Swig was first to the dirty soda trend and HTeaO got a head start as an iced tea-only chain. But as the beverage category heats up with more competitors, how are these two hot concepts continuing to stay ahead?
Alex Dunn, CEO of Swig and Heath Nielsen, president of HTeaO, each tackled that question at Informa Connect’s Future of Beverage conference, which concluded in Austin, Texas, on Friday. Although the two beverage company heads spoke during different sessions, they related several similar strategies.
Top of both lists: Customization and personalization are at the core of their success.
“Sodas are a $300 billion industry, so the demand is there. But consumers wanted more—more options and more flavor profiles,” said Dunn, in talking about Swig’s mission. “At Swig, people order ‘their drink,’ like at Starbucks. It’s customization with a base of soda instead of coffee or tea.”
When Swig was ready to expand from its home base in St. George, Utah, there was a lot of skepticism from investors as to whether dirty sodas were sustainable outside the state, said Dunn. “I spent a lot of time answering those questions, then something clicked,” he said. “I positioned Swig as the Starbucks of carbonated drinks … we were reimagining the way people consumed sodas, just as Starbucks did with coffee.”
HTeaO is also in the reimagining business, this time, with iced tea as a base. “You walk in and there are 26 flavors of iced tea, all in bubblers,” said Nielsen. “The average size drink is 40 ounces, and customers mix and match, adding blueberry, watermelon, peach and more to sweet tea.” The combinations are practically endless and as at Swig, every person is crafting “their drink.”
HTeoO customers can mix and match flavored iced teas from self-serve bubblers to create their own custom drink. | Photo courtesy of HTeaO.
At HTeaO, customers can also get energy shots, protein additions, hydration boosts and other add-ons, but while 80% of the business is self-serve, an employee has to add the extras.
Both concepts are also very picky about their base product. “Our black and green tea is brewed in house every day with a team of 20 brewers,” said Nielsen.
Swig uses patented carbonation technology for its sodas and is “maniacal about making the drinks, all the way down to the ice, making sure it’s in the right proportion to the liquid,” said Dunn.
At HTeaO and Swig, the beverage business revolves around “pick-me-ups,” where customers come in for a boost, often in the afternoon. In fact, the idea for HTeaO came about when the founder noticed many of his employees at a previous company leaving in the afternoon for a break and discovered they were going out to get an iced tea.
“Customers come in for a pick-me-up, but they become regulars because of their interaction with the people who make your drink,” said Dunn. At Swig, they’re called “Daymakers” because they’re trained to “make a guest’s day.”
Speed is also key to both concepts. A morning or afternoon pick-me-up has to be quick, whether a worker is taking a break or a busy mom is running her kids around. Nicole Tanner Robison was exactly that busy mom of five when she opened the first Swig 15 years ago.
As their menus and locations expanded, both concepts felt the time was right to add limited-time offers to keep interest high. “We limit LTOs to quarterly, trying to come up with flavor profiles that are unique but widely appealing,” said Dunn.
Swig’s hit LTO this spring was the Dirty Little Secret, a mix of Dr Pepper, coconut, pineapple and vanilla cream, promoted through its connection to “The Secret Lives of Mormon Wives.” The characters in the popular reality show often stop by Swig.
Seasonal fruits do well; pumpkin not so much. Swig tried a pumpkin dirty soda this fall and it was too polarizing; some people loved it, but others hated it, Dunn said. “It’s okay to make mistakes and admit it, then iterate. The speed at which you iterate matters.”
At HTeaO, customers have favorites, but LTOs are an opportunity, said Nielsen. “I love collaborations, and we recently did one with Poppi sodas and another with Perrier to bring in carbonation,” he added. The result was a summer LTO of Fizzy Refreshers in flavors including Lemon Lav and Desert Pear.
Another piece of the success puzzle has to do with consistency. Both concepts guarantee a consistent, refreshing experience and product.
And that has led to consistent growth. According to the most current data from Restaurant Business sister company, Technomic, Swig earned over $87 million in sales and counts 117 locations in 16 states, and HTeaO has more than $101 million in sales and 144 units in 10 states.
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