The island of Nantucket is known for its entrepreneurial spirit. Tom Scott and
Tom First caught that fever nine years ago when they started peddling Nantucket
Nectars in the island's harbor. Now the self-proclaimed "juice guys"
hold the number-two spot in the New Age beverage market.
The island of Nantucket is known for its entrepreneurial
spirit. Tom Scott and Tom First caught the fever nine years ago while attending
Brown University in Providence, R.I. That's when they proclaimed themselves the
"juice guys" and started peddling a peach concoction from a boat in
Nantucket Harbor.
To say the juice guys started their company, Nantucket Nectars, on a shoestring budget
would be an understatement. The two Toms built a multi-million dollar company
with an initial investment limited to a $170 bottle-cap hand press, recycled
bottles and an assortment of fruit. They had no formal business training and
conducted no market research. Their business was born from trial and error.
First, a Boston native, says it was a willingness to learn
every aspect of the business, along with their own naivete that kept their
dream alive in the early years. "If we had ever written out a business
plan in 1992, we would have gone to do something else," admits First. He
says since the duo didn't know how to do a cash flow projection, they had no
idea their business was sinking. "In the early 1990s we ran the business
out of a cash box, and if there was anything left in the cash box at the end of
the day, we thought we were making money," he muses.
Nantucket Nectars products are now sold in 30 states,
Canada, Latin America, Europe and Asia. Compared to mainstream titans in the
$15 billion fruit and tea beverage industry, the Toms are still a niche
operation. However, their company is increasing its growth rate each year and expanding
its product line as well. Besides juice, the company now offers a line of teas,
as well as Super Nectars, nutritionally enhanced juices that include food
additives like gingko biloba.
The story of Nantucket Nectars blossomed from a desire to
break tradition, to shun the corporate world, with its suit-and-tie lifestyle.
The Toms have succeeded in doing this with sheer determination, creative
marketing and most of all, a high-quality product. This combination has gained
them attention from both consumers and the media as the undisputed "juice
guys." And First says they are still having fun.
Nantucket Nectars holds the second place in the New Age
beverage market, trailing only behind Snapple. But the road to this distinction
has been long and sometimes bumpy. Although both First and Scott hold college
degrees, neither had any hard-and-fast business experience before starting
Nantucket Nectars. Scott graduated with an American Civilization degree, First
in History. But the two knew they didn't want to enter the American workforce
and spend their lives climbing a corporate ladder.
So they began their pursuit of a business they could call
their own while still attending Brown. Scott, a Maryland native, sought a way
to live on a seasonal Nantucket year round. He quickly started Terrapin
Painters on Cape Cod. While he says it was far from an ideal job, he still
preferred it to working for someone else. And even though his painting business
brought in enough to pay the bills, Scott was soon distracted by what he saw as
a better opportunity.
With the many vessels entering the harbor, an obvious need
arose for a service-oriented business. Boaters had to come to shore to eat,
refuel, restock, do laundry, and run various other errands. Scott's idea was to
deliver essential items to boaters via his own boat. He recognized the
possibilities of this idea and went straight to First. Shortly after, in 1989,
the two twenty something entrepreneurs began offering a boat-to-boat delivery
service in Nantucket Harbor called Allserve. Customers would radio Allserve
with a request, and the Toms would sail in their 19-foot red Sea Way directly
to the boater with supplies. This saved the customer hours of time each day and
made Allserve an instant success.
The Toms would do almost anything to keep their newfound
business afloat. In fact, Allserve provided more than just a delivery service.
The duo performed the oddest of jobs ― things others didn't want or have
time to do. They're motto: 'Ain't nothing them boys won't do.' The young
business owners shampooed their share of dogs and cleaned a good number of
boats to keep their dream alive. More than alive, Allserve would thrive and
expand to include two more boats in its fleet that summer.
When the busy season ended, it was time for the boys to
return to Brown and complete their education. Little did they know they were on
the brink of discovering a multi-million dollar business with only a strong
entrepreneurial spirit, a modest amount of money and a recipe for success. They
could not know it then, but Allserve would lead them to the first channel of
distribution for their future juice business.
