Thinking Out Of The Box
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Among the dense sea of flakes, puffs and Os, indecisive eyes scan cereal-box greats like Tony the Tiger-Kellogg's 47-year-old spokesperson for Frosted Flakes-and whoever happens to be the latest inspirational athlete to grace the face of General Mills' renowned Wheaties. Now novelty favorites like Flutie Flakes, produced by Pittsburgh's PLB Sports Inc., a food marketing company that introduces products featuring pro athletes, are stealing some of that morning spotlight-and making competition even more fierce in the picking process-with boxes featuring athletic heroes both young and old. So where do Jason Bauer and Michael Simon, founders of New York City's Famous Fixins Inc., yet another distributor and manufacturer of athlete- and celebrity-affiliated food products, come in? Especially when-well, let's face it-it's been done? Let's just say "celebrity" is the operative word.
Sure, PLB had a leg up on Famous Fixins in the breakfast department. PLB released Buffalo Bill quarterback Doug Flutie's cereal (with sales supporting the Doug Flutie Jr. Foundation for Autism) about a year before the latter released Baltimore Orioles third baseman Cal Ripken Jr.'s Cal's Classic O's cereal early last year. But even though they weren't the first ones out of the gate, self-proclaimed "sports junkies" Bauer, 30, and Simon, 31, have gotten top players from top teams to sign with them-and these are athletes with household names. Of course, Bauer and Simon have had some practice. The two in-troduced 1987 Academy Award winner Olympia Dukakis' Greek Salad Dressings to supermarkets in 1997. And they had a few connections, too.
In 1995, Simon, a former TV agent in Los Angeles, ran into Dukakis' son, Peter Zorich, a high-school friend, after returning to the East Coast to serve as PR manager for Planet Hollywood International Inc. in New York City. When asked what Zorich, a young guy in career tran-sition, should do with himself, Simon recalled those afternoons in high school spent hanging out at the Dukakis compound, feasting on Olympia's tasty cooking. When Zorich suggested Simon team up with his movie-star mom on a food product, Simon agreed-even though he says Dukakis was slightly em-barrassed at the thought of taking her Greek salad dressing, passed down by her mother, to the public.
None of the prospective partners knew a thing about bringing a food product to market, so it seemed almost fated when Bauer, the younger brother of Simon's best friend and a fellow Boston University alum, agreed to lend a hand. Bauer, who, at 21, launched his food and beverage industry career as the sales manager for his family's business, a Long Island, New York-based beverage wholesaler for companies like RC Cola and Diet Rite Cola, fine-tuned his skills in sales manager positions with two other food companies (one Greek) after his family's business closed its doors in 1994. "After working in a family business, it's hard to go work for somebody else," Bauer says. "I knew I had to eventually do something on my own, and I used the other companies to get experience."
With one well-connected former talent agent/public relations whiz, the endorsement of an esteemed actress and a guy who'd been in the business his entire working life, you'd think these guys would be scooping up their profits with silver spoons. Not so. "It doesn't matter-rich, poor, young or old-it's tough to get these products onto the supermarket shelves, which I didn't realize going into it," says Simon.
sales manager positions with two other food companies (one Greek) after his family's business closed its doors in 1994. "After working in a family business, it's hard to go work for somebody else," Bauer says. "I knew I had to eventually do something on my own, and I used the other companies to get experience." With one well-connected former talent agent/public relations whiz, the endorsement of an esteemed actress and a guy who'd been in the business his entire working life, you'd think these guys would be scooping up their profits with silver spoons. Not so. "It doesn't matter-rich, poor, young or old-it's tough to get these products onto the supermarket shelves, which I didn't realize going into it," says Simon.
When you have to pay "slotting fees"-which cost anywhere from $1,000 to $10,000 per item, per supermarket account-to get your unknown product on the shelves, the desperate search for funding occasionally leads to desperate measures. It may be easy for some to give up 50 percent of their company to get $250,000 in seed capital, like Simon and Bauer could have done had they accepted offers from leery venture capitalists. But they weren't about to forfeit such a huge stake in their dream. Instead, they took a risk and secured a $200,000 credit line through a bank. "We had enough faith in it that we were willing to personally guarantee it," says Bauer, "and we didn't have to give away any equity in the company."
