David Eben, founder and CEO of Paramus, N.J.–based Carrington Company, made the leap that many successful entrepreneurs have made: from a sinking ship to sailing the rising tide. In 1995, Eben started a food distribution company, but within only a few years he realized his timing was bad. "All the distributors were being gobbled up by large corporations," he says. To save his business, Eben decided to stop distributing other people's products and created a brand of his own. But in the crowded packaged food industry, dominated by industry giants such as Nabisco and General Mills, what could a small business from New Jersey offer consumers? Eben discovered that the specialty tea market lacked a value price point for upscale black teas, green teas and herbals.
In 1999, Eben founded Carrington Tea and set out to provide high-quality specialty teas at affordable prices. While most specialty teas were priced at $2.99, Carrington cost just 99 cents. As the health benefits of tea, and specifically green tea, became recognized by the general public, Carrington Tea attracted consumers from all socioeconomic markets and geographic areas. Today, the umbrella company, Carrington Company, consists of Carrington Tea, Carrington Farms and Nutra- Tea. Carrington Tea offers more than 24 natural and organic white, green, black, red, herbal and supplement-enhanced teas that are available in stores throughout the U.S.
Challenges of Low-Cost Products
The retail food industry is different from most other consumer businesses because distributors pay for shelf space. It is very difficult for an independent, new product to enter the market at a low cost to consumers. Eben says that Carrington is able to afford shelf space and keep its prices lower than the competition by employing unconventional methods. Carrington spends next to no money on marketing. Instead, they rely on their low prices and word of mouth to attract customers. For example, a consumer reads an article about the benefits of green tea and wants to give it a try. That consumer is more likely to spend less money to try something new. Another way the company saves money is through outsourcing. They outsource much of the manufacturing, which keeps their overhead costs low and the distribution channels were already in place. He was able to get in the door with food retail giants such as Shop Rite and Whole Foods, a feat not possible for many other small food manufacturers. To save additional costs, the company has also done away with wrapping its goods in cellophane and has redesigned its packaging to keep those costs down as well.
The down economy has not slowed Carrington's growth. "When the economy is good, it's tough for a value-priced item," says Eben. "But when the economy is down, our sales increase." According to Eben, Carrington sales are up more than 30% to-date from 2007. In addition to the Carrington Tea brand, the company also manufactures and distributes the Lindsay Gardens Tea brand, which is sold in dollar stores, and maintains several private-label deals. In 2005, Carrington Tea launched Nutra-Tea, a specialty green tea that contains dietary supplements.
Carrington also launched the Carrington Farms division, a health food branch that distributes its own brand of flax seed packs. Why flax? "About four years ago, I was at a meeting with one of our private-label clients and he tossed a bag of flax onto the table and he tossed a bag of flax onto the table and asked, 'Can you [make] this?'" says Eben. "Of course I said yes. I had no idea what flax was, but we were going to make it." The success of the private-label flax seed product has led to the development of the Carrington Farms brand. Like Carrington Tea, Carrington Farms is a low-cost alternative to its competitors. Eben plans to expand Carrington Farms to include other natural products. "The distribution channels to Whole Foods and the mom-and-pop organic food stores are already there, so I'd like to expand in that area," he says. Eben and his management team are currently looking to distribute their own brand of stevia, an herbal sugar supplement.