What started as a quest for a delicious fat-free brownie has turned into one of the grocery industry's most remarkable success stories. With virtually no advertising budget and a flat-out refusal to pay slotting fees (the grocery industry's practice of charging food manufacturers for shelf space for new products), Lindsay H. Frucci still expects her No Pudge! Foods Inc. fat-free brownie mix to get national distribution in major supermarket chains this year.
Frucci, 48, formed her company in 1995, after her passion for brownies and her aversion to fat drove her to develop a recipe that not only was fat-free, but also tasted good (an element other low-fat and nonfat mixes lacked). With a perfected recipe but no business experience, Frucci turned to the Service Corps Of Retired Executives Association (SCORE) for advice. "I hooked up with two wonderful guys who were wildly enthusiastic," she says. "They walked me through every step."
As much as they have helped, Frucci wasn't blindly obedient to her SCORE advisors. In the early days, she set prices based on costs and optimal profit margins, but quickly realized that she couldn't generate the volume she needed after retailers added their markups. So, against her advisors' advice, she slashed her wholesale price and her margins, hoping to make it up on volume. It was a risk, but it worked. "I've made a lot of decisions on instinct," she says. "One of the wonderful things I've learned is to trust my gut."
Frucci's biggest obstacle was getting products on chain supermarket shelves. Slotting fees run up to $25,000 per item per chain. "That wasn't something we could afford to do," she says. Instead, she decided to create "pull," an industry term for consumer demand. "Consumer power is huge," she says, "and if the consumers are asking for a product, the stores will carry it."
Using samples, networking and news releases, Frucci has built substantial product awareness. A brief mention in Weight Watchers magazine calling the product "the brownie of your dreams" introduced the mix to brownie-loving dieters nationwide. An Atlanta woman circulated a petition urging the Kroger chain to carry the mix. "We got into the Albertson's in Denver by women going to their stores and saying, 'We want this product,'" says Frucci. "We got in with no slotting; it's pretty unheard of in this business."
And she's not shy about asking for consumer help. Says Frucci: "Our packaging and all our mailings say, 'Please tell people about it.' The store list on our Web site says, 'Please ask your grocery manager for it.' Without our consumers and their backing, there is no company."
Just the Facts
Company: No Pudge! Foods Inc., Hopkinton, New Hampshire, founded in 1995
Founder: Lindsay H. Frucci
Product: A fat-free brownie mix available in four flavors
Employees: Two (including Frucci)
Start-up Capital: $10,000 in personal savings and a $5,000 line of credit at a bank
Sales History: Sales were $6,000 in 1995; in 1996, the first full year of operations, sales reached $42,000; they climbed to $400,000 in 1999, and should exceed $800,000 in 2000.
Manufacturing: All product and package manufacturing is outsourced.
Distribution: No Pudge! Fudge Brownie Mix is available in chain supermarkets, independent grocery stores, natural food stores and upscale gourmet shops across the country; it can also be purchased via mail order by calling (888) NO-PUDGE or visiting www.nopudge.com.