In 1893, a pharmacist named Caleb Bradham from New Bern, N.C., created a select mix of carbonated water, sugar, vanilla, rare oils and kola nut extract in an effort to draw people to his pharmacy. After a brief stint as ‘Brad’s Drink,” the drink was renamed in 1898 and patented as the legendary Pepsi-Cola in 1902.
In 1905, a century ago this year, Pepsi-Cola Bottling Company of Charlotte was awarded one of the first franchises to bottle this distinctive beverage. Now the longest-lived and largest independently-owned Pepsi-Cola bottling franchise in the world, it maintains its corporate office in Charlotte’s South End.
The president and CEO is none other than Barksdale (“Dale”) Halton, a spunky, straight-spoken woman who also just happens to be the granddaughter of the original franchise owners, Henry B. and Sadie Clarkson Fowler. While Halton didn’t anticipate working within, much less owning and operating the family business, she has influenced the company’s growth perhaps as much as her grandfather’s original vision.
The Pepsi ‘Challenge’
When Halton’s grandparents started up the company in 1905, they were the first bottler to incorporate using the Pepsi-Cola name and became the first franchise bottler. Henry and Sadie, along with their two daughters, Margaret and Elizabeth, initially operated their new business from their living room, but eventually moved the operation into a barn next to the city’s blacksmith shop. There bottles were washed by hand, filled with foot pedal machinery and delivered by two horse-drawn wagons. At the time, Charlotte’s population was 15,000 and the town’s iceman became the fledgling company’s first salesman, delivering product to a restaurant and two fruit stores among other stops. In 1908, Mr. Fowler bought the company's first soft drink delivery truck even though roads at that time were in limited use. Amazingly, Mr. Fowler never learned to drive himself!
In 1907, there were just 40 bottling plants producing Pepsi-Cola; in 1908 the number increased dramatically to 93; and by 1920 the Pepsi-Cola Company was producing syrup for 280 bottlers. It seemed as though nothing could stop its growing popularity. Unfortunately, shortly after the end of World War I, sugar prices began a series of wild fluctuations. Sugar, a principal ingredient in the syrup base of Pepsi, rose from five cents a pound to twenty-two cents a pound, and subsequently dropped to a low of three cents a pound, eventually bringing about the bankruptcy of the Pepsi-Cola Company itself and its own bottling company in 1923.
Unlike other bottling franchises, Pepsi-Cola concentrate has always been delivered without the sugar included. So when sugar prices skyrocketed, so did the cost of mixing the beverages for the bottler. Fortunately, Halton’s grandfather had the vision to foresee several of the sugar shortages and purchased his own sugar warehouse, tractor-trailer, and driver to minimize the effects of the sugar shortage.
During the Depression Henry Fowler continued to push forward; his was one of two franchises continuing to bottle and sell Pepsi while others were abandoning an apparently sinking ship as the Pepsi-Cola Company declared bankruptcy again in 1931. He was a determined and tenacious manager. He is said to have lectured a salesman on the evils of gambling, and then gone into the gambling house to win back a truck full of product lost by the salesman in a crap shoot. Fortunately over time, and after a number of changes in ownership, the Pepsi-Cola Company itself was able to “Come Alive.”
Henry Fowler remained at the helm of the Charlotte Pepsi franchise until his death in 1971 at the age of 93. His long-term efforts and dedication to Pepsi-Cola later earned him a place in the Beverage Hall of Fame. Mr. Fowler and Sadie also earned the title “Mr. and Mrs. Pepsi-Cola” in the industry and throughout the region. At his death, control of the company passed to his daughter, Margaret Fowler, and another family member became CEO. Margaret Fowler died in 1977 and in 1981, the current CEO left by mutual agreement. This paved the way for Dale F. Halton, daughter of Elizabeth and the Fowlers’ only grandchild, to become the president and CEO.
The Choice of a New Generation
Unfortunately, in the years subsequent to Halton’s grandfather’s stewardship, the company had entered a period of faltering profitability and productivity. By 1981, when Halton assumed her role as president and CEO, the company was in serious financial trouble. What she was to bring about was an historical turnaround for the company, resuscitating both the operation and its employees.
Says Halton, “We were on the verge of bankruptcy. Our equipment was falling apart. Our delivery trucks looked terrible and were always breaking down; we kept finding major bills that hadn’t been paid;, and our employee turnover was 400 percent higher than that of similar industry operations. We just didn’t know what would come up next.”
What happened in the few months after Halton assumed control is phenomenal. While by some accounts, Halton was the inspiration for the company’s near impossible recovery, Halton herself turns to Darrell Holland, the man she calls her “closest friend and mentor; the closest thing I have to a brother.”
Halton and Holland teamed up, with Halton embracing “the front,” or administration, and Holland, “the back,” or production. Halton recalls, “Many advisors thought we needed to bring in a big expensive management team, but I was adamantly against it. I knew we would be okay with Darrell, with Stu Menzel in the plant, Charlie Sullivan in sales and Marilyn in HR. We had the right people in the crucial positions; we then needed to wring out what wasn’t needed.”
After determining that there was only enough money for one-half week of operations, Halton applied for a line of credit to get the company through the transition. Amazingly, that line of credit was never used, and was cancelled 3 to 4 months later. Says Halton, “We really tightened the purse strings. If Stu came in and said, ‘I need another person in the plant,’ Darrell would turn back to him and say, ‘Go figure out how to get rid of two.’”
By eventually repairing the machinery and morale, increasing production and sales, managing receivables and staying on top of maintenance, the company was on solid footing the next quarter.
