OtherWhat Food & Beverage Entrepreneurs Can Learn From HOTLIPS Co-Owner David Yudkin

You almost have to feel a little bad for soda these days. Once a symbol of American life, soda has more recently gained a rather notorious reputation as a corn-syrup and calorie-laden menace to our public health.

It might take more than just rebranding to get soda back on track. Perhaps soda needs to be altogether redefined. It’s a lofty mission, but if anyone can do it, it’s HOTLIPS. After all, they have been redefining pizza since 1984, and in the process have become one of Portland’s flagship culinary destinations.

Of course, deliciousness is essential, but it’s not just about what goes into HOTLIPS pizza or soda — it’s also about how much energy is consumed to make it and how long dollars spent and earned stay in our local economy. Here, HOTLIPS co-owner David Yudkin shares the journey he has taken to launch and establish a soda brand that is blazing trails in more ways than one.

Here’s more from David:

The spark that inspired the birth of HOTLIPS Soda: The first 10 years was figuring out how to run the pizza business. We looked at the community and the support from the community. We looked at materials coming in and our carbon footprint, and what we really realized is how important local economies are.

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You have to have a plan to scale up. If you just employ yourself you’ll be working your butt off for a long time.” (Tweet this.)

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When we examined our beverage options, we started asking ourselves, why are we sending our money to Atlanta and selling something with no nutritional value? Portland is the land of microbrews, and it wasn’t rocket science to figure out how to carbonate a beverage. Our first soda we put in kegs, about 10 years ago, and we got a great reception. People wanted it, it was a winner. We started selling it in the stores on draft, and it was kind of a no-brainer to start bottling it at a small scale.

Early challenges: At first, we joined forces with a brewery and used all their equipment — pumps, kettles, chillers. The problem is that beer is loaded with yeast, and it was hard not to contaminate our soda with their yeast. We had to move out to a facility that didn’t have that problem, which set us on a path of working in small manufacturing. We refurbished equipment from the 60s and cobbled together a production line.

Notable successes: We keep trying to make better soda. We’re working with a really cool guy – a friend of ours who’s spent his life working with Proctor & Gamble and General Foods and Starbucks and all these big companies. He came to us and said, what I really want to do with the rest of my career is work with small manufacturers to improve the efficiency of local, sustainable businesses.

He’s helped us build automation into our equipment, which has made a dramatic difference in cutting back the waste. It’s not only made the process more energy efficient, but has reduced our lost product (soda pop, bottles, etc.) from 7-8% down to one percent. This type of automation is something the Big Guys spend hundreds of thousands of dollars on, and our whole project is going to cost a fraction of that.

Competitive advantage: You’ll notice I’ve been dancing around the word “sustainability.” In 1994, I was talking to Jeanne Roy, a prominent local activist on air quality and solid waste issues, and she asked me, “Why are you taking up sustainability?” I said it was the right thing to do, it was cool, and it was a competitive advantage because my competitors would never go there. And there was a look in her eyes that said WRONG. I realized that if we’re the only pizza place that does this, we’re not getting anywhere. We’re not going to change the world. The challenge is to be on the cutting edge, push the envelop, and then get others to do these kinds of things.

How the food and beverage industry is changing: We came to the conclusion that we can’t tell people to eat granola and whole wheat because not everyone responds to that. People want pleasure, and it’s got to be delicious. You need to make things tempting and get people to move to it. In the beverage world, what people want is more nutritious and environmentally responsible options. The world is moving in that direction.

The challenge is, there’s a real reason why that has not happened yet, because it’s very difficult to work with live fruit. Fruit changes dramatically whether you pick it in the morning or afternoon, or pick this variety or that variety. July’s berries are different from August berries — you’re dealing with something that’s alive. That brings more variables into the equation, and when you add variables you add risk, which requires more craft, which makes it more expensive.

The way to provide inexpensive food to a large amount of people is to take the variables out, but that means you’re left with the lower common denominator. I don’t think enough people are fully ready to pay the cost of what it means to accept that risk and bring that craft/skill to everyday objects like soda. How do you reach a large enough market for the product that we’re trying to make?

What success looks like: Our end goal is to be a strong regional brand and product. One of the best things that has happened to us recently is the Wall Street Journal mentioned HOTLIPS Soda as “emblematic of the flavor of the Pacific Northwest.”

What it really means to source locally, in terms of social, environmental, and economic impact: The longer  you can keep a dollar circulating in your community, the stronger your community is. If you can take your natural resources and make something, your economy is going to be more dynamic and resilient. For instance, instead of shipping out a board to another state or country, if you ship out a cabinet, then you are also involving the hardware store, the box maker, etc. The dollar circulates longer, and those businesses are supporting the school band or baseball team, whereas if the money goes out immediately to a bank in New York, it doesn’t really do much for the local economy.

Benefits of starting a company in Oregon: I think the Oregon economy is pretty unique. Portland has been a progressive city for a long time, very supportive of entrepreneurs and risk-takers. It has a pretty unique regional government system, so Washington, Multnomah, and Clackamas counties, they all work pretty well together and make a functional region. Only a handful of regions in the United States have that dynamic.

Your #1 piece of advice for food/beverage entrepreneurs in Oregon: You have to have a plan to scale up beyond just creating a job for yourself. The first stage is to prove viability, but you have to keep in mind the end game. If you just employ yourself you’ll be working your butt off for a long time.

Another thing is that there’s a lot of pressure to discount and buy market share by underselling the product – that’s kind of a death spiral. If you’re a craft person you’re taking on a lot of risk and you should be compensated for that. You can’t undersell your product.