Smoothie Operator

Ric Lashway, president of Selection Unlimited in South Burlington, sees no limits to the possibilities of his distribution business

by Portland Helmich

Ric Lashway started at Selection Unlimited in South Burlington as a sales representative when the company was involved only with video rentals. Realizing that technology might make video rentals obsolete, Lashway helped take advantage of the company’s distribution power to move into the beverage industry.

A business that’s not changing is a dying business,”says Ric Lashway, president of Selection Unlimited. He should know. Lashway was instrumental in growing Selection Video, a South Burlington video rental company that serves 250 rural convenience stores in mostly northeastern states.

He was also an integral part of spawning — from Selection Video’s customer base — Selection Unlimited, a specialty beverage company that maintains 16,000 accounts throughout the United States and Canada. Both businesses are owned by parent company DWS Inc. “Our whole history,” Lashway says, “is about finding creative solutions to challenges.”

The realization that technological advances might eventually render video rental companies obsolete forced Lashway and the owners of DWS Inc., Derrick and Randy Senior, to contemplate broadening their product mix in 1993. “Many people said we were a video rental company,” Lashway remembers, “but we said, ‘We’re in the convenience store industry.’ “

More to the point, DWS is in the distribution business, which it has imporved on by developing new products to distribute. Selection Unlimited specializes in selling instant cappuccino and real fruit and coffee semi-frozen smoothies through small, independent convenience stores, as well as national convenience store chains.

“It’s not authentic cappuccino from Italy that’s made in a $5,000-to-$15,000-machine with real milk foam on the top,” Lashway concedes. Selection Cappuccino, which comes in 10 flavors, is a powdered blend of coffee, non-dairy creamer and sugar mixed with hot water and flavorings. “It’s more like flavored hot cocoa than it is real cappuccino.”

The 36-year-old president adds that the company’s smoothies aren’t whipped up fresh in a blender, either. Like the coffee smoothies, Selection Unlimited’s fruit smoothies are dispensed out of a machine, which combines liquid fruit concentrate, water and ice. “They’re in between a slush and a real smoothie,” Lashway points out, “but you can still see bits of fruit in the product.”

Selection Unlimited’s products are targeted toward the convenience store customers, even though Selection Unlimited’s clinets are convenience store owners, themselves, and, according to Lashway, one reason the drinks have taken off is that they offer a high profit margin. A 12-ounce cup of Selection Cappuccino costs between 89 and 99 cents, while a 12-ounce Selection Coral Bay (the brand name of the fruit and coffee smoothies) costs between $1.49 and $1.59. “Our products have a higher-end appeal,” says Lashway, “but they’re not too costly.”

The products boast a long shelf life and produce little waste because they remain in the dispensers until customers push buttons and select drinks like Killa Vanilla cappuccino or Orange Dream smoothie, one of Coral Bay’s seven smoothie flavors.

Running a company that makes specialty beverages wasn’t what Lashway had in mind in 1985. Newly graduated from Champlain College with an associate’s degree in business management, Lashway responded to an advertisement in The Burlington Free Press for a territory representative at Selection Video. It was the first want ad for the fledling video distribution company, which was only a month old at the time.

The Georgia native applied for a few jobs and was offered three positions. “This was the worst one. The company hadn’t been around that long, and the money wasn’t as good,” Lashway deadpans.

Still, Lashway was impressed with Derrick and Randy Senior. “I felt the company had the potential to go places,” he says, “and I felt that what I’d be doing would suit my personality more.”

As the Seniors’ first full-time employee, Lashway managed and expanded the company’s territory, which comprised 26 stores in northern Vermont. Within two years, he was promoted to sales manager while the company continued to expand throughout New England and into New York, Pennsylvania and Ohio.

Lashway says Selection Video quickly became known for its marketing and high level of customer service. Furthermore, he says the company developed a reputation for being cutting edge. “We designed our own racks that lit up on top and advertised upcoming movies,” Lashway notes, “and we were the first one to invest in a computer system.”

That willingness to invest in innovations was brought to the fore in late 1994. The company knew it needed to find a product that would have more longevity than video, so it began conducting informal surveys among its customers, trying to determine what products the stores wanted that they couldn’t get from other suppliers.

Lashway says that although Selection Video made a few attempts to “put together different programs” for its customer base, “nothing stuck.” It wasn’t until Derrick Senior saw a cappuccino machine being tested in a Vermont convenience store that the company’s new enterprise began to take shape. “He thought it looked interesting and tasted interesting,” Lashway says. “It was a product that seemed to be a little ahead of the market.”

After researching equipment and product manufacturers, the company invested in five $1,200-machines and lentthem to stores throughout its territory. Customers, Lashway recalls, were extremely skeptical that a product like instant cappuccino would ever sell in rural stores. “Anything that had the look of ‘big city’ was looked down on,” he explains. “Everybody said the same thing, ‘That yuppie drink won’t sell here.’ ”

Lashway understood the store owners’ hesitation, as some stores were still offering free coffee, and others were in towns where unemployment was as high as 12 percent.

To the store owners’ surprise and Selection’s delight, the product was an instant success, greatly surpassing the goal of 75 cups a week per store. Not only did instant cappuccino outsell regular coffee in many locations, but it did not affect coffee sales. While the product appealed to all types of people, it seemed to sell best among young adults and females. “A whole new market opened up,” Lashway points out.

Validated by its hunch’s would pay off, the company got even busier. More representatives were hired in an effort to expand the company’s customer base. Lashway oversaw sales; Randy Senior handled operations; brother Derrick worked on research, development and marketing.

While tending to the video side of its business, the company worked with product manufacturers to develop its own beverage formulas. By the end of 1995 more than 1,500 locations were selling Selection Cappuccino.

