All In The Family

June 26, 2020

When prohibition ended in 1933, an entrepreneur named Fred Nackard applied for a liquor license and started a business distributing alcohol in northern Arizona. Nackard ran the business out of his home with his wife, Monica, who managed accounting while Fred handled deliveries with the company’s single truck.

Fast forward 87 years, and The Nackard Companies’ territory covers 40,000 square miles in Arizona, home of some of the world’s largest tourist destinations, including the Grand Canyon. The business has three distinct branches: a Pepsi bottling franchise, Hi-Line Refreshment Services (vending, micro markets and coffee service) and Legacy Beverage (beer distribution). The company remains in the family; it is currently run by Fred and Monica Nackard’s son, Patrick, with Patrick’s son Palmer serving as vice president. 

Bootcamp, booze and bottling

Two years after Fred Nackard launched his liquor distribution company in Flagstaff, Ariz., he expanded into the bottling business with his brother Phillip. They acquired Dr Pepper and Nesbitt’s franchises. When Fred and Phillip were drafted during World War II, Monica and Phillip’s wife Bessie kept the business going.

“When my grandfather was drafted, he wanted his wife, Monica, to run the business, and at the time Dr Pepper didn’t agree with that,” explained Palmer Nackard. “There weren’t women that owned bottling facilities at the time, so there was a disagreement, and he cut ties with Dr Pepper and started a Pepsi franchise. He signed the franchise agreement around the time he went to bootcamp.”

After returning from the war in 1945, Fred Nackard moved away from liquor distribution to focus on beer distribution and Pepsi bottling. He expanded territory over the years, purchasing seven acres of land in Flagstaff, which he initially used for storage space. This was eventually transitioned into a production facility, office and warehouse.

Fred and Monica’s only child, Patrick, grew up in the company, working various jobs throughout the bottling line, warehouse and the office. Upon Fred’s death in 1984, Patrick was named president of the company.    

Expansion into vending

By the early 1990s, the company had one full-service vending route. Jim Bushnell, the company’s vice president and chief financial officer, said that while Pepsi was handling the route at the time, Patrick Nackard was interested in expanding the vending business and separating it from Pepsi to create a standalone company.

“In 1992 we answered an RFP from Northern Arizona University, and had not a clue that we would be awarded the contract,” Bushnell recalled. “But we were, and this took us by surprise. Within 90 days we had equipment coming in, but we had no software and no computer programs to handle this.”

Bushnell and Nackard quickly figured it out. Northern Arizona University became the company’s first major vending account, and Hi-Line Snack and Vending was born.

“We had Palmer’s dad and mom, Patrick and Julie Nackard, and myself, and the general manager Gary Hummel all filling vending machines in the wee hours of the morning to get ready,” Bushnell said. “Our service department was setting up the equipment. But we made the deadline. And we’ve been operating ever since, expanding from one account.”     

“In the last seven years, the vending business has really grown for us,” Palmer added. “We’ve focused on expanding our offerings to micro markets, nano markets and coffee. It’s been an exciting part of our business.”

As senior director of Hi-Line Refreshment Services, Gene Simon oversees the company’s vending expansion.

“Our latest forays have been going to our largest accounts and converting them over to micro markets,” Simon noted. “We found that to be really beneficial for both our sales and our customers. The customers really appreciate having the expanded offerings that a micro market brings and the ease and convenience of an open shopping experience."

Servicing a unique territory

Palmer Nackard said that the company’s territory presents interesting challenges and opportunities.

“We still have three sides to the business,” he explained. “We have the Pepsi bottling franchise; Hi-Line Snack and Vending, which we now operate as Hi-Line Refreshment Services because we do more than snacks and vending these days; and Legacy Beverage, which we are partners in, and that’s the beer distribution business. We are a Canteen franchise on the Hi-Line side, and we don’t go outside of our Pepsi territory with our vending business.”

Nackard explained that their territory includes 40,000 square miles, and the population density is about seven people per square mile. This area of northern Arizona may not have a large population, but it includes some of the biggest tourist destinations in the world.

“We cover the Grand Canyon, Sedona and Lake Powell, so although we only have about half a million full-time residents in our market, we get well over six million visitors into our market throughout the year,” he explained, noting that the area doesn’t fit squarely into a clear marketing demographic. “A lot of the times we get lumped into the Southwest when it comes to what products people might want to buy.

“But because we have such a huge influx in tourism, we might sell things that do well in Asia or Europe,” he continued. “If you were a vending operator in Phoenix, you might not consider the same products that we would because it’s a different demographic in that market.”

Nackard said that because of this tourist-heavy demographic, the company isn’t afraid to try new things. They’ve had success selling batteries, headphones, pens and other items travelers might need when they’re on vacation. Nackard said these items do well in vending machines in the Grand Canyon or in hotels across their territory.

Technology and training solutions

After acquiring another vending operation, Aspen Vending, the company made the decision to enter into a franchise agreement for Hi-Line with Canteen in 2012.

“We’d talked with Canteen a couple of times, and with the acquisition of Aspen it made a lot of sense for us,” Simon explained. “We felt that with their expertise, it would make our company a lot stronger.”

