Polar Beverages is about to uncork a nationwide expansion.
The Worcester company has entered into a long-term franchise agreement with Keurig Dr Pepper to pursue an ambitious goal: taking the high profile that Polar has achieved for its seltzers in the Northeast and replicating that across the country.
The agreement allows the Crowley family to continue owning Polar, while giving Polar access to Keurig’s direct-to-stores delivery network and its manufacturing network. The deal was announced Thursday, to coincide with Keurig Dr Pepper’s second-quarter earnings release.
Polar has earned a reputation for a loyal regional following and clever, quirky marketing of what is essentially fizzy water. It creates limited releases of unusual flavors such as Strawberry Margarita and Blackberry Mango Punch, for example, and holds an annual March Madness contest to determine the next full-time seltzer flavor.
Polar does have some national distribution already, through chains such as CVS and Costco. But its presence is limited outside of its East Coast stronghold. Chief executive Ralph Crowley Jr. said that building a true national distribution network was proving too expensive for Polar.
Even with its limited reach, Polar ranks third nationally in market share, behind LaCroix and PepsiCo’s Bubly brand. The total size of the US market for the unsweetened and flavored sparkling water category is approaching $2 billion a year in sales, a market that grew an estimated 19 percent in the past 12 months.
KDP chief executive Bob Gamgort said he’s determined to push Polar to the number one spot, the position holds in on much of the East Coast.
The distribution deal is similar to one Keurig announced in 2018 with Danone to distribute Evian water in the United States. Essentially, KDP will buy the ingredients from Polar to manufacture the seltzers in other parts of the country. They will share the marketing costs in the new territories.
“They’ve got the brand; we’ve got the distribution,” Gamgort said of Polar, which generates an estimated $600 million-plus in annual revenue. “They get to maintain ownership of the brand but they get to see their dream of the brand becoming national.”
Gamgort said Polar was a leader in the seltzer market long before the current fundamental shift in consumer interest toward “lightly sweetened, better-for-you beverages.”
Polar and KDP already have a partnership that has been in place long before the Keurig-Dr Pepper merger in 2018, when Dr Pepper Snapple Group was run out of Plano, Texas. Polar has distributed a number of the company’s soda brands, such as A&W and Sunkist, in the Northeast for more than 30 years. Now, KDP will essentially be doing the same thing for Polar for much of the rest of the country.
Crowley said he first met Gamgort about a year ago. They agreed to meet up at the Wegmans supermarket in Burlington, not far from Gamgort’s office in the same town. Gamgort wanted to learn more about Polar, and Crowley thought a tour of the beverage aisle would be more effective than a PowerPoint presentation.
Gamgort said the COVID-19 pandemic didn’t have any impact on the Polar deal. KDP has offset a significant decline in sales to restaurants and offices with increases in revenue through online channels as well as supermarkets and other food stores. “We’re continuing to play offense and expand our portfolio,” he said.
For the Crowley family, it’s a way to finally gain a true national presence without giving up ownership. Polar is continuing to build its local presence, too, with naming rights for the stadium under construction for the soon-to-be Worcester Red Sox (a.k.a. the WooSox), scheduled to relocate from Pawtucket, R.I., next year. And, it’s breaking into the alcohol business, through a partnership with Harpoon’s parent, Mass Bay Brewing Co., to make spiked seltzers.
This deal with KDP is focused on the seltzers, Polar’s flagship product, by filling in some huge geographic gaps in the distribution network. It’s possible, Crowley said, that KDP might consider distributing other Polar beverages.
“My only measure of success is if we can bring the next generation of the family on to run the company,” Crowley said. “We could sell Polar for a lot of money, but that’s not what we want to do.”