After graduating college, the two returned to the island of
Nantucket to pick up where they left off with Allserve. But they knew once the
season ended, the winter months would be challenging at best.
"We were looking for ways to make our business
year-round, and we were involved in a lot of different things. We were involved
in the scallop industry, storing boats in the winter, servicing engines. We
even distributed bread," explains First.
Only a brave few people dared to endure the slow winter
months on the island, but those who did had to stick together. Cook-offs were
common on many nights, where Nantucket natives gathered to show off their
culinary skills. First would bring the juice. This was not just any juice, but
a special creation influenced by his travels in Seville, Spain, where nectars
are a popular refreshment. "I sort of became infatuated with this juice.
There was nothing like it in the United States. So when I got back, I kept trying
to recreate it." The recipe calls for just the right mix of water, nectar
and pure cane sugar. The islanders loved it.
The Toms quickly realized the potential of this tasty fruit
creation and headed to their local grocers that same evening. "One night,
we started mixing fruits in a blender. We bought all sorts of fruits from our
local grocery store and came up with some concoctions that are probably better
left forgotten," says First. But he says they did hit upon some great
flavors, including the ever-popular Orange Mango juice cocktail.
The next spring, Allserve would include a glorified floating
lemonade stand in its repertoire of services. They sold a lot of peach juice to
thirsty boaters that summer. And while they felt this might be the idea that
hit it big, their juice business started as just another way to boost
Allserve's summer sales. "We were doing so many different things, we
thought eventually maybe something will stick," says First.
Nantucket Nectar's early channels of manufacturing and
distribution were quite primitive in comparison to the bottling plants they use
today. "Basically we were producing the juice by hand out of an ice cream
store for a while, and just selling it to a few stores on Nantucket," says
First. But the juice guys would soon encounter the first real setback to their
pioneering efforts: spoilage. Because the juice was all natural, it spoiled
rather quickly. Nantucket Nectars was forced to move production from their
Allserve General Store into a mass-production plant in upstate New York.
Six months into their endeavor, the Toms hired a plant that
specialized in juice production and bottling to recreate First's recipe in
large quantities. The two provided the plant with everything they needed to
concoct the nectars, including technicians to oversee the process. The first
batch cost a whopping $14,000, and the Toms knew they would need to sell a lot
of juice to recoup this expense. "I think we figured we were going to end
up giving juice away for Christmas presents for the next 20 years. But we sold
a lot that summer and then spent the fall and winter trying to pull ourselves
together and figure out if we could make this a bigger business."
Although securing manufacturing channels can be costly to an
aspiring entrepreneur, First describes the experience as "easy."
Nantucket Nectars is co-packed, meaning they use independent bottlers. While
there was considerable competition for bottlers in the 1980s, there is an
overabundance of them now. This allows the juice guys to change plants, if
necessary, to ensure the highest quality products. "We put a lot of
pressure on our bottlers," he says.
But if the manufacturing seemed easy, it was probably
because of the overwhelming difficulties the pair faced while struggling with
the distribution of Nantucket Nectars.
"We lost $2.2 million in 1994, but we made it out of
it," First recalls. He says the mistake was focusing too much on
distribution. "We got into distribution in a big way and started selling
other people's products. We had 18 trucks running and warehouses, and we really
didn't know what we were getting ourselves into."
He says the walls started closing in on the juice guys, and
they had to dump their distribution efforts completely. Ironically, First
considers the near downfall of Nantucket Nectars as one of their biggest assets
today. "We knew so much about the business by the time that nightmare was
over that it became an advantage. We've been through the fires, and we know
what it's like, how tough distribution is. And when we speak to our
distributors, we tell them, 'We've been in your shoes,'" explains First.
He compares distribution to putting together pieces of a
puzzle, both geographically and intellectually. "Building this network of
people around the country who represent us has been an ongoing project over the
last three and a half years. Coke and Pepsi are the best in the world; beyond
that, there aren't a whole lot of choices. And you can't get distributed by
Coke and Pepsi if you are not part of their family. It has been very hard work
for us."
Many New Age beverages come and go, enjoying rapid growth,
then falling by the wayside. Nantucket Nectars have been successful in building
a strong foundation for their company with a philosophy for slow but steady
growth. "I don't know of another company in our industry that has grown
nine years in a row," says First. "We've grown every year we've been
in business."
