A Grown Up Cup

A Grown Up Cup

Corporate strategy by Mark Gordon | Managing Editor

Tervis Tumbler, a 60-year-old company once known for its quirky cups, is starting to be known for its annual sales growth. Revenues are up more than 300% over the past decade to $23 million in 2006.

Some of the recent growth numbers produced by Tervis Tumbler, the Venice-based drinkware company, are staggering considering the company's been around since the end of World War II and only started its big sales and marketing push a few years ago.

Revenues have increased 64% percent since 2004, from $14 million to $23 million in 2006. That current number is up 360% since the late 1990s, when it was hovering around $5 million in annual revenues. And as recent as the past two months, sales have kept flourishing, as November 2006 was up 80% over the previous year, while December was up 55%.

The company - which makes four varieties of custom-made cups bearing hundreds of possible patched-in logos, from lighthouses to ladybugs - has also hired an additional 25 people during the past year, bringing its total employee base to about 165, including two new management-level positions in marketing and Internet sales. What's more, it moved into a new 55,000 square-foot headquarters in March and recently completed a company-wide software upgrade.

That's just the kind of data that looks good on a business growth plan.

Not as good-looking though, as Matt Lauer and Al Roker. The celebrity hosts of NBC's Today Show chatted up Tervis Tumblers on an episode last October highlighting monogrammed holiday gifts. Along with the show's lifestyle guru, Elizabeth Mayhew, the hosts bragged about the cups' "nearly indestructible" makeup, which is derived from the some of the material used to make bulletproof shields and fighter jet windshields.

"It was kind of cute," says Laura Spencer, a Tervis Tumbler senior executive promoted to CEO late last year.

And while the Today Show plug was the type of national buzz Spencer and other Tervis executives crave, there have been other recent triumphs: The company received top honors at 2006 awards ceremonies sponsored by both the Venice Area Chamber of Commerce and the Economic Development Corporation of Sarasota County. And its cups ranked high in several top-selling lists monitored by GiftBeat, a national trade publication for the gift industry.

Taken together, the marketing exposure on local and national levels is part of the strategy Tervis Tumbler hopes will take it to $100 million in annual sales, with its first stop being $40 million by 2010.

Tervis Tumbler President Norbert Donelly, who has been working with the company's board and outside consultants to plan that long-term vision, says the $100 million mark, while way out there, is a driving motivation.

"We have a good feeling about how we will get to $40 million," says Donelly, whose family has controlling ownership of the company. "Now we are working on how we'll get to $100 million."

'Intense process'

Spencer, 42, has been assigned the task of leading the growth. A Venice native and University of Florida graduate who completed executive courses with the Harvard Business School, Spencer's been with Tervis since 1997, working as CFO and COO before officially taking over the top position a few weeks before Christmas. She previously worked as an accountant with Sarasota-based Kerkering & Barberio, where Tervis Tumbler was one of her clients.

Donelly, the son-in-law of the company's former owner, will be taking a less active role in daily operations and focusing more on long-term planning, to the point where he hopes to start taking Fridays off.

Donelly and Tumbler's board, which includes Tim Clarke, founder of Sarasota-based Clarke Advertising & Public Relations and Sun Hydraulics board member Clyde Nixon, promoted Spencer for her ability to excel in all areas, including marketing and manufacturing. "She's balanced and bright," Donelly says.

The biggest challenge to meeting company growth goals, says Spencer, is two-sided. It's both having enough skilled employees in the right departments, from sales to the factory floor, as well as making sure the "intense process" of actually putting out an order is carried out efficiently and with great care - one of Tervis Tumbler's signature selling points is its lifetime guarantee, that any defective product will be replaced.

Further complicating the process, Tervis Tumbler makes all of its products on a customized made-to-order basis. That could mean anything from a big shipment of flip-flop decorated mugs for Beall's Department Stores or one 24-ounce cup with an unusual college logo. Says Spencer: "It makes a simple cup a little more complicated."

For the factory process, Spencer and the manufacturing staff are implementing the Lean manufacturing process, a system that focuses on reducing waste in areas such as inventory and waiting time in order to improve productivity. One byproduct of a company successfully using Lean principles is more efficient production without skimping on quality.

The next challenge is to sell more of what's coming out of the improved factory, an area where the company plans to continue expanding its reach. Tervis Tumbler products can be found in more than 6,000 retailers nationwide, and it recently opened a factory store, its fourth, in the Villages, outside Orlando.

The company is also putting more resources into selling over its Web site, including hiring a former Internet sales executive from national retailer T. J. Maxx to run the Web sales division. The investment is already paying off: Internet sales were up 128% from last November to the same month in 2005, as well as up 57% for all of 2006. The Web site itself, www.tervis.com, follows the company's four-year-old quirky retro marketing campaign, where its tumblers are pictured in 1950s style surroundings.

Diversified customers

Global sales approaching $25 million and Lean manufacturing principles likely weren't the thoughts occupying the minds of Frank Cotter and G. Howlett Davis in 1946. That's when the pair of engineers from Detroit created a double-walled insulated tumbler that could keep cold drinks cold and hot drinks hot. They called the cups Tervis, after the last three letters of their names.

John Winslow, a Casey Key-based entrepreneur involved in several Sarasota-area companies bought the company in the late 1950s and moved it to Venice. Donelly, who had worked in banking and in sales jobs, joined the company in 1998 after marrying Winslow's daughter. He took it over after Winslow died.

The polycarbonate-made cups were originally sold as a piece of Old-Florida, decorated on the inside with Sunshine State staples, such as palm trees and pink flamingos. But sales growth was stagnant the first 30 years or so - partially by design, as Winslow ran other businesses, including selling life rafts and rifles.

"He had varied interests," Donelly says, "but he didn't have an interest in making the company bigger."

Donelly officially began that growth stage about five years ago, starting with putting together a long-term, big-picture thinking board of directors that now includes his two grown children, as well as Clarke and Nixon. Randy White, a past executive and current board member of Venice-based window manufacturer PGT, joined the board late last year.

Spencer says the growth strategy is looped around the diversity in its customers, from department stores to golf tournaments to holiday gift-givers. So the marketing staff is regularly looking for ways to add to the catalog of patches that decorate its cups and mugs. Spencer says landing the rights to put NFL teams and logos on the cups would be a big boost.

"People aren't buying our cups for something to drink out of," she says. "They are buying it as a gift for the motif inside."

By the numbers: Tervis Tumbler

Year Revenues %Growth

2004 $14 million

2005 $17 million 21%

2006 $24 million 41%

Three-year average annual growth: 31%