Dr Pepper Be Damned, Dublin Bottling Works is Striking Back Against Big Soda

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Jeff Kloster, owner of Dublin Bottling Works, didn't sit on his ass and sulk after his company's settlement with Dr Pepper Snapple stripped him of his top-selling product, Dublin Dr Pepper. The day after the news hit, he says, he picked up the phone and did the same thing he's done if one form or another for the past 40 years. He sold soda.

His angle is a little different this time, though. Instead of working as an appendage of the Dr Pepper Snapple Group, Dublin Bottling Works is now a fully independent business, free to operate in the best interest of Kloster's lifelong passion: small-production sodas backed with top-notch customer service.

Kloster was in Dallas yesterday, hocking beverages with names like Big Red, Vintage Cola, Cherry LimeAid and Triple XXX Root Beer. Only he's not just selling sticky syrups and cases, he said. He's selling freedom, or Soft Drink Independence, as he calls the idea. It works like this:

When an owner builds out a restaurant, he's given two equipment options when it comes to fountain beverage service. He can purchase the dispensing unit that mixes syrup water and carbonation, or he can lease it from one of the big soda distribution units. Coke, Pepsi and other large soda companies offer free or low-cost equipment to start-up businesses, as long as the equipment is used to serve that company's products.

The offer is attractive to cash-strapped start-ups because it saves significant coin. New machines can run $6,000 to $8,000, and larger machines with 12 heads and integrated ice-makers cost nearly $20,000.

But taking the free equipment robs each business of its ability to offer the products of small independent bottling companies. That's why Kloster is in Dallas. In addition to meeting with many small businesses to sell his revamped soda line, he just sold a refurbished fountain head to Jack Perkins at Maple and Motor.

Perkins exercised his soda independence immediately. He now offers an exclusive run of Dublin Bottling Works beverages and, on a single line, Diet Coke. Dublin currently doesn't offer any low-calorie sodas, but that's the beauty of the system: Perkins now has a choice. Dr Pepper Snapple group picked up his old fountain machine the same day.

In addition to Maple and Motor, Kloster also met with Chicken Express and other Dallas-based businesses. He said the response to his new line has been overwhelming.

And that response is spreading. In Austin, Patrick Terry will honor Dublin Bottling Works with a public event to mark the loss of the original Dublin Dr Pepper. Terry owns P Terry's Burgers Stand, a five-location burger business he started in 2005. His eye is on the future as well.

"We're going to look at Kloster's offerings," he said when asked if he'll continue to support the small Texas bottler. Terry built his business on a foundation of customer interaction, and says the decision to move away from Coca-Cola products will be no different. "We'll let the customers decide," he said.

The decision might be straightforward. Dublin Dr Pepper has been P Terry's number one seller since the chain first opened, and Kloster's new products promise similar appeal. How is that Triple XXX Root Beer, branded with crosshatches that used to denote the strength of real beer? "It drinks like cake," Kloster said.

Kloster hopes his current momentum will continue. Within two years, he hopes to recapture much of the business he lost in the settlement by continuing to grow his new product line. He hopes to hire back the 17 employees he was forced to lay off, and continue to expand the business his grandfather built.

But not without a caveat.

"It is not our goal to create a beverage company that is so large that our single focus is the bottom line," Kloster said, while conceding profitability is still important. "If that's who we become, we lost our way."

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