First says Boston Beer Company, microbrewers of Samuel
Adams, have acted as a mentor to the young Nantucket beverage vendors.
"They're from here (Boston), and they advertised as a relatively small
company competing against some of the big players in the industry. It helped
give us the confidence to advertise," explains First.
First says he and his partner initially looked at
advertising like throwing intangible money into the sky, hoping something would
come back to them. "For a small company, that's very scary," he
admits. But the juice guys took the big plunge in 1996, spending an estimated
$200,000 on radio advertising in the New England market. Their ads featured the
founders bantering lightheartedly about the trials and tribulations they’ve
faced. "When the year was over, there was interest from newspapers and TV
stations. People were talking about the brand and reading our bottle caps. That
just energizes you," says First.
In the midst of the success of their clever and
cost-effective radio campaign, the juice guys have been concentrating on
getting their product into stores across the country. Nantucket Nectars landed
an exclusive deal with Einstein Bagels, but Coca-Cola bought the contract and
pushed out the niche product to offer their own line of beverages. Still, the
juice guys, with their respected reputation and innovative juice blends, landed
a prized spot in many Starbucks Coffee and Bruegger's Bagels outlets across the
nation. And Nantucket Nectars are also starting to show up in convenience marts,
like 7-11, and wholesale clubs like Costco.
To expand their distribution reach, the young company
employs a sales force of about 70 people. "For our size, we probably have
more people per case than any company in our industry. We put a lot of focus on
our sales team and work hard to get new accounts and service them well,"
explains First.
"I also think we have a good product to sell, so if we
get the people to try the stuff, we usually do a pretty good job of getting
them on board," he says. First says getting a foot in the door is
relatively easy, if you are persistent. The real challenge lies in getting the
store to continue carrying the product. "We put more focus on staying in
stores and sampling our product and running promotions with our partners,"
he says. Nantucket Nectars is also available through mail order and the
company's Web site, for people who can't find the beverage in their area.
First says the juice guys do everything together, including
developing new ideas. "But by 1995 we realized that someone had to be
responsible for one thing and another person had to be responsible for another
thing, so we kind of divided our loyalties and it's worked pretty well.
Tom First focuses on the sales. "I really like the
sales aspect of it because it was such an important aspect of building the
company. I am also very involved in building our distributor network. And I do
a lot of the flavor development." Tom Scott focuses more on running their
25-30 person marketing team.
Competition? There's plenty in the New Age beverage
industry. Tom First offers one piece of advice for dealing with the
competition: "innovate."
First says staying cutting edge is the best way to deal with
any competitor. "I think we are in an industry that moves. What people
thought of in terms of fruit juice 10 years ago is much different from what
they think now. In 10 more years, what people think of as fresh will be
different than what it is now," he explains. First also feels staying
abreast of new and changing technology is important. "Ten years ago people
were drinking cartons of juice that were poorly pasteurized. We believe very
strongly in pushing the quality envelope."
The juice guys also offer larger portions of their beverage.
The industry standard juice bottle is 10 ounces, while Nantucket offers a full
12-ounce dose of their nectars.
Industry experts say the juice craze is more than a passing
fancy; so is Nantucket Nectars. And First's thirst still hasn't been quenched.
"There's no doubt that I feel we've gained some success
at this point. I feel some personal satisfaction that people actually know we
exist. But I never like to admit to myself that we are even one-tenth of the
way to where we want to get to because that's when you lose your edge, and
that's when you stop creating and fighting to grow and survive," he
explains.
"Our goal is to become the biggest juice company in the
United States," says First. But he quickly adds that more than financial
success, the Toms are looking for a legacy. "In 10 years when people think
of Nantucket Nectars, I don't want them to just say, 'They have great
orange-mango.' I want them to say, 'I hear that's a great company.'"
Company: Nantucket Nectars
URL: www.juiceguys.com
Founders: Tom First and Tom Scott, the "juice
guys"
Industry: New Age beverage
Founded: 1989
Revenues: $30 million+
Copyright © 2000 by Virtual Advisor, Inc. All rights reserved.