business to TreeSweet Companies.
  • 1987: TreeSweet sells Faygo to National Beverage Corp.
  • 1996: Ohana non-carbonated beverage line is introduced.
  • 2001: New logo and nostalgic line of glass-bottled sodas debut.
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