The 2 Unbreakable Rules That Helped This Orange Juice Company Get to $50 Million :: Inc.com

0

The has changed little in 28 years. There is still a young, dark-haired girl, half an orange in her outstretched palm. Beside her is a citrus tree. Behind her, the and a sunset sky.

Natalie Sexton, the girl in the picture, was 2 when she was enshrined as the icon for . Her mother, company founder Marygrace Sexton, initially had a more ambitious vision for the design. "I told the artist I'm going to put the baby in the wagon, and I'm going to have my dog pulling it, and we're going to walk through the groves," says Sexton. "And he said, 'What are you selling? Dog food? Baby food?' So out went the wagon. Out went the dog. The only thing that stayed was the girl."

The girl has stayed long enough to become director of marketing and part of the second generation poised to carry on the family business. Between its production and cold-packing facilities, Natalie's Orchid Island Juice occupies more than 100,000 square feet in the coastal city of Fort Pierce, Florida, midway between Orlando and Miami. When Natalie's moved here from Vero Beach, 10 miles away, in 1996, this picturesque backwater was lush with citrus trees. Greening disease, which struck the state in 2005, reduced that stock. But unlike other brands that have had to develop new supply chains, the company still manages to source as much as 80 percent of its raw materials from Florida.

Florida citrus is famously sweet and juicy. When Natalie's launched in 1989, the fresh stuff was available chiefly at roadside stands. Now it is ubiquitous in stores, whose refrigeration capacity greatly increased with the introduction of precut vegetables for salads.

Natalie's--which produces around 7 million gallons a year--makes its juice to order and ships within 24 hours of squeezing. That has made it the top pick in juice-offs by Cook's Illustrated and Bon Appetit, among others. And while the overall market for orange juice is down, Natalie's--among the most expensive juices in the country, with prices as high as $9 for a half-gallon in the Northeast--reports revenues have , to roughly $50 million, since 2012.

Part of that growth is new interest in clean-label products. Part is international demand: Natalie's sells in 28 countries outside the United States. Part is a more professional, aggressive approach to marketing. And part is the proliferation of products, including cocktail mixers and exotic blends like orange beet and carrot ginger.

Those flavors do well at Fresh Thyme Farmers Market, which sells Natalie's at its 65 Midwest stores. Same-store growth is strong, up 13 percent over last year, says Scott Schuette, Fresh Thyme's vice president of produce. "Quality, consistency, value, and convenience make Natalie's products appealing to customers," says Schuette. "The family-run business mentality trickles down" to all their employees.

From cradle to grove

Marygrace Sexton was born to working-class parents in Bridgeport, Connecticut. The family moved to Florida; and when Sexton was 10, her parents divorced. "Then things started unraveling," she says. Her two older brothers lived with their father. She and her younger brother stayed with their mother, who worked long hours as a housekeeper and nurse's aide to keep the family afloat.

An indifferent student, Sexton at age 15 signed up for a jobs program in high school and worked as the assistant for a dentist, eventually becoming office manager. Then in her early 20s, she found the retiree-heavy social scene in Vero Beach disappointing. One day, she saw the name "Robert Sexton" on the dentist's patient list. She remembered Robert from high school; his family was locally prominent. "I thought he must be a lovely eligible bachelor. So I scheduled him for a checkup," she says. Two years later, they married. Natalie was born in 1988.

Robert Sexton's family owned a business called Oslo Citrus Growers. Robert ran the packing house that shipped produce from Oslo's and other groves. The business supplied large processors like Tropicana and concentrate makers like Minute Maid, which dominated the market. "My father said, 'No one is making fresh juice at the retail level. The only way you can get it is if you squeeze it yourself or go to roadside stands,'" says Natalie. "There needs to be a brand in there."

But Robert had no time to launch a second business. So Marygrace stepped up. She started the company with two rules: Never lose money and never take on debt. She has succeeded at both.

Oranges on a roll

Drawing on her IRA, Sexton sublet a small citrus warehouse across from her husband's packing facility and turned it into a juicing room. She leased an extractor and bought a couple of tanks and other equipment cheap from a juice company that had recently expired.

Late one night in November 1990, Sexton loaded a cooler of juice into her car and drove three hours to Miami. At 2 a.m., she arrived at Miami Citrus Market, where produce distributors congregate. That led to a meeting and later a tiny order from the Carnival Fruit Company, which serves the food service industry. She made those first deliveries in the middle of the night using a truck borrowed from the neighborhood meat supplier.

Over the years, the family, once divided by divorce, came back together. Shortly after the company's founding, Sexton's brothers John and Bil Martinelli came on board as, respectively, executive vice president and chief engineer. Her brother, Frank Martinelli, became director of operations in 1997. "The most beautiful thing is that, at the end of it all, we all ended up working here," says Sexton.

John Martinelli joined just in time to tag along for Sexton's first big presentation to Sysco. The food service giant bought 500 gallons of juice. He also accompanied Sexton on her first sales trip outside the state in the family's station wagon. The pair were so green they made exclusive deals with two distributors whose territories overlapped. "We were so excited. We never imagined they would run into each other," says Sexton. "One of them called us and said, 'Can't anyone tell the truth in your company?'"

A major early account was private labeling for Fresh Samantha, at that time a popular East Coast brand. But when the owner announced he wanted to blend Natalie's with a less expensive juice to bring down the price, Sexton--worried about quality and liability--withdrew. "John came to me and said, 'Marygrace, what am I going to do? You are getting rid of probably my biggest account,'" says Sexton. "I said, 'Sell it somewhere else, John. That is what we are going to do.'"

The old and the new

Natalie's is a midsize company now, but some things haven't changed. Production is still made-to-order, small-batch. And the business still uses opaque bottles, whereas most of the industry has gone to glass. The bottles are 100 percent recyclable plastic and less expensive than glass, says Sexton. And "20 years later, I look unique because I am still in my old packaging."

With encouragement from Natalie, the business is also exploring new markets, like baby food. Cocktail mixers--comprising just citrus, cane sugar, and water--have been a hit. The current holy grail is a fresh Bloody Mary mix, a challenge because consumers have little experience with fresh tomato juice. At tasting events, "People were shocked. They thought it was not tomato juice," says Natalie. "We said that is what tomatoes taste like. It is not supposed to taste like salt and over-processed tomato paste."

Sexton says the company's ramped-up growth is necessary to keep all the leaders engaged. "If your older generation does not want to retire and your younger generation is really pushing for their careers, then you should be growing at double the rate," she says. "We put goals in place to make that happen. And thank God, we are meeting their goals."