If you’re an entrepreneur looking to launch a new consumer food product, gum would likely be well down the list of potential candidates. After all, the gum industry is a low-margin, high-volume commodity business dominated by global giants with instant name recognition and vast marketing resources.
So in 2010, when Jay Klein decided to start selling a natural, aspertame-free chewing gum, he knew he’d had to spend some serious time flying under the proverbial radar. “We have a very unconventional start,” explains the founder of Pür Gum. “We didn’t want to go after big orders fast because they’d be hard to service.”
It’s difficult to say whether that’s a rationalization or a tactic. But the fact is that Klein and his sales team started trawling for customers, they began by literally going from door to door. “We called it ‘running for mayor’ in all the small towns.”
They visited organic, health and specialty food stores and small restaurants, offering samples and writing up tiny orders of $40 or $50 or $100. “It was,” Klein reflects, “a very hard way to run a business.”
Little by little, however, Klein’s campaign team was building a following and developing some brand awareness, first in Greater Toronto, then southern Ontario, Quebec and finally British Columbia’s lower mainland.
Pür Gum—which now has revenues in excess of $10 million, about 60% of which come from outside Canada—soon began to target certain high density U.S. urban regions—New York, parts of California, Florida—all “health hubs” where Klein reckoned he could visit many potential retailers without logging a huge amount of travel time.
But Pür Gum’s export shipments really took off after the company accidently discovered a distribution channel that was hiding in plain sight. When Klein was New York, he began to visit not just individual retailers but also head-office buyers, on the thinking that those orders had a far more attractive cost-of-sales profile (because gum margins are so thin, Klein says, Pür Gum closely monitors the cost-benefit ratio when establishing a presence in a given market).
One of those visits was a chain in airport duty free shops, which had outlets in hub airports in New York, Boston and Philadelphia. The venues were perfect: air travellers frequently buy gum to counter unpleasant eardrum pressure during take-off and landing.
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Soon after those stores began carrying Pür Gum, Klein says he began to notice curious “volume blips.” Customers, he said, would buy irregular volumes, eight or ten packs at a time. As the Pür Gum team dug down, they realized these purchases were being made by consumers who liked the product but couldn’t buy it in their own markets. The airport stores, he continues, “opened up a very international channel for us.”
By attending international trade shows, Klein began meeting distributors who were persuaded by Pür Gum’s story, and accounts of how its popularity spread virally through airports and other channels. The number of national markets grew from three to six, then ten and finally 25, the current level.
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To distributors who asked about Pür Gum’s minimum shipment policies, Klein would simply reply, “one. That’s the least I can ship you without opening the package. We lowered our barriers to entry so everyone could try it.”
With this newfound interest, however, came unfamiliar obstacles, but ones that will be familiar to SMEs that have found themselves delegating the well-being of their brands to foreign distributors.
Klein recounts a recent episode with a northern European distributor that had approach the company at a trade show, very eager to add Pür Gum to their product catalogue. In early 2014, Pür Gum and this distributor negotiated an exclusive country-wide arrangement. But within months, Klein realized that this firm was falling way behind those of distributors in other European countries. “They were the only international partner that hadn’t put in an order and we couldn’t figure out what was going on,” he says. Klein and his team paid the firm a visit “to light a fire under their butts.” But he also rescinded the exclusivity provisions in the distribution contract. “You have to know how to cut your losses.” The upshot: The firm’s performance has improved somewhat.
But Klein points out that those kinds of miscues have been the exception, and he can point to examples of distributors that have not only represented the brand well; they’ve run with the opportunity. Case in point: Pür Gum’s distributor in Dubai.
In a similar period, that partner has built huge market penetration—Klein says the figure is in the 70% for the category—using everything from samples to innovative advertising and custom in-store merchandising. “When I did a supermarket check,” Klein says of a recent visit, “the merchandise clerk would tell me about the product. I was grinning ear to ear.”
Such stories offer an important learning about building a sustainable export business, Klein adds. In his business, he has to move large quantities of product to generate even modest dollar amounts of margin. So as with all consumables, customer loyalty is perhaps the most valuable asset of all, and thus should be the focus of a marketing strategy.
The Dubai partner “figured they could penetrate the market and create consumer loyalty,” he says. “If you sell only one container, it’s not a good business. But if you sell one per month at tight margins over ten years, that’s a great business.” You might say that Pür Gum’s distributor knew how to make Klein’s natural gum into a product that sticks.