Says Halton, “In the beginning of all this, Darrell asked me what my philosophy for the company was. I said that we had to get on solid financial footing and then I wanted to give back to the employees who worked so hard to make our recovery possible.”
What began as a minor profit sharing plan, Halton says evolved into a “very healthy 401(k).” It is this, the company’s generous benefits and competitive salaries, that she is most proud of. “We are like family, and we take care of each other,” she says.
The relationship is very healthy. It produces nearly 9 million raw case sales per year (the equivalent of nearly 19 million 8-ounce cases). The company has grown dollar-wise 500 percent, its EBITDA has increased 750 percent and raw case sales have risen 300 percent. The company now has 380 employees.
Join the Pepsi People
Pepsi-Cola Bottling Company of Charlotte has several other significant relationships upon which the company depends. Explains Halton, “This business has a lot to do with cooperation and mutual respect. From
Pepsi-Cola North America (PCNA; the refreshment beverage unit of PepsiCo Beverages and Foods North America, a division of PepsiCo, Inc.), to our suppliers, our canning partners, and the retailers we service, we work very hard to maintain a high quality product with reliable and friendly attitudes.”
Behemoth PCNA, sells its bottling franchisees the concentrate to Pepsi-Cola and its other brands. Built into the price of the concentrate is marketing costs, licensing and other fees that cover the expenses PCNA incurs to support the brands and itself. To the concentrate, the bottling franchises then add sugar, fructose, carbonation and water before bottling, labeling, packaging, distributing and promoting the products to retailers.
“We have a very good relationship with PCNA, comments Halton. “We have proven our strength and our desire to work together for the mutual benefit of our customers.”
For her part, Halton and her grandfather have done their share for Pepsi as well. By nurturing the business through the rough spots, Pepsi’s brand has stayed resilient. Interestingly, Halton says it was her godfather, Bill Jones, who introduced Mountain Dew, which eventually rose to dizzying heights of popularity in the Southeast.
All this is not to say that there isn’t an occasional bump in the road. Pepsi-Cola’s global presence has encouraged geographic consolidation of its bottling franchises, which makes it difficult for the independent bottlers to stay afloat. It also has commanded a more prominent role in national accounts to choreograph and synchronize billing and reporting cycles as well as marketing.
“But,” comments Halton, “as our retailers get larger and larger and expand their areas, it becomes more difficult to answer all of their needs. I believe that if done right, the necessary evil of ‘bigger is better’ will pay off in the long run.”
Then of course, there are the customers. According to Halton, “There are three types of consumers. Loyal Pepsi drinkers, loyal Coke drinkers, and those who will buy whatever is on sale.”
It goes without saying that you can’t mention the word ‘Pepsi,’ without summoning the ‘C-word: Coke,’ and the cola wars that have become almost as legendary as the brands themselves.
For her part, Halton says, “I don’t feel any contentiousness for Coke locally, nationally or internationally – as long as they play fair.” When asked what she considers unfair, Halton includes attack ads or ads that mention the competition in a deceptive light.
Of course, one can’t help but recall the enormous ‘Take the Pepsi Challenge,’ promotion from the 1980s. If that isn’t calling out the competition, what is?
“The truth of the matter,” says Halton, “is that I would not allow that promotion to play out here. We had just climbed out of the dust onto a comfortable new playing field, and it didn’t make sense to start stirring up competition.” She adds, “To this day I am absolutely convinced it was the right thing to do.”
As for competition today, Halton says she embraces it, “It makes you better. I want the other guy to be healthy. I just want to be a little bit healthier.”
Urban legend has it that Coca Cola employees were forbidden to use the “P-word” until the president himself made the fatal faux pas during a speech at an annual convention. It became apparent that Pepsi was a force to be reckoned with.
“I remember the first time our market share ever passed Coke. We were at a meeting when the Pepsi-Cola regional manager made the announcement. Tears came to my eyes and I had to leave the room. I can still remember what that felt like, like the family was smiling down at me.”
Dale Halton spends a lot of time thinking about her grandparents and the rest of the family who have left her such a rich legacy. She explains, “During the time we were building the production facility we are in now, I would look at my grandfather’s portrait across the room and it seemed like his eyes were just boring into me. In my mind, I had to convince him that the money we were spending for the new facility was worth it – oh, how he hated to spend money sometimes!”
She also tells the tale of a copyright infringement case that Coke filed against the Fowlers. “This young lawyer very condescendingly asked my grandmother, the Pepsi ‘grande-dame,’ if you will, just what in the world she could know about Pepsi.
Most people didn’t know that my grandmother worked with my grandfather in the business; it just wasn’t accepted at that time.”
“Well, she straightened her back, looked down this very patrician nose of hers and said, ‘Young man, I weaned my children on Pepsi.’ I was told that the humbled lawyer left the courtroom and didn’t return to the trial.”
Halton carries not just a little bit of the same strength and feminine assertion. “There was just no way this company would be sold. I couldn’t let it happen. I have Pepsi in my blood!”
Halton concludes, “I just never pictured myself sitting where I am, doing what I do, but I feel so incredibly fortunate to be here. And of course I look up at their pictures and hope they are proud with the way things have gone.”
As the centennial of the now thriving, secure, Pepsi-Cola Bottling Company of Charlotte is celebrated this May, and the commemorative ‘Centennial Can’ is passed around, one can’t help but suggest that her grandfather’s portrait will smile back brightly at Dale Halton and the people who supported her.