A Touch of Effervescence

The thirsty U.S. spends $3.5 billion a year on soft drinks, and 60% of that money--$2 billion--goes for carbonated cola concoctions based on the West African kola nut, which Africans chew for refreshment. With their strong cola sales, front-running Coca-Cola and runner-up PepsiCo have long dominated the soda-pop industry. Lacking a popular cola contender, Canada Dry Corp. has run a poor third despite its lead in ginger ale. Now, in a move to put more fizz in its fortunes, the company has brought out a new variety of cola drink that is 99% caffeine-free.

Sport-Cola achieves that distinction by foregoing the extra dose of caffeine that most cola makers add to the tiny quantity present in kola nuts. In name and formula both, the beverage is aimed primarily at the 80 million U.S. youths under 20, who account for almost half of cola-drink consumption. Says Canada Dry President David J. Mahoney: "We're giving the consumer one more choice."

With a Wink. Among soft-drink companies, Canada Dry has been a notable laggard in adopting such strategy. While the industry more than doubled its sales volume in a decade, in great part by introducing new beverages--notably low-calorie drinks--which persuade new groups of customers to imbibe, Canada Dry added only one new product: Wink. Before Mahoney took charge 15 months ago, profits had skidded from $5,400,000 in fiscal 1965 to $4,400,000 in 1966.

This was precisely why California Entrepreneur Norton Simon, who controls 34% of Canada Dry through his Hunt Foods & Industries, wooed Mahoney away from the $160,000-a-year executive-vice-presidency of Colgate-Palmolive. A veteran of package-goods wars at Colgate, at advertising agencies (his own and Ruthrauff & Ryan) and at Good Humor Corp. (where he had been president), Mahoney, 44, proved to be a dash of effervescence. By paring administrative overhead and closing two of the company's 16 bottling plants, he cut $1,500,000 a year from operating costs. To pep up promotion, he hired two new ad agencies for soft drinks; he allocated more money to plug such profitable sidelines as Canada Dry gin and vodka and Johnnie Walker scotch, which the company distributes in the U.S. In came four outsiders and out went four of the company's 16 vice presidents. "I didn't raid Colgate, or anything like that," says Mahoney. "George Neumann [vice president for planning] is the only one I ever worked with before. Some of them even left better jobs to come with me."

On the Rebound. Before Mahoney could restore Canada Dry's bubble, profits sank to a dismal $658,950 in fiscal 1967 (partly because he junked $1,560,000 worth of obsolete wooden cases and deposit-type bottles). But in the nine months ending last December, sales shot up to a record $155 million and profits rebounded to $2,890,000. Naturally, nobody is more delighted than Norton Simon, a notably tough taskmaster. "Dave has done sensationally considering the time he's been aboard," says Simon. "Canada Dry is a substantially rejuvenated company." Wall Street agrees. From its 1966 low of $19 a share, the company's common stock climbed to $34 early this year on the New York Stock Exchange. The announcement of Sport-Cola sent it up to $37.

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