Dividends and Queen Bee

Have you ever been in a drugstore and seen a can with an older gentleman in a beard surrounded by a bee and the can is called Burt’s Bees. You or someone you know may use the product or products associated with Burt’s Bees. If you ever wondered what the story is with the company, the partial answer is on the website, but the full answer is in a book called Queen Bee written by Phyllis Austin published by Tilbury House Publishers, Thomaston, Maine, 2015. The book is the story of Roxanne Quimby, Burt’s Bees and Her Quest for a New National Park.

Roxanne Quimby grew up in various cities in the manufacturing belt of the US and spent summers with her Grandparents running an ice cream shop in Boston. In that setting, she learned the fundamentals of small business and customer service, which she would eventually take to her company. Well, before that she went to college and because she was taking art and it was the time of hippie generation, San Francisco was the place to be. She eventually passed and met her husband. They decided to live off the land, but where? Their journeys took them to Maine and buying a piece of land and living off the land. If you think about the people who settled the country, it was a hard life, but there were good things about it – being in the woods and the rhythm of nature. Ensuring your needs are met on a very limited budget. Roxanne and her husband lived there till her husband wanted to move to town and they separated.

Roxanne needing something to do, met Burt Shavitz who ran a bee colony. Burt was contented with the way of life he had created and really did not want to expand. Roxanne believed the honey and candles could sell more because they were very good. She did the craft fair circuit, depending on where you live will depend on the number of craft fairs in your part of the country, however for every product there are fairs or conventions. Customers do not tend to go to all of the fairs but some of the suppliers do and they get to know each other and learn from each other.

For those customers who did not attend all the craft fairs, Burt’s Bees produced a catalogue, Roxanne had a eye or flair for marketing and the catalogues are collector items or were very well done. They also helped to increase sales. Then Roxanne decided to go to the Wholesale market and premium stores which partly came out by going to conventions.

Once sales increase, all businesses must decide to you grow more or be contented with what you have. Roxanne wanted more and took increasingly control of the business. She moved into skin products and eventually there is a line of beauty products which exists today. There are many stories in the book as the company moved from small quarters to main street building in Guilford and then to North Carolina. Some were success, some were workovers but the product remained true to its roots as natural and people liked and bought it. Eventually the company was taking over by Clorex which still owns it.

What is important during the process of running the business, the product remained true to its roots 98% plus natural; no debt, Roxanne had a wonderful ability to link to customer needs, now days research does what Roxanne could do; the company used ingredients, integrity and unique packaging as its differentiation from others in the marketplace. When Roxanne hired people who previously worked in larger corporations, they found the ability to access reports was lacking in terms of pricing, profitability and raw materials. Moving from a small company to a larger one in skin care led to more government regulatory processes which the small company did not have.

The people Roxanne hired at the senior levels knew the company had something special and they were willing to bring their talents to help the company achieve greater production and sales, but often the company felt like a boot strap operation.

Linking to dividend paying stocks, in the retail world there are thousands of products and more are introduced on a regular basis most will not be a success from an investor point of view. They may be good products, they may be small or regional in nature, but often times the barrier to entry is low. Burt’s Bees largest customer in 2001 was health food store accounting for 40% of sales, then gift and specialty stores, and everything else – website, drug stores, etc. When you are shopping you are looking for the ones that are special. If you are not positive, wait till the giants such as Clorex buys the company and uses its distribution system to bring the products to all the markets. There is a good reason why companies that have billion-dollar line products are profitable on a year-to-year basis.

There are more questions than answers, till the next time – to raising questions.

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