Tilia Inc

views updated

Tilia Inc.

303 Second Street, North Tower, Floor 5
San Francisco, California 94107
U.S.A.
Telephone: (415) 371-7200
Toll Free: (800) 777-5452
Fax: (415) 896-6469

Wholly Owned Subsidiary of Jarden Corp.
Incorporated: 1990
Employees: 150
Sales: $184 million (2001)
NAIC: 333319 Other Commercial and Service Industry Machinery Manufacturing

Tilia Inc. is a manufacturer and distributor of vacuum packaging systems used to store food. Tilia's kitchen appliances are sold under the names FoodSaver and FreshSaver. The company also sells a variety of accessory products intended for use with its vacuum packaging systems, including bags, canisters, and jar sealers. Tilia's products are sold in warehouse retail outlets, discount stores, grocery stores, through a company-operated Web site, and through infomercial programs aired on television. Acquired by Jarden Corp. in 2002, Tilia also markets its products overseas through partnership agreements.

Origins

Tilia began with an innovation, a vacuum packaging system developed by a German inventor named Hanns Kristen. Kristen's experimentations were driven by his belief that the vacuum systems in existence fell short of being true to their name. He surveyed the products on the market in the mid-1980s and discovered that most of the vacuum systems available sealed bags without first removing all the air from the bags. In 1987, Kristen succeeded in developing what would become known as the "FoodSaver," a product with impressive capabilities whose success was stalled by the absence of effective marketing support.

The advantages afforded to the consumer by the FoodSaver family of products were enticing, but relatively few consumers were aware of the novel product until years after Kristen's pioneering work. It took roughly a decade before FoodSaver was able to shed its anonymity and draw the attention of U.S. consumers. The person responsible for igniting the interest in Kirsten's invention joined Tilia about three years after the introduction of the FoodSaver on the market. In 1993, Linda Graebner was named president and chief executive officer of Tilia, the parent company of Nationwide Marketing, which was directly involved with marketing the unique vacuum packaging system developed by Kristen.

Graebner was responsible for broadcasting the merits of the FoodSaver to consumers in the United States. She joined Tilia after vacating her post as vice-president of marketing for the Dole Food Company. At the time of her arrival, Nationwide Marketing sold three different models of the FoodSaver: the FoodSaver II, the FoodSaver Professional, and the Food Saver Compact. Although there were features that distinguished each model, all three included two-way cutting blades, jar-sealing attachments, and instructional videos. Additionally, the company marketed the VacuSave Commercial Vacuum Packaging System, which was designed for food sealing and storage for institutional users. Aside from equipment, Tilia, through Nationwide Marketing, offered a variety of accessories that included the company's patented VacLoc bags, canisters, and jar sealers.

The company and the products Graebner took charge of in 1993 possessed qualities that were sufficient, in retrospect, to attract customers. The FoodSaver family of counter-top products employed powerful piston pumps to remove air from Tilia's VacLoc bags, enabling food to remain fresh three to five times longer than if the food were refrigerated in a conventional manner. The reusable bags, which were boilable, microwaveable, and washable, featured a nylon layer that provided a complete oxygen, moisture, and odor barrier. As opposed to canning, vacuum packing did not sterilize food, thereby making it shelf-stable, but by removing air, vacuum packaging dramatically slowed the deterioration of food caused by air. For the consumer, vacuum packaging promised a savings of time and money, enabling users to buy in bulk quantities and retain freshness far longer than traditional food storage methods offered.

Graebner realized the strengths of Tilia's vacuum packaging system when she took the helm in 1993. Shortly after her appointment, she agreed to an interview with HFD—The Weekly Home Furnishings Newspaper that revealed her thoughts about her new company. In the June 14, 1993 interview, she said: "With my background, clearly my arrival is a commitment to build the business and to increase our marketing efforts. I have quite a bit of advertising experience through doing a lot of television commercials at Dole. My view of this opportunity is that FoodSaver is clearly the premier product in this category, and we want to create more awareness about its superiority. Our machine is patented and the only true vacuum saving product and we want to create some more awareness about it."