With the loan, they designed, packaged and started distributing Olympia's Greek Salad Dressing, taking the small-budget approach when appropriate. For instance, after realizing it would cost upward of $10,000 for rights to use stock photographs of the Parthenon and the Greek Islands on the dressing bottles, Bauer spent $2,000 on a trip to Greece and took his own pictures.
Simon believes 1997 was the perfect time to launch because there was no similar brand-name dressing available. But, according to Bauer, it was still difficult to get brokers and supermarkets to carry it: "People just aren't up at night saying, 'God, I wish there was a Greek dressing,' you know?"
Best Faces Forward
After paying thousands of dollars in slotting fees, and spending hours doling out dressing samples, Famous Fixins scored both distribution and public awareness. But, growing anxious amid their impending success, Bauer and Simon nearly exhausted their loan. "We wanted to grow our business quicker than it was generating profit," says Bauer. "So we met with a securities attorney and started the process of taking the company public to raise capital."
Since NASDAQ requires a company to meet certain revenue and asset levels to do an IPO, Famous Fixins went public in September 1998 by merging with a trading shell, a public company with stock that no longer trades because the business is inoperative. But going public provided more than a solution for staying afloat while growing-it also afforded Bauer and Simon an incentive to offer prospective celebrity partners.
A change of focus also catalyzed growth. "We decided to come out with products we could approach supermarkets with," says Bauer. "Products we knew they'd be able to sell so we wouldn't have to pay these exorbitant slotting fees." Olympia Dukakis, whose dressing is now in 2,000 supermarkets nationwide, garnered interest-but not many fans compare to sports fans. "Now you have [New York Yankees] Derek Jeter on a box [of Jeter's cereal]," says Bauer, "and a buyer in New York knows that's going to sell. I mean, Derek Jeter's a brand within himself."
Trying to get a toehold in the largest category in the food industry using little advertising beyond that of the players' good names (and faces), Famous Fixins has launched a line of 10 cereals featuring the greatest of the greats. The Chicago Cubs' Sammy Sosa, members of the New York Mets, and the San Francisco Giants' Barry Bonds have all been featured. Supermarkets like it because not only are the mostly seasonal boxes collectors' items, packed with goodies like official Major League Baseball cards and chances to be a ball boy or win a jersey, but part-if not all-of players' proceeds go to charity. Famous Fixins requires it, and the players are all for it. "[At press time] Derek Jeter was about to sign a $120 million contract," says Bauer. "Do you think he needs to make a couple hundred thousand dollars on a cereal?" Of course not. But what players and teams do like is getting signage in atypical places like supermarkets.
PLB, Famous Fixins' biggest competitor, also donates profits to charity and allows athletes to take an active role in creating the packaging. But what it can't offer that Bauer and Simon can are shares in the company. That ability paired with Famous Fixins already amazing list of partners, has led to two more exciting partnerships: a three-year deal with teen pop sensation Britney Spears for a line of candy/novelty products inked in late February, and one with Rookie of the Year race-car driver Tony Stewart for car-shaped, Altoid-like mints.
As far as competition goes, Simon only sees good in it, because it makes supermarkets more receptive. "There are 50 states with hundreds of cities," he says. "There are enough teams to go around." And don't think grocery chains are loyal to brands. "Loyalty? Nah, definitely not," remarks Simon with a hint of sarcasm. Whoever has the winning team on their box gets the slot.
Unfortunately, watching games, races-and now the Billboard 100, probably-has more of an effect on Simon than before. "It's no longer sports-it's business," he says. "Sitting at the Mets' game-six playoff against the Braves-you just live and die by these 11 guys every week." Being on the ball, and going online (www.famousfixins.com) in spring 1999, however, have taken sales from $500,000 in 1998 to $3 million in 1999. Next on the agenda: more national products and being recognized as a viable company in the eyes of Wall Street and financial communities.
When asked if he still sees himself running Famous Fixins in five years, Bauer responds, "Definitely. But I see it as a $10 stock."