Simon said Hi-Line is exclusive with 365 Retail Markets. Most of their micro markets operate on the legacy kiosks, while a few are on ADM.

“We’re planning to upgrade all of them — that’s another project we’ll be doing during the [coronavirus] slowdown, is to get all the markets moved over to the ADM platform,” Simon added. “We’re also putting Beacon markets into some of our smaller locations.”

The company also utilizes Crane Streamware and has a small interface with USA Technologies/Cantaloupe Systems for cashless hardware.     

About four years ago, the company consolidated all its prekitting into a central warehouse to reduce costs and improve efficiency.

“We did that [consolidation] in conjunction with bringing in LightSpeed,” Simon explained. “That allowed us to gain efficiencies and better control over our inventory.”

Simon noted that one of the challenges that is unique to the company’s geography is that vending machines and accounts are scattered throughout their territory; in many cases, there is substantial distance between sites.

“Having a well-trained delivery staff that can take care of simple repairs and maintenance on the machines is very beneficial,” he said. “We bring people in, put them in a utility role so they learn the routes and learn more about the equipment. Then, we partner them with a technician and train them on how the machines work and doing simple repairs. We then offer them a route after they’ve gained that experience. I think that’s helped us be a little more efficient.”     

Business during COVID-19

The Nackard Companies has vending and micro market accounts in universities, hospitality, manufacturing, healthcare and government facilities. Like most operations, they’ve experienced a slowdown in certain accounts due to the coronavirus crisis, particularly in schools and hotels.

“On the other hand, we’ve had a few accounts that initially asked us not to come but have since determined that since their employees are not able to go to restaurants and get meals conveniently, they’re more dependent on their vending services,” Simon explained. “So, they’ve actually invited us back in.”

Nackard said the company is using any extra time afforded by the crisis wisely.

“We’re pursuing different kinds of business,” Nackard added. “We’ll be selling hand sanitizer from a local brewery in northern Arizona. We’re looking at internal projects that we’ve been wanting to get done, like moving racking in warehouses, cleaning and getting equipment prepared.”

Simon explained that as Hi-Line continues servicing accounts that are still open during the coronavirus pandemic, he’s been working on implementing promotions in micro markets.

“During the [coronavirus] crisis, business at our manufacturing facilities has been what’s really sustained us,” Simon noted. “Most of these accounts have stayed open and some of them are actually growing sales because they’re producing products that are essential for consumer goods. We want to put a customer appreciation program out there to say, ‘Thank you; we realize you’re working hard and here’s a reward for your dedication.’”

Simon said that moving forward, he plans to use promotions to bring attention to new products available in the markets. He added that while coffee service is currently a small part of their overall business, he believes it has high growth potential and is planning further expansion.

“Most of our distribution area is in colder climates, and coffee is a really good product for us to expand into,” Simon said. “We feel that we can offer a lot more to our customers in terms of service to support the coffee sales. Other companies that are in that line don’t have the ability to really take care of the account on the service end.”

Simon is currently working on expanding coffee service into convenience stores by managing their beverage bars.

“Because of our sister company, Pepsi, we already have people that are familiar with convenience store sales and we have a lot of contacts with c-stores,” he said. “That’s a major opportunity for us. We’ve set up a market development team. Right now things are in the planning stages because of the coronavirus — there aren’t a lot of opportunities to meet face-to-face with customers.”

Simon said they’re using time strategically during the coronavirus to work on assembling sales materials, determining the products they intend to sell, and  preparing for launch when the timing is right.

“We’ve been able to secure the coffee business at a couple of accounts while [coronavirus] is going on, but we think that’s just the tip of the iceberg and that we’ll be able to really get this going as soon as the virus lifts,” Simon added.          

A grandfather’s legacy

Nackard said that when his grandfather started the company, he built the business upon three pillars.

“[The pillars are] to provide the highest quality product, hire the best people to sell and produce those products, and always give back to the communities we do business in,” Nackard said. “We donate monetarily to pretty much every community we do business in. We’re very involved in chambers of commerce, nonprofits in every area — education, arts and sciences, recreation. Through event sponsorships and donations, there’s not really an event that goes on in a city or town that we cover that isn’t supported by us in some way.”

Both Simon and Bushnell said they enjoy the challenges that the convenience services industry continues to offer.

“The industry is constantly evolving,” Simon said. “There’s always a new challenge or obstacle, but it creates a new opportunity for us to expand what we’re doing and become more efficient. So, it’s always interesting and challenging.”

“It’s dynamic —we’re always looking for the next change, and that’s what makes it so interesting and fun,” Bushnell added.

Nackard agreed that the constant change keeps everyday business exciting. “Not to sound like a broken record, but it’s absolutely true and I think most people in our industry would say this, but it’s constantly exciting,” Nackard said. “I think what I enjoy most about the business is that we sell brand names — products that people know — but we’re constantly finding new ways to sell those and make it more convenient for people to buy them. There’s always something new to sell, and there’s always a new challenge to tackle. Even though what we sell is simple, tackling the complexities of that industry is a constant challenge. Every day, you learn something new.”