Nantucket Nectars' "Juice Guys" Bottle Formula for Success With Quality Ingredients 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. 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 and had no idea that 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. Squeezing Out an Idea 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 popular refreshment. "I sort of became infatuated with this juice," says First. "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. A Juicy Opportunity 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. Venturing Into New Territory, Production and Distribution 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 for 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. " 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. " Striking Deals for Growth
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