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Business Observer Friday, May 25, 2012 8 years ago

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Good times continue to pour in at Tervis Tumbler, a success story among recession tales of woe. But now, with a new CEO, the company has some lurking challenges.
by: Mark Gordon Managing Editor

Jabil Circuit executive Patrick Redmond, a 30-year resident of Sarasota, was stunned in 2010 when he first studied Tervis Tumbler's financials.

Stunned in a good way. Redmond was aware of the insulated drinkware manufacturer, mostly in the 1980s and 1990s through its kitschy Old Florida store in Osprey on U.S. 41. More recently, he had read stories about the company's hare-like growth, going from $24 million in 2006 sales, for example, to $75 million in 2010, up 213%. The firm surpassed $100 million in sales in 2011. It has 650 employees.

Yet when Redmond examined the business — he had been invited to join the board — the fact that it grew so fast by selling a plastic cup was both refreshing and shocking. “When I first started here,” says Redmond, “I was like 'my goodness, it's a plastic cup.'”

Redmond has since grown to realize Tervis' success hinges on more than plastic. Success further hinges on matching new products with an ambitious national branding campaign.

Redmond, 51, has also grown into a new job with the company, past being on the board: He was named president and CEO of Tervis in late February. He replaced onetime consultant and chemicals industry executive Barry Wolfson, who was CEO since December 2010.

Wolfson couldn't be reached for comment. Tervis Chairman Norbert Donelly declines to comment on Wolfson's tenure or why it ended after 14 months. But he's nonetheless confident the right person to lead the next era of growth is Redmond, who joined Jabil in 1995, back when the electronics manufacturer was a $400 million firm. Jabil had $16.5 billion in 2011 sales.

Donelly cites Redmond's experiences in building units and business lines at Jabil as key attributes for Tervis. Donelly also says Redmond is a “people person,” someone who relates well to both board members and factory workers. “Pat's a better long-term solution for us,” says Donelly. “He has a good willingness to recognize what he doesn't know, which is a great trait in an executive.”

Adds Donelly: “He's able to keep his ego out of decisions.”

Wolfson isn't the only executive to leave Tervis recently after a short stint. Brian Crowley, named chief financial officer in June 2011, left the firm earlier this year, too. Crowley had been CFO at Fort Myers-based furniture retailer Robb & Stucky before it filed for bankruptcy. Tervis currently seeks a replacement for Crowley.

Redmond says the leadership transition is more a product of fast growth than any particular issue with a certain executive. He specifically praised longtime executive Laura Spencer, who held several positions with Tervis, including CEO from 2006-2010, during her 14 years with the firm. Spencer left the company in June 2011, and is now the chief financial officer for Sarasota-based JCI Jones Chemicals.

“I have a lot of respect for Laura and what she accomplished,” Redmond says. “But every stage of growth at the company will require a different skill set.”

The skill sets in the executive suite at Tervis currently revolve around branding. That's because Redmond and Tervis executive Richard Kaplan are on a mission to elevate the company's brand. Donelly promoted Kaplan to president-chief brand officer the same day Redmond was named CEO. Kaplan reports to Redmond, though Donelly says Kaplan essentially runs the front end of the company.

“We are at a phase where we are defining who we are,” says Redmond. “Once you know that, you can leverage it.”

Taking chances
In conversations about what Tervis is, and what it will be, executives from Donelly on down don't shy away from names like Apple and Nike. Tervis executives admire how those companies create an aura, and a movement, around products. Plus, like Tervis with its cups, Nike and Apple manufacture and sell stuff — sneakers and shirts, computers and smartphones — that others can easily make.

“It's not about the running shoes,” says Redmond. “It's about the brand and the lifestyle. It's about the swoosh.”

Kaplan, who previously worked in brand development for Levi Strauss, led Tumbler's first national advertising campaign last year. One internal theme is the company isn't afraid to try new ideas and take chances.

For instance, Tervis took the tumbler experience on a road trip earlier this year for the first time ever. The destination: A National Football League pop-up retail store at the league draft in New York City April 25-28.

Tervis engineers built a welding machine for the event, where customers could create their own tumbler. Customers selected the design and the team, then watched the machine connect the inner part of the cup to the outer part. Several NFL and college players signed autographs, and the kiosk sat among NFL brand stalwarts, including Reebok and Nike. Says Redmond: “It was a huge hit.”

The campaign directly impacted sales. Tervis products are now in more than 5,000 stores nationwide — an all-time high. That goes from local specialty stores to 14 Tervis retail stores to chains like Bed, Bath & Beyond, Macy's and Hallmark. Bradenton-based retailer Beall's carries a large line of Tervis products, too.

The campaign also stretches to the company's newly designed website, where sales are up 30% over 2011.

While that's some evidence the campaign has worked, Tervis executives emphasize there's a long way to go. Redmond says the Midwest and Northeast are two markets in which the company would like to do better. Donelly likewise recognizes growing the brand nationally is a process.

“We have a lot of room to grow,” says Donelly. “We're still not what I would consider a national company. We can still grow significantly.”

'Real big'
Big dreams don't seem far-fetched, considering how fast the company has grown the past five, even 10 years. Yet there was a time when $100 million in sales, and customers nationwide, seemed like a one-way trip to fantasyland.

The company was founded in 1946, when Detroit engineers Frank Cotter and G. Howlett Davis created the first tumbler, a double-walled insulated cup. The Tervis name is derived from the last three letters of their last names.

Casey Key entrepreneur John Winslow bought the company in the late 1950s and moved it to Venice. Donelly, a banker and salesman who married Winslow's daughter, bought the company in 1988, when it had 12 employees and $380,000 in annual revenues.

By 2003, the company, with the motto that the cup would keep cold drinks cold and hot drinks hot, was selling tumblers in Bed Bath & Beyond. By 2011, it was making 80,000 cups a day in its newly expanded 90,000-square-foot factory, just east of Interstate 75 in north Venice. “I'm absolutely amazed at how things have gone,” Donelly says. “Sometimes I don't put it in the perspective it deserves.”

The recent growth explosion, separate from any branding or marketing programs, stems from two other key elements: new products and new licensing deals. On the former, for example, Tervis introduced a water bottle earlier this year. On licensing, meanwhile, the company has a diverse stable, from Disney to Harley-Davidson to the NFL and Major League Baseball.

Licensing and product development is what Redmond considers the company's biggest opportunity — and his No. 1 worry. “The risk is running out of gas,” says Redmond. “The risk is to not come up with something fresh.”

Redmond will also closely monitor how the company grows. Another five-year period of 213% revenue growth, like 2006-2010, is unlikely, at least in the short term. Redmond declines to discuss specific 2012 revenue projections, but he says Tervis will likely slow from the 35%-50% a year it was doing, to 20% or so.

That kind of growth would put the company in $120 million territory in 2012, and approaching $150 million in annual sales by the end of 2013. Redmond says Tervis has the staff, and the wherewithal, to expand faster, but one of his missions is to manage the growth. “We can make this a real big company real fast, and that would be that,” says Redmond. “But we want to grow responsibly.”

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