In 1994, Saverio Pugliese and Marc Wexler, two New York beer distributors, developed diet ice cream sandwiches and sold them to delis on the Upper West Side of Manhattan. The product wasn't selling, so Wexler changed the name to Skinny Cow and reworked the label to show a cow in a bikini. He got Key Food stores in Queens to take the new product, and sales took off. Distribution was quickly expanded to other New York supermarkets, and the product was eventually acquired by Nestle (NSRGY). Today it is a leading ice cream line.
In 2002, 23-year-old grade-school friends Kelly Flatley and Brendan Synnott of Darien, Conn., had an idea for a natural granola product. They made the first several batches in Flatley's mother's kitchen, hand-packaged them, and sold them at a few local stores. The product sold so well that by the end of the year 25 stores had taken it on. Based on that initial success, they gained investors, built a commercial facility, and expanded to grocery stores in 25 states. In 2007, the company was acquired by Kellogg (K) for about $100 million.
Bear Naked, Inc.
In 1998, Seth Goldman, a recent graduate of Yale School of Management, and Barry Nalebuff, one of his professors at Yale, set out to make a better tea drink. They brewed the first batch of Honest Tea in Goldman's kitchen, mocked up labels, and took it to Fresh Fields grocery in New York. The product was a hit, generating $250,000 in sales in its first year at Fresh Fields. It was expanded, and today it is one of the leading tea brands.
Honest Tea, Inc.
Burt Shavitz of Bangor, Me., was a beekeeper who worked with a friend, Roxanne Quimby, to make natural products out of beeswax. In 1984, they developed several products and tried to sell them at local craft fairs. The furniture polish did not sell well, but the lip balm and other personal care items did. Based on their success at the fairs, they built a manufacturing plant in North Carolina and expanded into retail stores. After several years of growth, the company was acquired by Clorox (CLX) for $925 million.
In 1986, Brian Maxwell, a Canadian athlete, whipped up his first batch of energy bars in his girlfriend's kitchen in Berkeley, Calif. He began selling them as Power Bars at local athletic events. The original bars lacked flavor but still sold well, as marathoners and cyclists liked the concept. Based on this early success, Maxwell gained investors, built a facility in Berkeley, improved the formula, and expanded. The business grew to $150 million in revenue by 2000, when it was purchased by Nestle.
SOCIÉTÉ DES PRODUITS NESTLÉ S.A.
In 1996, J. Darius Bikoff, a metals importer from New York, had an idea for a new bottled water with electrolytes called Smartwater. He developed sample product and sold it to health food stores, but it only generated average sales. Shortly after that, he tested a new product, Fruitwater, and then in 2000, Vitaminwater. The latter drink was an instant hit, and by 2006 generated $350 million in revenue. In 2007, Coca-Cola (KO) purchased Vitaminwater for $4.2 billion.
In 1984, Phil and Gayle Tauber of La Jolla, Calif., developed Kashi Breakfast Pilaf, based on a formula they concocted from grains and seeds, in an attempt to appeal to those pursuing a healthier lifestyle. The original product did not sell well, so they changed the formula and the name to Kashi 7 Whole Grain Puffs, and launched in Southern California natural foods stores. The new product sold well and was expanded. In 2000, it was acquired by Kellogg; today it generates $600 million in revenue and is one of Kellogg's fastest-growing brands.
Orange-Glo International was a small, family-run furniture polish business. In 1997, owner Max Appel came up with an idea for a new cleaning powder called OxiClean. He began selling it at county fairs, where he met Billy Mays and hired him to pitch the product. Mays' pitch generated a strong response, and based on its success, it was turned into a TV ad. From there, the product line expanded into Wal-Mart Stores (WMT). In 2006, the business was acquired by Church & Dwight (CHD) for $325 million.
In 1995, Katie Rodan and Kathy Fields, former Stanford University dermatology students, came up with an idea for a new skin care system to treat acne. Infomercial company Guthy-Renker funded a television test, and the product line sold well. Production was expanded and celebrity spokespeople were added, including Jessica Simpson, Serena Williams, and Jennifer Love Hewitt. The business has grown to more than $850 million in annual revenue, and the products are now sold in retail stores as well.
Arizona Iced Tea
In 1992, John Ferolito and Don Vultaggio, beer distributors in New York, decided to get into the iced tea business. Vultaggio's wife, Ilene, designed the first package, borrowing a motif from their Southwestern-style house in Queens. The product was originally sold to Ferolito and Vultaggio's beer customers in New York in oversized cans to make it stand out. The brand sold well, and was soon launched nationally. Today it generates an estimated $300 million in annual revenue.