"At $2.99, you are asking supermarket shoppers to think about the purchase," says Worth. "We are priced to compete with the likes of Oreo and Fig Newtons. If I went through the gourmet and specialty stores, I'd have a $2-million to $3-million business. Frookies can be a $100-million company."
That's not a ridiculous hope. At $100 million (wholesale), Frookies would represent just 3.33% of the entire cookie market. On average, "healthy alternatives" in any food category rack up 10% of sales.
But to achieve $100 million, Worth must get the product on the shelf, and that takes us full circle. He can't get $100 million in sales unless he has significant shelf space, and he can't get on the shelf unless he can prove Frookies will sell.
The problem is only bound to get worse because of a relatively new phenomenon in the supermarket industry: slotting fees, a practice that forces manufacturers to pay to get retailers to carry their product.
Here is how it works. Before a supermarket will accept a new product, it demands that the manufacturer pay for what the store describes as the cost of stocking the new product and taking an old one off the shelf. The fee can be seen as a form of insurance that protects the supermarket should the new product bomb.
The fees are rapidly becoming the norm. "Slotting allowances have become such an accepted part of doing business that the main concern of retailers and wholesalers involves getting their fair share from manufacturers," begins a recent article in Supermarket News.
Worth has firsthand experience. One supermarket chain in Connecticut told him that it would be happy to display Frookies in its 60 stores, if he paid $1,000 per store.
Worth, who raised just $500,000 to start Frookies, doesn't have that kind of money. That means -- once again -- he has to be resourceful. While slotting fees are spreading faster than kudzu after a rain, they are not yet universal. If he moves quickly, Worth can still get into some stores without them.
Worth's best hope, though, is to create so much demand for Frookies that supermarkets are forced either to waive the slotting fee or reduce it. "If we can get into one chain that doesn't have the fee and do well, we can force its competitor to take us in."
But again, Worth is forced to try to create a big demand without using big dollars. A general rule of thumb in the cookie business is that you must spend $10 million on national advertising to be heard. Worth hasn't spent anything on advertising, instead using promotions and point-of-purchase displays to get customers to try his cookies.
The initial results are encouraging. Customers are responding to the cookie's good taste and all-natural appeal in surprising numbers. In his first three months, Worth sold 70,000 cases of cookies. According to his business plan, that wasn't supposed to happen until the middle of year two. Numbers like those may make it easier for Worth to raise the $5 million he thinks it will take to make Frookies a national company. That money -- which will probably come from the sale of additional stock -- would go toward funding TV commercials and beefing up distribution. In the best of all possible worlds, that will increase demand and keep Frookies moving out the door.
Continued success raises an interesting question. What happens when the industry's cookie monsters notice that Worth is nibbling on their lunch?
Keebler officials say it takes them less than a year to create a new brand that responds to a competitive threat. And while Worth hopes his cookies can be found in half of all supermarkets by year's end, Keebler and its kith and kin don't have to worry about distribution.
"The giants are a problem," says Worth, taking another drag on one of the cigarettes he just can't seem to quit. "But we have a few things in our favor. We have about a nine-month lead time, and we are already working on new products that I would rather not talk about. Second, consumers tend to be loyal to the people who create a category. Third, the large companies have an interesting marketing problem. If they introduce a new, all-natural product, they are going into direct competition with their other less healthy products. And finally, if they do enter, I think they will increase the size of the category, and that can only be good for us."
On the surface, that sounds fine. But it sure would have been more convincing had Worth not popped an antacid right after he said it. Within arm's reach he keeps the largest jar of Tums we have ever seen.
You do have to wonder how much of his bravado is whistling in the dark. Worth's entire line of credit at United Jersey Bank is exactly $1.5 million, and three of his seven employees work for him part-time while they try to develop their own food products.
Yet the orders are coming in to his office in Englewood Cliffs, N.J., at an amazing rate. He has experience with a similar product, and he is contracting out almost everything that could cost him money: baking, packaging, and distribution. Perhaps most important, Frookies do taste good.
"This is a war, and even if I lose, I win," says Worth. "Say the big boys do come in and take over the market. They aren't going to get all of it. I'll be left with a $15-million or $20-million company at worst."
Maybe. But: can he get distribution? Avoid the slotting fees? Get established before the big boys respond?
Or will the Frookie crumble?
Getting back to the Garden is a wonderful idea. But -- as Adam and Eve found out -- you still have to deal with snakes.
