Steady growth may be key to cashing in on tough market
Duo wants to turn gum into healthy profits
Brendan Kover and Jesse Beaulac were sitting around one day chewing over some business ideas, when it struck them.
Vitamin-infused chewing gum — a way to get that daily dose of vitamins without having to swallow a pill.
That was two years ago. Now the young entrepreneurs are starting to slowly spread across the country as the Canadian franchisees for Vitamingum, an American product that puts 12 vitamins into a cube of gum.
“We were just talking one day and I was complaining that I don’t eat very healthy and we wondered what if I could get the vitamins I need out of chewing gum?” Kover said.
“We thought there’s vitamin water on the market, so why not vitamin gum?”
That slightly off-the-wall idea sent them to the Internet where they eventually stumbled across Vitaballs, a Kentucky company with a patent for just what they were seeking.
A Canadian distribution deal was concluded after two years spent wandering the bureaucratic mazes of Health Canada to get the product approved for sale. There was also advertising material to be developed and, most importantly, money to raise.
They finally hit the market last October with $100,000 they contributed themselves and $160,000 raised from a pair of angel investors. In the initial months they’ve managed to sign deals with PetroCanada, Sobeys Atlantic and Fortinos. So far they’ve moved 110,000 packages at a wholesale price of $1. Retail prices run between $2 and $2.29.
“That’s not enough to really play in this game, but we’re being pretty frugal with our money,” Kover said. “We’re being careful about the price because we know gum is usually an impulse buy, so we don’t want to charge too much.”
The chewing gum market i n Canada is dominated by two global companies: Cadbury Adams Canada and Wrigley Canada. To- gether the companies accounted for 97 per cent of value sales in 2013. Globally, gum is a $20-billion-a-year business.
Right now Kover and Beaulac are too small to attract the attention of the major players, but they know when they do the usual fate for upstarts is for a major player to come out with a similar, but cheaper product to crush the competition or for the upstart to be purchased and shut down.
“We know something like that is always possible, but we’ll just have to wait and see what happens,” Kover said. “Right now, Wrigley and Cadbury have so much market share they really don’t pay much attention to someone like us.”
For now, both men draw wages from other businesses — Kover is in the heating and cooling business with his father and Beaulac has a landscaping business — while spending as much time as they can selling gum.
In one sense, Kover said, the fact they don’t have a lot of money will save them from the temptation to grow too f ast, something they know could be fatal.
“The allure is certainly there to grow fast, but we want to crawl, walk and then run,” Kover said. “We want to dominate the game we’re playing now and then move to the next level.”