Burt’s Bees, Inc.

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Burt’s Bees, Inc.

701 Distribution Drive
P.O. Box 13489
Durham, North Carolina 27709
U.S.A.
Telephone: (919) 998-5200
Toll Free: (800) 849-7112
Fax: (919) 998-5201
Web site: http://www.burtsbees.com

Private Company
Incorporated: 1991
Employees: 91
Sales: $43.5 million (2002 est.)
NAIC: 325611 Soap and Other Detergent Manufacturing; 325620 Toilet Preparation Manufacturing

Burt’s Bees, Inc., sells environmentally friendly skin care products in the United States, Canada, and Japan. As this category has grown, Burt’s has successfully expanded distribution beyond its traditional health food store base to 9,000 retail outlets across the United States. Lip balm has been the company’s biggest single seller, reported Durham’s Herald-Sun, accounting for $5 million a year in sales. The Wings of Love line of women’s cosmetics accounted for nearly 10 percent of retail sales.

North Maine Origins

Burt’s Bees was formed when an out-of-work waitress with a fine arts background teamed up with an eccentric beekeeper. Roxanne Quimby was raised in Lexington, Massachusetts. There was some entrepreneurial blood in her family; her father had been trained at Harvard Business School.

After attending the San Francisco Art Institute, in 1975 Quimby moved from California to the northern Maine community of Guilford in an old Volkswagen van. The area around Guilford, something of an ancestral homeland for Quimby, was in an economic shambles; it was the only place she could afford to buy land. She bought 30 acres for $3,000; for a time she and her husband-to-be lived out of a tent without running water or electricity. Even the VW bus eventually broke down. Quimby built a cabin and settled into a homesteading life. After a divorce, Quimby juggled three part-time waitress jobs to provide for herself and her young twins. After being laid off, she became something of a speculator at yard sales and flea markets.

Quimby met Burt Shavitz in Bangor, Maine, in 1984, while hitching a ride. Shavitz, then 49, sold honey from the back of his Datsun pick-up truck. He had lived in New York and once worked as a photographer for Time and Life magazines. After apprenticing in the bee business, Quimby decided making candles would be a perfect use for Shavitz’s stockpile of beeswax. At her first craft fair, Quimby sold $200 worth—a significant amount of money for someone used to living off the land. In its first year in business, the venture had sales of $20,000, reported Fortune Small Business —more than twice Quimby’s goal.

Big Break in 1989

The pair got their big break in 1989, reported the Maine Times, when Louis Sager, buyer for New York’s hip Zona boutique, ordered hundreds of teddy bear candles. Quimby and Shavitz easily assembled a staff of 40, mostly women with children, in the depressed local economy. Quimby told National Public Radio that their accountant was a 14-year-old boy on the high school math team. They set up shop in a series of thrifty accommodations: a one-room schoolhouse (rent: $150 a year), some old trailers, and an abandoned bowling alley that lacked plumbing.

In true homesteader fashion, the first products were cooked up on a wood stove, later upgraded to a gas model. Quimby put her fine arts background to work shaping the decorative candles as jars of honey or teddy bears. They sold well at local arts and craft festivals. Using recipes from old almanacs, the pair soon began making soaps and perfumes, all with natural ingredients. As Quimby would later put it, “If it’s not at least 92 percent natural, it’s not a Burt’s Bees product.” The natural ingredients were paired with recyclable packaging to the extent possible.

The company incorporated in 1991, when annual revenues were $1.5 million. The company was soon making half a million candles a year. Lip balm was added to the line-up the same year; it would become the company’s best-selling product. As Burt’s Bees grew, Quimby’s sisters Renée and Rachelle were tapped for their business acumen.

Going South in 1994

Sales reached $3.5 million in 1993. The company needed to expand to fill orders, and Quimby found her dealings with Maine bureaucracy tiresome. Sites in New Hampshire, Tennessee, and Florida were considered, but it was North Carolina’s aggressive lobbying effort that succeeded.

Burt’s Bees, which had experienced some difficulty finding skilled workers in the backwoods of Maine, relocated to an 18,000-square-foot former garment factory in Creedmoor, North Carolina (near Raleigh), in early 1994. The Raleigh area was home to a number of other cosmetics companies, including The Body Shop International, Pond’s, Revlon, and Almay.

Burt’s opened its first retail store at a Chapel Hill mall in September 1994. The company had distribution in Japan by this time; its product lines numbered 50 items. A venture into the pet treats market did not pan out. Handmade items were also cut from the roster after the North Carolina move as Burt’s began to embrace automation one piece of machinery at a time. The company scoured the local economy for more than talent; it acquired a giant second-hand mixer from the cafeteria at nearby Duke University, reported the New York Times.

Quimby moved back to Maine two years after relocating with the company to North Carolina. Burt had returned after only three months. Quimby lived in a house by the sea in the fishing village of Winter Harbor (population 500), with her wood stove to remind her of more primitive days.

Annual sales reached $8.2 million in 1998. Burt’s then had more than 100 distinct items in its product line, which were sold in 4,000 outlets, including General Nutrition Company and Bath & Body Works stores, and Wild Oats health food supermarkets. Collections of travel-sized samples introduced in mid-1998 became instant best sellers.

The packaging was redesigned in 1999 to help it stand out on shelves, replacing off-white with yellow. Photos of Burt (who, with wild hair and a bushy beard, looked very much the part of an eccentric beekeeper) appeared on packaging for the company’s Bay Rum line of men’s care products.

Wings of Love Takes Flight: 1999

A sub-brand of women’s cosmetics, Wings of Love, was launched in the spring of 1999, beginning with seven shades of lipstick. These used the same oil and wax base as the lip balm, with natural pigments, and came in a recycled aluminum tube. The makeup collection was expanded the next year with powder, moisturizer, concealer, and blush. The company eschewed putting Burt’s face on its women’s cosmetics, opting instead for females projecting a sense of natural beauty. Most were culled from Quimby’s friends and family.