Ric Lashway started at Selection Unlimited in South Burlington as a sales representative when the company was involved Lashway started as Selection Unlimited’s only employee but has grown into a management position where he oversees a staff of nine, including Cindi Getek, marketing coordinator; and Adam Paxman, logistics manager.

Lashway says that as the company began to distribute the product into more urban areas, traditional distributors began to get into the game. What ensued, of course, was competition, and Selection Cappuccino was at a disadvantage. “We were competing on their turf with their customer base,” Lashway recalls. “The more stores we added on, the more people we had to hire, whereas they could just add products because they were already delivering thousands of products to these stores every week. They had economy of scale and so could sell at a lower price.”

To remain competitive, Selection began selling the 2,000 cappuccino machines it had lent to convenience stores. “Once we proved (to the stores) it was going well, we told them we could reduce their case price if they owned the equipment,” Lashway explains.

That effort freed up cash but didn’t address the larger issues: competing distributors had a loyal customer following, possessed a larger sales force, and visited the stores on a regular basis. Finally, Lashway recalls, “We said, ‘Why are we banging heads with these people? Why don’t we partner up?’”

Selection Unlimited turned over its accounts to the distributors, who agreed to buy only Selection products. In return, Selection agreed to handle all marketing, train the distributors’ sales force to increase revenue, and continue to develop new products.

This meant the company would have a wholesale and a retail division, as Selection Cappuccino products were still delivered directly in markets where the company had a strong video business. In 1996 Lashway became vice president of retail, while Derrick Senior took responsibility for the wholesale end.

To help offset the decrease in cappuccino sales during the summer months, Selection test-marketed its own brand of smoothies in 1998. “We’d looked into how traditional slushes were selling, and they seemed to be on the decline,” Lashway says. After 7-Eleven, which had pioneered the slush industry, began to develop a coffee smoothie, Selection knew the industry was ready for a change. Timing the debut of its own smoothies to coincide with 7-Eleven’s product and with Dunkin’ Donuts’ Coolatta, Selection rolled out its smoothie line in 1999.

A year and a half ago Lashway says, it was apparent that Selection was not just made up of two divisions — retail and wholesale — but had become two separate companies. “We now have a video company called Selection Video,” Lashway explains, “and a beverage company called Selection Unlimited.” Lashway became president of the latter in 2000, at the same time the specialty beverage business took its remaining retail accounts and converted them to distributors like Pine State Trading in Maine and Finkle Distributors in New York.

Elevating Selection Unlimited to a national level by selling to large chains like Uni-Mart, a publicly held company based in Pennsylvania that maintains more than 300 stores in New York, Virginia, West Virginia, and Pennsylvania is what excites the new president now.

“We’re able to compete successfully because of our flexibility. We adapt to the needs of the corporation rather than make them adapt to ours.”

Customers like Otto Hansen have noticed. General manager of operations for R.L. Vallee Inc., which operates Maplefields convenience stores, Hansen says promotional support separates Selection Unlimited from its competitors. “Not only do they have a great product, but they know how to market it,” he says.

Kim Parker, Selection Unlimited’s key account manager, says she’s “constantly amazed” at Lashway’s level of enthusiasm for the business. “He lives and breathes Selection Cappuccino and Coral Bay,” she remarks. “He keeps me motivated.”

Lashway seems to have been motivated since childhood. At 8 years old he was doing chores for a farmer after school. At 16 he worked during the summer for Burton Island State Park; by 18 he was the park’s assistant manager. “I’ve always been interested in work and the real world,” he says.

It’s those characteristic that convinced Derrick Senior to hire Lashway. “He’s continued to push the limits and set new standards,” Derrick says. “Status-quo is not a word in his vocabulary. I have an enormous amount of trust and faith in him.”

Inherently competitive, Lashway says the challenge of running a small specialty beverage company (including Lashway, there are 10 employees) is convincing larger chains and distributors to take a risk and make a change.

When Lashway was dealing with individual convenience store owners, the promise of litte investment, shelf space and extra effort with a potential for good income was a major selling point. “As companies become million- or billion-dollar businesses,” Lashway explains, “the people in charge of making decisions about us aren’t affected personally if we improve their bottom line by $200,000. Unfortunately, the fear of failure is a bigger motivator than the opportunity for gain.”

Kim Parker, key account’s manager, is in charge of managing Selection Unlimited’s 16,000 accounts throughout the United States and Canada.

Selection Unlimited’s challenge is as clear to Lashway as the reason for its growth. “Successful businesses,” he says, “have to have quality products, loyal customers, a vision and a mission that’s clear to customers and employees.”

Next on the South Burlington company’s agenda (the company’s still located in the same building as Selection Video but is looking for a new space) is to branch out into the food service industry by setting up its products in bars, restaurants and colleges. Moreover, the company, which contracts with food tech experts to create new formulas, is developing a new brand of slush that contains more real fruit, and it has new smoothie products in the works.

Lashway says the trend toward healthier lifestyles is influencing product development. “We’re doing a lot of work on energy-type drinks, but we’re not going to release them until there’s a real demand for them,” he stresses. “Timing is important.”

For now this husband and father of two young daughters is enjoying his new position at the company that he helped raise. “I like being posed with new challenges every day,” he says, “and I like the multitasking that this environment demands.”

What Lashway seems to like most is the unlimited potential Selection Unlimited affords. “There are tons of opportunities for us to develop exciting new beverage lines and different markets to promote those to,” he dreams aloud. “From a marketing and product development point of view, we’re only limited by our imagination.”

Originally published in October 2001 Business People-Vermont