How they became kings of coolers - Michael Crete, Stuart Bewley

Nation's Business, Oct, 1985 by Richard Steven Street

Picture it: sun, sand, surf and a group of young people working up giant, beach-party thirsts.

Michael Crete is acting as bartender. He decides he will become a hero by coming up with a drink that may be more thirst-quenching than cold beer.

Crete mixes citrus juice and chablis in plastic tubs. become a hero he does. Thirsty friends returning from a volleyball game drain the tubs.

That early 1970s experience at a California beach made Crete more than a popular person at a party. It made him--eventually--a fabulously successful entrepreneur.

It also led to creation of the wine cooler industry, in which company after company has introduced its own brand of low-alcohol (typically about 6 percent) mixtures of fruit juice and white wine. Sales of the sweet, refreshing, lightly carbonated coolers are expected to top $310 million this year.

The kings of coolers are not the big, diversified companies that have entered the field, but Crete and Stuart Bewley--who like Crete is 32 and hails from the same small California farm town, Lodi. Their California Cooler, Inc., grew from a shoestring operation that produced 1,575 gallons of homemade cooler worth about $12,000 in 1981 to a high-powered company that sold 22 million gallons--worth more than $72 million wholesale--last year.

Recently, Brown Forman Corporation, the Kentucky distiller (Jack Daniel's, Early Times, Southern Comfort) bought the company for as much as $146 million ($63 million cash plus payments tied to sales, which could add $83 million over the next three years). Crete and Bewley, who started it with $10,000, will remain in charge of what essentially will be an autonomous operations.

Back to the 1970s: Crete kept tinkering with his recipe after that beach party, trying it out at social gatherings. One day in 1978, conscious of the consumer trend toward nonalcoholic or light-alcoholic beverages that was pushing sales of such products as Perrier or wine instead of hard liquor, he was stirring his umpteenth batch of cooler for a family party. Crete, who was working as a beer distributor at the time, thought: My cooler has commercial potential. The next year, when he was setting up distribution for a winery in Lodi, he began bottling cooler samples, which he dropped off at wine accounts.

Responses were positive. Stores asked for more. (California Cooler, a slightly cloudy, lime-green, proprietary mix of grapefruit, pineapple, lemon and lime juices, plus white wine, fructose and preservatives, may not be everyone's cup of tea. But it has more than 50 percent of the cooler market.)

Crete found it impossible to set up a full-scale business while working as a distributor. Enter Bewley, one of Crete's high school buddies. Bewley, who had been living and working in Oregon, wanted to start a business in his hometown.

Putting up $5,000 each, the two entrepreneurs established offices in an abandoned migratory farm laborer's camp called "Hog Hollow."

"That first year, all our business transactions occurred in restaurants," recalls Bewley. "Nobody ever saw Hog Hollow." The camouflage opened doors and gave Crete and Bewley the chance to pick the brains of knowledgeable people.

"Neither of us had ever done anything like this before," says Crete, talking in a conference room at the company's sprawling facilities today in a Stockton, Calif., industrial park. "We had to lear about glass, carbonation, suppliers, everything."

In early 1981, Crete and Bewley launched their business from behind two desks borrowed from their parents. They made samples using a 15-gallon beer keg and a plastic garden hose, bought juices in local supermarkets, squeezed their own grapefruit, bottled their product in beer bottles soaked in water-filled tubs to remove the original labels and distributed their cooler out of the back of Bewley's 1953 pickup truck.

Moving out of "Hog Hollow" after receiving their alcoholic beverage license in August, 1981, Crete and Bewley established operations in a vacant warehouse at Roma Winery in Lodi.

Previous attempts to market popwine drinks had always preserved the traditional wine appearance. Crete and Bewley found that inappropriate.

"We were creating something that people wearing T-shirts would drink at a baseball game on a hot afternoon," says Bewley, "not something to be swirled and sipped over lobster in some elegant restaurant."

To project a livelier image, Bewley and Crete chose emerald green, 12.7 ounce bottles, wrapped them at the neck in gold foil, and labeled them with an attractive gold, green and white logo. To make their cooler more competitive with beer and pop, they sold the bottles in four-packs rather than the usual six-pack arrangement, which held the price per pack under $4.

Bottling remained a primitive operation. Bewley and Crete worked late into the night filling, capping and labeling.

In December, 1981, as demand surpassed production, Crete and Bewley hired an employe, paying him in company stock. (Exactly how much of the millions from the Brown-Foreman deal goes to the early temporary employe remains a company secret, though Bewley says the man today is a millionaire. Also in line for a harvest of dollars are company employes who will receive "substantial" though as yet unspecified bonuses in October.)