A man, a can and a plan

Bill Hargis Jr. likes to tell the budding entrepreneurs in his business class at Virginia Commonwealth University that they can accomplish anything if they go after it hard enough.

"A lot of entrepreneurs run into roadblocks," Hargis said. "Sometimes it might be friends or family or neighbors who tell you, 'That is a bad idea.'"

Hargis is the type of entrepreneur who doesn't give up on an idea but refines his approach. He has run into some pitfalls during his ventures -- he previously headed The Switch Beverage Co., a Richmond-based carbonated fruit-juice company that grew quickly but eventually went bankrupt. With his latest endeavor in the alternative-beverage business, Hargis thinks he has found the right formula for success.

That formula consists of 100 percent fruit juice, a dash of sparkling water and added nutrients such as Vitamin A, all packaged in a colorful can.

The product is Fruit 66. Hargis, president and chief executive officer of Richmond-based 4U2U Brands LLC, now is working to put his company's product in school cafeterias across the country.

"As an industry, we need to be providing something that students want, that parents like, that meets nutritional requirements and that enables the schools to make money," he said. "I think we've done a good job creating something that does that."

The drink is typically sold in schools for $1 a can, he said. Schools keep about 45 cents of the price to help cover their meal costs, he said. They typically sign contracts that provide them with a share of a la carte sales profit. 4U2U Brands also donates a portion of its proceeds to the Alexandria-based School Nutrition Foundation, which provides training and education to food-service workers.

Launched in 2007, Fruit 66 is sold in school systems in 35 states including Virginia.

The goal is to capitalize on a renewed emphasis on healthy beverages in schools as concerns have grown about childhood obesity. A federal law passed in 2004 requires school systems to adopt wellness policies, prompting districts to ban the sale of carbonated soft drinks.

That has opened the market for alternatives such as bottled water, flavored milk and fruit juices, said Erik Peterson, a spokesman for the national School Nutrition Association.

Sparkling juices such as Fruit 66 are becoming a popular choice for school administrators, he said. "This is a beverage that has the nutritional value of a serving of fruit, and it bubbles, too."

Hargis said one of his goals with Fruit 66 was to reduce the calories without compromising taste and nutrition. An 8-ounce can of Fruit 66 contains 95 calories, less than in most other juices or soft drinks, he said.

When Hargis needs taste testers for potential Fruit 66 flavorings, his daughter, Lily, 12, and friends step up.

Lily, 12, says she is "a big water drinker" but also a fan of Fruit 66 Fruit Punch and Apple Berry flavors. "It's one of the few [carbonated] drinks I like," she said. "I like it because a lot of the things in it are healthy."

Celeste Glavé, 13, says she likes the beverage because "it is fizzy and sweet, and sour sometimes."

"You get to try new flavors you haven't tried before and you get to compare," Celeste said of the taste testings at the Hargis home. "My favorite flavor is the Apple Berry and the Orange Tangerine."

The girls also help promote the beverage by wearing Fruit 66 T-shirts and buttons.

"I wear [a T-shirt] to school, and sometimes I go up to the lunch people and say, 'You should sell Fruit 66,'" said Lily, who attends Lucille Brown Middle School in Richmond.

The U.S. juice market for a la carte items in schools remains relatively open, compared to retail, Hargis said. Still, the company faces competition from major soda companies that have long had a presence in schools with carbonated drinks and have bought alternative-beverage companies to remain there.

Henrico County is among the school systems offering Fruit 66. Tim Mertz, director of school nutrition services, said the schools sell the beverage as an a la carte item but also offer it as part of lunch some days.

"Fruit 66 is one product we can use to strengthen our menus," Mertz said.

In the late 1990s, Hargis was a co-founder of Switch Beverage, which also aimed to make carbonated fruit juices the beverage of choice in school cafeterias.

Switch, with 11 flavors, grew quickly but burned through a lot of cash. In 2005, the company could no longer attract capital, and a group of investors took it into Chapter 11 bankruptcy. By that time, Hargis and co-founder Wayne Gilbert had left the company.

"When we started Switch, it was really a new category," Hargis said. "It took a lot of money and time to educate people about what a carbonated juice was.

"We got people used to this whole new category, but it wasn't quite right. The caloric count wasn't right," at 130 to 160 calories, Hargis said.

After devoting years to building the Switch business only to lose control of it, Hargis wasn't sure he wanted his next entrepreneurial move to be in beverages. The MBA from Northeastern University did some consulting work. He taught classes at VCU on entrepreneurial management, a job he still relishes.

Hargis said he teaches students how to navigate the potential pitfalls of being an entrepreneur, but he encourages them to take calculated risks.

Hargis took such a risk with Switch Beverage. He had worked in the beverage industry before, as a sales manager for Guinness Import Co. in the Boston area and as director of sales for an independent beverage distributor. But he left the job that had brought him to Richmond in the mid-1990s, as the manager of industrial laundry plant, to join the Switch venture.

It wasn't long after he left Switch that Hargis started to hear from some of the investors, distributors and school nutrition advocates he had known during his years with the company. "They wanted to know whether I was going to do something else," he said.

Through his consulting work for Izze Beverage Co., maker of Izze sparkling fruit juices, and the calls he received, "I realized there was still a void" in alternative beverages for schools, Hargis said.

In early 2007, he started to work on developing a new brand, and Fruit 66 was born.

Although Hargis is focusing on selling Fruit 66 to schools, the beverage is starting to work its way into retail.

A recent positive review of Fruit 66 on industry Web site www.bevnet.com prompted e-mails from interested distributors around the United States and in the United Kingdom, Jamaica and Egypt.

Local stores selling the product include Belmont Butchery.

Butchery owner Tanya Cauthen said she found out about Fruit 66 through a sales representative for 4U2U Brands who is a friend of her sister. "She knows I am pretty picky about what I will carry," Cauthen said.

Fruit 66, she said, "is sweet enough for kids but not too sweet for adults. . . . In the afternoon when I am looking for a pick-me-up, I will drink it."

Hargis said his approach to the business this time is different than with Switch Beverage.

Rather than boost product sales fast enough solely to attract a buyer, "the plan is to grow a profitable business. I think that is just a better business model."

He declined to release sales figures but said the company's sales through schools have already exceeded those reached by Switch during his time with the company.

Sales of soft drinks in schools were about $700 million in 2004, he said, the last year figures were available and before school systems started a major shift toward alternatives.

"All we need is a piece of that to be a big business in Richmond," Hargis said. "I want a building downtown to have the Fruit 66 logo on it."
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.