Hot Trend in Soda : Cocodrilo Beverage Hopes Jalapeno-Flavored Soft Drinks Will Spice Up Latino Market

Bruce Singer hadn’t planned to chuck it all and go into business for himself, but then he had this idea . . .

As an advertising and marketing professional, Singer usually had a drawer full of ideas. But this one was special. It was, well, hot.

Singer decided to break into the highly competitive but potentially lucrative $40-billion-a-year soft drink market with a product aimed specifically at Latinos.

To do that, he formed a company, Cocodrilo Beverage Inc. in Fountain Valley, to develop and market a soft drink livened up with jalapeno juice!

Singer chose the Latino market because it represents the fastest-growing ethnic group in the country.

According to the U.S. Census Bureau, the Latino population has increased five times faster than the rest of the population since 1980, up almost 35% to 19.4 million last year from 14.4 million at the beginning of the decade. About 3.8 million Latinos live in Southern California alone, up 31% from 2.9 million in 1980.

And nationally, the Latino population is expected to double by the year 2020 and to nearly triple to 19% of the total population by 2080, according to the Census Bureau.

Singer’s decision was a smart one, said Alan Wolf, editor of Beverage World magazine. “Lots of companies are looking at the Hispanic market, even established players like Coors and Anheuser-Busch,” he said. “There is a recognition that it is a well-developed market, but one with a different cultural background that takes a special marketing effort.”

But aside from a few imports from Mexico and South America, Singer asked himself, was anyone offering a soft drink targeted directly at Latinos?

He asked his questions again, this time in a discussion with a friend--a biochemist interested in food and drink--during a beach party in Laguna Beach in July, 1987. And from that conversation the idea was born.

Now, 20 months, several dozen formulations, seven market tests and about $140,000 later--most of it his own money--Singer is preparing to launch an unusual line of soft drinks--natural lemon-lime, mango and cola flavors spiced with the essence of jalapeno and serrano chili peppers.

Cocodrilo--Spanish for crocodile--isn’t the world’s first spicy soda pop. In 1987, a small company in Louisiana introduced Cajun Cola, accented with cayenne pepper and spices popular in Cajun cookery.

But Singer’s soda, according to Lynn Dornblaser, general manager of New Products News in Chicago, appears to be the first developed expressely to appeal to the Latino market, where palates are culturally attuned to seasonings that carry a bit of a kick.

If it manages to make any kind of dent in that market--which accounts for about 7% of the total U.S. population and nearly 25% of the California population--Cocodrilo could become a business success.

Nationally, colas account for 70% of the soft drink market, and lemon-lime drinks rake in 10% of all sales. The Latino population’s share of soft drink purchases was about $2.8 billion, so if Cocodrilo could pick up even 1% of that it would mean about $28 million in sales, Singer reasons.

Of course, Singer and Percy Rivera, Cocodrilo’s newly appointed president, hope the drinks will have appeal outside of the Latino community as well. There are, they reason, a lot of people from a lot of cultures who like foods that bite back.

That bite is a key marketing tool for the company. Cocodrilo’s “mascot” is grinning, sunglass-wearing Pepe Cocodrilo, and the toothy reptile is featured prominently on the label.

Marketing slogans include “You’ll like its bite!” “Get Croc’d!” and “No more wimpy soft drinks!”

It takes more than snappy slogans or a cute mascot, however, to make it in the nation’s competitive soft drink industry.

Even things like taste, price and, yes, uniqueness, take a back seat to distribution, according to industry watchers like Gary Hemphill, editor of Beverage Industry, a monthly trade magazine.

“Getting distribution is the key,” he said, “and that is difficult because there are a lot more soft drink products than space to display them.”

Indeed, in just the last 2 years, nearly 150 new soft drinks have been introduced around the country, said Dornblaser. Almost all of them were niche market products introduced only on a regional basis--including a diet peanut-chocolate fudge drink and a caffeine-free, high-potassium cola and an herbal cola imported from China, both sold in health food stores.

With that volume of competition, Hemphill said, “the independent stores, the mom-and-pop places, are the place to go at first so you can build up a track record of sales. That’s what the chain stores want to see before they’ll take a chance with your product.”

But even getting into the corner market can be difficult for an independent, regional product.

Cocodrilo comes in both lemon-lime and cola flavors, and because of exclusivity clauses in their contracts, the various major brands’ bottlers and distributors won’t deal with a company like Singer’s, said soft drink marketing consultant Bruce Oman.

“The only way to go is with beer distributors or through food distributors and brokers.”

At Cocodrilo, thanks largely to company President Rivera’s background, the initial major distribution push will be through beer distributors in 13 northwestern states.

Singer said Cocodrilo has just about completed negotiations with a master distributor in Seattle who believes that he can market about 100,000 cases of the spicy sodas through 132 sub-distributors in the 13-state area.

But Rivera, who came to Singer’s company last June when Moctezuma Brewing in Mexico shut down its beer importing franchise in Santa Ana, says Cocodrilo wants to hang on to California, Arizona, New Mexico and Texas--the most heavily Latino states in the West--for itself.

Lacking a developed distribution network and the cash to set one up, the company is HOTHEDhoping that successful sales to the north will combine with word of mouth from test markets in Orange and Los Angeles counties to set up a growing consumer demand for Cocodrilo drinks.

To help promote the drinks, Cocodrilo also has provided a free supply to the athletic departments at all three of Santa Ana’s high schools.

Greg Coombs, basketball coach at heavily Latino Santa Ana High School, said that the drinks were sold at a number of games to raise money for the sports program and that feedback from consumers, mainly high school students, “was pretty good. The kids seemed to like it. It was something they could identify as their own.”

And then there is Cocodrilo’s secret weapon.

Rivera helped Moctezuma introduce Hussong’s Beer to Southern California in late 1985. In so doing, he got to know Ricardo Hussong, proprietor of the famous cantina in Ensenada.

On July 4, 1988, Hussong’s began using Cocodrilo lemon-lime as a bar mix and created several drinks--including a “Croc-tail”--by blending the peppery soda with tequila.

Rivera said his vice president of marketing, Tim Kirchner, recently overheard two youths discussing a recent trip to Baja California while standing in line at a local amusement park.

“Tim told me that one of them started talking about Hussong’s, and the other said that he’d tried a new drink there made with ‘this real rad Crocodile stuff.’ ”

That might not sound like much--but best-selling Corona Beer got its start when surfers and vacationers from the United States who had sampled the brew in Mexican cantinas started asking for it at their local liquor stores.