Graebner realized the importance of delineating the strengths of the Food Saver family of products from the beginning of her tenure at Tilia. It would take several years, however, before she could broadcast the marketable qualities of a genuine vacuum packaging system to the public to an extent that could foster significant sales growth. A private company backed by venture capital, Tilia lacked the financial resources to deliver an effective, broadly based message to the public. In time, once the financial resources were available, Graebner's vision was manifested in an effective marketing campaign that vaulted FoodSaver onto the national stage, thereby delivering exponential sales growth to Tilia.

Tilia generated less than $10 million in annual sales when Graebner assumed responsibility for spearheading FoodSaver's marketing campaign. The company's revenue volume did not increase substantially in the years immediately following Graebner's arrival, but the momentum toward greater growth began to build not long after she joined the company. Historically, Tilia had garnered the bulk of its sales from distributing FoodSaver models to club stores, the membership discount stores frequented by consumers who preferred to buy in bulk quantities. To a lesser extent, the company advertised FoodSaver on cable television shopping channels. The breadth of distribution began to widen in 1995, however, when a new vice-president of sales, Jim Schnabel, joined Tilia. The team of Graebner and Schnabel began to plan for FoodSaver's introduction into department stores. For the most expensive models of the company's vacuum packaging system, retail prices were reduced from $300 to $230. The financial goal, as articulated by Schnabel in 1995, was to increase sales 15 percent for the year and between 15 percent and 20 percent for 1996.

Rapid Growth in the Late 1990s

Despite the efforts to broaden distribution, annual sales did not increase with the percentage gains that later confirmed FoodSaver's maturation into a product of national recognition. The foray into department stores failed to capture the interest of consumers. FoodSaver was a product whose novelty proved to be its own undoing. "It is a product that doesn't sell itself," Graebner explained in an October 11, 1999 interview with HFN—The Weekly Newspaper for the Home Furnishing Network. "It needs description and education," she added. Patrons of department stores looked at the FoodSaver and, presumably, were confronted by a product whose value they little understood. A different way of effectively delivering the value of FoodSaver needed to be found to unlock the potential of vacuum packaging to the public. Toward the end of her fifth year in charge of Tilia, Graebner found the ideal way to relate FoodSaver's worth.

During the late 1990s, no better format existed to describe and to demonstrate the capabilities of a product to a mass audience than an infomercial. Tilia aired its first infomercial in December 1998, a program that featured the FoodSaver Compact II, one of three models offered by the company. At the time of the infomercial's debut, Tilia was ending a year during which it collected $18.5 million in sales. From this point forward, the company began to record robust financial growth, as it at last found a way to preach to potential customers. During the first six months of 1999, Tilia sold more FoodSaver vacuum packaging systems than it did during the previous year. The broadcast of the infomercial was part of an aggressive marketing campaign unleashed in 1999, an advertising program that also included marketing FoodSaver through print catalogs and through traditional retail advertising methods. Infomercials were the deciding factor in the ascendance of FoodSaver, however, injecting Tilia's signature product line with unprecedented vitality. The effectiveness of the company's infomercials also had a beneficial effect on the retail success of the FoodSaver line. "It [the infomercial] is clearly driving retail business," Graebner explained in her October 11, 1999 interview with HFN-The Weekly Newspaper for the Home Furnishing Network. "Because when you promote it on television," she added, "the subsequent retail business is strong. Consumers are seeing the infomercial and walking into their retailer and purchasing the product."

Fueled by the aggressive marketing campaign, Tilia's revenue volume swelled dramatically as the company ended its first decade of existence. Sales increased from less than $20 million in 1998 to more than $80 million in 1999. By 2000, when infomercials accounted for one-quarter of the company's sales, the effect of the marketing campaign on Tilia's retail business was evident, its growth sparked by the increased awareness of FoodSaver. Between 1998 and 2000, the company's retail distribution quadrupled, confirming Graebner's belief that the infomercials would not only add another source of revenue but also spur growth in Tilia's retail sales. "We had the products, but the biggest challenges for us was educating consumers," Graebner explained in an October 27, 2000 interview with San Francisco Business Times. "The cable shows created a wide audience and brought us new accounts such as Wal-Mart and Kmart."