Burt’s introduced its first body lotions (Baby Bee Buttermilk, Carrot Nutritive, and Milk & Honey) in March 1999. They featured natural milk and sugar enzymes as preservatives, noted WWD. Ocean Potion, Burt’s line of bath products made with sea ingredients, was dropped due to a low sales volume. Burt’s had begun cutting product lines with sales volumes of less than $1 million a year.

Burt’s Bees products had been added to Long Drugs stores, Cracker Barrel restaurant gift shops, and L.L. Bean catalogs. Shavitz promoted them at special events on the collegiate circuit in North Carolina, Massachusetts, and California. According to WWD, one of the company’s interns who was studying for an M.B.A. identified the college bookstore market as a potential marketing channel. Burt’s Bees products were aimed primarily at educated women in the 18-to-25 demographic, said Quimby. The company opened a showroom and marketing office in New York City in 1999; this quickly spawned a seasonal deal to place Burt’s Bees lip balm in Starbuck’s stores for the holidays. In October 1999, Quimby bought out Shavitz’s 30 percent share of the company that bore his name. Shavitz retired to a converted turkey coop in Maine. Sales reached $13.8 million in 1999.

Burt’s Bees was leading the rapidly growing, highly fragmented natural personal care segment of the health and beauty market, reported the journal happi—Household & Personal Products Industry. The segment as a whole grew at almost 30 percent a year, reaching $3.6 billion or about 9 percent of the total beauty care market, said the Nutrition Business Journal.

Success spawned imitators. Quimby complained to Inc. magazine that a French company knocked off her idea for a line of lettuce, carrot, and tomato soaps in the winter of 1999/2000. Burt’s product line had proliferated into 12 distinct brands, such as Green Goddess bath items. These were scaled back in 2000 due to confusion among retailers.

The Wings of Love collection was bolstered with sparkling, peppermint-flavored lip shimmers and lip pencils in the fall of 2000. They were so full of natural ingredients they were considered edible. Carrot Nutritive Day Creme and bath salts were added to the vegetable-inspired lineup. An unusual Burt’s Bees brand product was peppermint breath drops—marketed for both men and their dogs. Burt’s also introduced a first aid ointment.

Company Perspectives

Burt’s Bees currently offers more than 80 formulas that are over 98% natural. Forty-two of our products are 100% natural! We define the term “natural” as: “Any substance that is harvested from nature and then isolated and purified by a variety of environmentally responsible techniques such as filtration, fermentation, distillation, and expressing.’’

Bigger Hive in 2000

Sales were more than $30 million in 2000. During the year, the company relocated yet again, to a 105,000-square-foot site at Durham’s Keystone Office Park near the Research Triangle. This site was soon expanded to 136,000 square feet. Growth was coming from new markets in Japan, Canada, and Europe, as well as the Internet site. Quimby liked to tell reporters her main competitor was the multibillion-dollar powerhouse Procter & Gamble Co. The company was expanding its product line to become a major player in the consumer products business. A toothpaste came out in January 2002 and was well received, followed by shampoo a year later. Another new line was Baby Bee skin care products for babies and others with sensitive skin.

The Wings of Love cosmetics line was expanded with all-natural eye colors in August 2002. A number of mass retailers test-marketed Burt’s Bees later in the year, including Bath and Body Works, Hannaford Brothers, Publix Super Markets, and Winn-Dixie Stores. Quimby plowed a large part of her profits into land, spending millions to acquire tracts of northern Maine forest to preserve them from development. A grassroots group called RESTORE had been trying for ten years to form a national park and wildlife preserve there against opposition from logging interests. Burt’s Bees also gave several million dollars to the Nature Conservancy.

For Sale in 2003

Quimby put the company up for sale in 2003 to help raise money for conservation-related land acquisition. She reportedly was seeking $150 million for Burt’s, which by then employed 130 people and had sales of $43.5 million a year. By this time, Quimby had spent $8 million to acquire more than 15,000 acres in Piscataquis County, Maine, for the proposed park. The company was attractive to both financial and strategic investors, reported the Daily Deal Thanks to Quimby’s frugality, it had little debt and excellent margins.

The company’s product line had grown to include 150 items; Burt’s had begun to aim some of its marketing effort towards older women, with its Healthy Treatment line. There seemed ample room for growth; although its line was carried by some 9,000 outlets, the company had yet to exploit the drugstore chain market (apart from Longs Drug Stores and Wegman’s) due to its refusal to pay for shelf space. In July 2003, TheDeal.com reported the search for a buyer was down to two New York buyout firms. Burt’s Bees also planned to open its own retail shop at its Durham headquarters in 2004 and was set on expanding the manufacturing, warehouse, and shipping areas at the facility. Employment was growing rapidly, numbering 180 workers in mid-2003.

Principal Competitors

Aubrey Organics; Caswell-Massey Co. Ltd.; Kiss My Face; Pré de Provence; Tom’s of Maine, Inc.

Key Dates

1984:: Roxanne Quimby meets beekeeper Burt Shavitz in rural Maine.
1989:: Trendy New York City boutique gives business its big break.
1991:: Beeswax lip balm is added to line-up; company incorporates.
1994:: Burt’s Bees moves to Raleigh area of North Carolina, a hotbed for cosmetics companies.
1999:: Quimby buys out Shavitz; Wings of Love cosmetics line is launched.
2000:: Company relocates to larger facilities in Durham, North Carolina.
2003:: Burt’s Bees is offered for sale for a reported $150 million.