Editor’s note: This story comes from Tampa Bay Inno, our online sister publication. Want more stories about the local innovation economy? Subscribe to The Beat, a free email newsletter that breaks down everything you need to know.
While almost every industry has been put on hold during the coronavirus pandemic, businesses that create their own product have had a particularly unique share of challenges. From conversing with manufacturers across the globe, to dealing with distributors stateside that are pivoting to remain open, three startups share their triumphs and struggles as they continue to keep their businesses afloat.
Danielle Coate‘s biggest blessing and also biggest regret centers around one word: diversifying.
While the co-founder of Conscious Coconut, which makes high-end coconut oil wellness products, is grateful to have a slew of avenues for distributing her product, she wishes she had followed the same pattern when it comes to manufacturing.
“We’re just using this time as a huge wake-up call, that you can’t have all your products from one place like I do and that you need to diversify,” Coate said. “And I have been proud that who buys our stuff has always been diverse. I think it’s important to have different outlets and then you don’t have all your coconuts in one basket.”
The final Conscious Coconut products are a result of global efforts: the coconut oil comes from the Philippines, the packaging and labels are made in China, and the products are packaged and shipped from the MacDonald Training Center in Tampa.
“We manufacture our own coconut oil in the Philippines, it’s all fair trade, and all of that has been shut down,” she said. “It’s one thing to keep your sales up; it’s another to keep the product up. And in China, between the crazy U.S. tariffs and all the Covid-19 closures when they were rampant with it, they were shut down from January and February. And right now, you can’t move anything without it costing 10 times as much. But all of our stuff is custom made, it’s not like I can go get it made somewhere else.”
Since the pivot, Coate’s nights usually consist of staying up late talking with potential international manufacturers over Whatsapp and email.
“I literally haven’t slept in months, and because of the time change I’m up all night discussing packaging,” she said. “The Philippines will open again and it will all be fine. As far as China goes, that is a nightmare. I literally cannot afford the unknown factors of ‘Are tariffs going to go up, will we limit the trade?’ I would love to tell you it’s a fast process to switch, but it’s not. I spent years creating and buying a custom mold and I can’t send that to another manufacturer; it’s going to be rough.”
But her saving grace has been Whole Foods. She is in other small retail shops that have been closed during the pandemic, and part of a fair trade subscription box, but is now considered an essential business due to supplying the grocery store. In the last month, she made the shift to include single-use coconut oil packs near the checkout line, essentially saving her business’ revenue.
“Half of our income comes from hotels and resorts which are obviously closed, and that’s terrifying, but we are sold in Whole Foods,” she said. “I talked to their team members, body care members, marketing team, and did a whole push in April that was incredible and we were able to get through a weird, tough time. We have everything we need right now, product wise, but you do have to prioritize and right now it’s Whole Foods. So if I have to put aside product right now, we do. And I hate doing that, but it’s what we have to do.”
Buzzpop Cocktail Corp.
Joseph Isaacs put it simply: He needs more revenue and less product during this time.
His company creates alcohol-infused popsicles and, as of two weeks ago, launched a CBD-infused line “Soothe Ice.”
While it may seem like an unusual time to launch a new product, Isaacs said it was the lucky timing his business needed to survive.
“It’s been tough, I won’t sugarcoat it at all,” he said. “I guess fortunately, from a financial perspective. we were able to launch the new products. Since 95 percent of customers for Buzzpops were all food service, we’ve taken some really massive hits with respect to revenue. But we didn’t crawl into a hole and die; we just started looking for some more creative ways of getting things done. We’ve had to pivot, we’ve spent more time on the launch of Soothe Ice than Buzzpops, and fortunately we had that other line in the hopper.”
While the factory for Soothe Ice is in Plant City and for Buzzpops it’s in Delray Beach, the wraps are created in a Massachusetts facility. While there were no constrictions on shipping domestically, production was pushed back for weeks because the facility created an influx of labels for hand sanitizer products.
“We had six week delay on getting the wraps out of our printer,” Isaacs said. “It’s a massive facility and they were running hand sanitizer labels for four weeks straight, and everyone was getting kicked back and back.”
For Buzzpops, roughly half of sales come from wholesale to providers, with 30 to 40 percent coming from events and the remaining sales comprised of direct-to-consumer. Because Soothe Ice launched in a time events have been halted, Isaacs is unsure what percentage of sales could make up that product.
“Who knows what is going on with events,” he said. “I don’t think we will have a music festival in 2020, the big food festivals — I don’t see that going on either. It’s going to be interesting. We’re missing out on so many events — it’s May 1 and everything from March, April, May and even June have been blown out. We’re hoping it will be back by the end of June.”
Thanks to receiving PPP funds in the second round, Buzzpops has not had to implement layoffs or furloughs. But the future remains unknown.
“I hope we can keep all our key people; we will see what happens on the manufacturing side,” he said. “If we go through another three to four months of this insanity where none of our major distributors will be up online, it will kill our revenue for the year. Inventory is high and cash is low, what can I say?”
When Taylor Prater co-founded Made Coffee, she came from a liquor background that came with many constrictions. With coffee, she wanted to take advantage of the freedom that comes with manufacturing your own product.
That independence she created has paid off.
“It was all new, so it was very interesting and exciting and the partner I started the company with was very mechanically inclined,” she said. “We took a lot of cues from the beer industry. I was always in liquor, and you can’t distribute it. So [with Made Coffee], I like being able to distribute it myself. You have more of a finger on the pulse of everything.”
She is also deemed an essential business, as she provides her product to Publix. But despite that distributor, she still took a hit when events cancelled across the region for the unforeseeable future.
“For us, grocery is the majority of our business,” she said. “And Publix is still rocking and rolling; we’re able to get put on the road because we’re considered essential. I’m very grateful it’s all worked out. But since day one, we’ve been out at events and festivals, we want to chat with people, explain the product and that’s non-existent right now. We had product allocated through a six-month to one-year events calendar.”
Made Coffee has taken that product and donated it to health care workers in need, both in hospitals, doctor’s offices and nursing homes.
“We all have friends and family that work at these hospitals or community connections,” she said. “We drop the pallets off, put them in the break room and they pick them up on their shifts. A lot of companies we work with like Fresh Kitchen and Better Bird have been feeding them, so it’s nice to have extra component.”
She has also launched the Made Box, which sells coffee for the cost it takes to make and amped up her e-commerce site to allow sales across the nation. But as for the future?
“I don’t know,” Prater said with a laugh. “Someone asked, ‘What’s your marketing budget look like?’ And I don’t know. I’m trying to take it one day at a time. Delivery schedules are all over the place and accounts have different locations and delivery protocols. We’re taking it day by day.”