Key Dates:

1987:: Hanns Kristen develops a vacuum packaging appliance that becomes known as the FoodSaver.
1993:: Linda Graebner is selected to lead Tilia.
1999:: An aggressive marketing campaign, highlighted by infomercials, sparks rapid sales growth.
2002:: Jarden Corp. acquires Tilia.

While in the midst of watching the company expand at a rapid pace, Graebner began to pay increasing attention to Tilia's presence overseas. At the end of 2001, when the company recorded $184 million in sales, Tilia signed an agreement with Sanyo to help bring FoodSaver to the Japanese market. The agreement, which gave responsibility to Sanyo for the distribution and marketing of the vacuum packaging appliance in Japan, was not the first international partnership Tilia forged but it was the most important overseas deal the company made. In an interview with HFN-The Weekly Newspaper for the Home Furnishing Network, Graebner marked the occasion by articulating her commitment to the further development of Tilia's international business. "A big part of our message," she said, "is we're continuing to look for strong partners to broaden our base, and we really want them to be partners, not just distributors. Right now we're really focusing on international growth and looking for potential candidates."

Buyout in 2002

Graebner's efforts to orchestrate Tilia's international expansion soon were overshadowed by events on the company's domestic front. During the spring of 2002, merger negotiations were underway that would lead Graebner to forsake Tilia's independence for the benefits of joining another company. The discussions sprang from a relationship with Alltrista Corp., the dominant player in the home-canning business. Tilia had used Alltrista's Ball brand of jars to demonstrate the advantages of using FoodSaver's vacuum packing system in home canning, which led the two companies to entertain the idea of merging their operations. The central figure leading the negotiations was Alltrista's chief executive officer, Martin Franklin, who assumed control over the company in September 2001 and immediately began to make sweeping changes at the company. Franklin moved the company's headquarters to Rye, New York, trimmed its involvement in the industrial market, and focused Alltrista's effort on the consumer market. In a March 29, 2002 interview with the San Francisco Chronicle, Franklin explained his reasoning behind the interest in Tilia. "We looked at the home preservation industry," he said, "and really the market leader that's carved out an entire sector on their own is Tilia."

There were benefits for each company in the corporate union. Franklin expected the acquisition of Tilia to immediately increase Alltrista's earnings and double the size of its consumer business. For Tilia, there were several advantages to be gained by being absorbed by Alltrista, which possessed a much bigger distribution network than Tilia's. Alltrista's distribution network included a strong presence in grocery store chains, an area of the retail sector where Tilia enjoyed little exposure. Furthermore, the deal promised to give Tilia greater access to capital. Alltrista agreed to pay $145 million for Tilia and assume responsibility for $15 million of Tilia's debt, as well as to award Tilia as much as $25 million in cash or stock during the ensuing three years provided certain profit requirements were met. The merger, which combined Tilia's $184 million in sales with Alltrista's $241 million in sales, was completed in April 2002. "This is the marriage of a sales-and marketing-strong company [Tilia] with a manufacturing-and distribution-strong company [Alltrista]," Franklin remarked in an April 8, 2002 interview with HFN-The Weekly Newspaper for the Home Furnishing Network.

Several weeks after the merger was completed, Alltrista changed its name to Jarden Corp., a change in identity meant to signal the company's emphasis on the consumer market. Under the control of Jarden, Tilia retained much of its independence, operating as separately managed subsidiary within a decentralized organizational structure. Graebner kept her titles as the company's leader, presiding over a new era of Tilia's existence.

As Tilia moved forward, the company was expected to benefit from the support of Jarden. One significant change to Tilia's operations that occurred under Jarden's control was the company's partnership with a leader in the food preparation market. In late 2003, Jarden acquired VillaWare Manufacturing, a maker of small electric kitchen appliances, cookware, and kitchen tools such as waffle makers and panini grills. Jarden combined VillaWare's and Tilia's marketing and operations functions, although the two companies' sales forces remained independent of each other. In the years ahead, as Tilia attempted to capitalize on the spreading awareness of its product, the exploitation of Jarden's distribution network promised to deliver robust growth. At the time of its acquisition by Jarden, Tilia had reached only 3.5 percent of the nation's households, a percentage figure that Graebner hoped to significantly increase in the future.