With Luck, This Biz Will Go Down the Toilet
COMPANY: NuWay Corp. HEADQUARTERS: New York City
TYPE OF BUSINESS: Makes flushable moist toilet tissue
FOUNDER: John Marino, successful entrepreneur with four previous start-ups
CAPITAL: $7 million from Marino, the executive team, and 10 or so angels
KEY COMPETITION: Major bath-tissue companies: Kimberly-Clark, Procter & Gamble
COMPETITIVE STRATEGY: Create patented dispenser; grab shelf space in new market
Diaper changing isn't normally a task new fathers relish. But for four-time company founder John Marino, the unsavory cleanup job prompted a brainstorm. Premoistened baby wipes made the job so easy that he thought there might be an adult market for a similar product. So he started NuWay Corp. to develop MoistMates, flushable wipes on a toilet-paper-like roll.
Marino hopes to build a new consumer-product niche, landing nationwide distribution in grocery stores and drugstores within two years. He'll spend $6 million on television and national print advertising the first year and $7.5 million in 1998. He projects that sales will hit $20 million in 1997 (with a $5.2-million loss) and $48 million in 1998 (with a $3.5-million profit).
Even if MoistMates win only a shred of the $3.7-billion toilet-paper market, the potential payoff is huge. And Marino's research tells him 15% of all Americans dip their toilet paper in water before using it. If he can secure distribution and persuade consumers to try his product, Marino is poised to grab millions.
The gritty, low-margin grocery world is new to Marino, whose previous businesses were in the software and service industries. He has hired a team of consumer-goods heavyweights with manufacturing, selling, marketing, and finance experience with Sony, Gillette, and Scott Paper. Those four managers bought about 15% of NuWay's stock. Marino owns 30%. Ten angels, who put up about $6.5 million, own the remaining 55%.
Marino will need his team's smarts if paper giant Kimberly-Clark decides to jump into the fray. Its flushable-wipe product is the only one on the wipe market, which brought in more than $500 million in 1995. Marino hopes Kimberly-Clark or one of the other majors will ignore his product until he proves the niche, and then perhaps will try to acquire it.
Strengthening NuWay's market position is MoistMates' revolutionary dispenser. Kimberly-Clark's wipes come in tubs. Marino's come on a sealed roll that hooks onto an existing toilet-paper fixture. He spent three years developing the roll and holds three patents on it. Industry analysts say there's a market for something like this. "The problem with this product is getting people to use it the first time," says Bill Shea, a category manager for the Star Markets grocery-store chain. "He's making it easy and accessible with that dispenser."
So far, Marino is flush with success. When he rolled out the product in the Northeast, last fall, he landed every major grocery chain from Buffalo to Boston. The notoriously tough buyers were so eager to carry the product that some lowered the slotting fees. "It's a value-added product with a higher margin than a commodity like bath tissue," Shea says. Marino expects to place MoistMates in 20,000 stores by the end of 1997 and in 40,000 by the end of 1998.
He's already dreaming of companion products--a medicated version, and, perhaps with an eye to growing his customer base, one for toilet-training toddlers. "My four-year-olds love that," he says.
NUWAY, John Marino, 733 Third Ave., 7th Floor, New York, NY 10017, 212-692-0172 21