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In our second series, Maree Morrissey talks to Dave
and Teri Morris, founders of The Virginian House Trading
Company (T/A Dave And Teri's Cookies), about their difficulties
with the business.
| VITAL STATISTICS |
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| Teri and Dave Morris,
entrepreneurs behind Dave and Teri's Cookies |
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Business Name:
The Virginian House Trading Company, T/A Dave and Teri's Cookies
Year of Set Up:
1999 and trading since May 2001
Founders:
Dave and Teri Morris
Location:
Ballywilliam, Enniscorthy, Co. Wexford
Business Type:
Cookie manufacturing
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Owned by Dave and Teri Morris, Dave and Teri's Cookies is the name
of a cookie dough business, based in County Wexford. Commencing trading
in 2001, Pettitts in Wexford was their first customer while Superquinn
was their first major multiple.
CURRENT STATUS
Accounting for over 50% of their sales, Tesco stocked Dave and Teri's
cookie products in over twenty of their top stores. However, this past
July, Tesco decided to delist the entire line as the range was under performing.
This has very serious implications as Teri and Dave's distributor,
PRM Ireland, has decided to no longer distribute their product.
OBSTACLES
There have not been enough margins in the business and increasing sales
has been difficult. In December 2003, Teri and Dave had changed the packaging
and also improved the product and the production. Sales did improve with
the stores that continued to carry the product. Clarifies Teri, "sales
for the past three years have been fairly constant." Their company
has some recognition in Ireland with TV exposure, their own branding efforts
and with awards such as the 'Best in Ireland' Bridgestone Award.
RAISING FINANCE
Initial financing came from three main sources: Teri's mother, the
BES Seed Capital Scheme and through their own resources. They also received
a number of grants from Bord Bia and Wexford County Enterprise Board.
WHERE IT'S AT
"We would like to keep our business going if we can make money from
it," outlines Teri. Over the past few years, the couple has had several
enquiries about a foodservice pack. "It wasn't until IFEX in
March of this year that we decided to make one available." They sent
cookie dough to one prospect, picked up another customer and started shipping
foodservice packs to both within a week. The foodservice packs were much
easier to produce and the volumes and turnaround were also higher. They
have been in discussions with two major foodservice distributors but both
of these companies have decided not to become distributors as they believe
Cuisine de France dominate the market.
The factory is currently underutilised. Dave and Teri believe the best
way forward on the retail pack is to rent the factory and to outsource
the manufacturing. Recently they have been in discussions with a few local
manufacturers, have signed with a real estate agent and have had some
enquires. Says Teri, "although we have discussed outsourcing with
other manufacturers, we do not know whether we will go this route as we
have not made a decision on whether to continue."
ANTICIPATIONS
Teri has returned to IT, which is her own background and has started
a new Masters course in Network Computing at WIT while Dave is concentrating
on farming.
What is the Crux of the Matter for Dave and Teri Morris' business
right now?
- They would like to see their business continue if it can make money.
- They have looked at other options such as foodservice, cooked cookies
and hampers but have not been able to break into any of these more lucrative
markets.
- The retail end has very low margins and the only value they have
left with this is their brand.
DAVE & TERI'S QUESTIONS FOR THE PANEL
- Should we find another distributor and continue supplying our retail
pack in order to preserve our investment given the low margins on this
side. If so, how do we increase sales?
- If we decide not to continue with our retail pack, how best can
we get a return on our investment?
- If we diversify into other related areas, such as foodservice,
how can we best develop this to make an impact?
Read below comments from our panel of experts about ways in which
Dave and Teri Morris could steer their business in future directions to
overcome their current dilemmas.
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GET THE 'MARKETING MIX' RIGHT
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 It's
clear enough that the product has potential, the early growth in sales
is a testimony to that. The difficulty with managing growth is particularly
significant: one manifestation of that being the problem of controlling
quality in the production. I'd like to address the challenge to increase
sales. It may seem a bit clichéd to say so but effective selling
depends on effective marketing.
Marketers talk about the need the get the 'marketing mix' right.
The key element in that mix is the product. Let's focus on your
product and your 'brand.'
Know Your Product Better
I'd like to know what's so special about your product?
What is the competitive advantage that your product has to offer
that customers simply can't resist it and your competitors
wish they could copy and will probably try? Where would these guys
position their product on a price/quality equation?
Answering these questions will then bring you to a consideration
of wider issues such as telling your target customers about this
product, how it meets their personal needs, pricing the product
at a level that reflects their perception of the product and ensuring
that it is available where your target customer shops.
Dr. Pauric McGowan, Director, Northern Ireland Centre for
Entrepreneurship (NICENT)
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 Dave
and Teri's story deserves publication. A clever but simple idea took
hold, grew too fast, mistakes were made and corrected, but not fast
enough. Overall inexperience cost them their two biggest customers;
Sainsbury's and Tesco.
What's Left?
A brand, of doubtful value. A factory, which may provide an income
stream. A willingness to try again tempered by caution and a need
to make ends meet. Without capital behind them, it's unlikely
that Dave and Teri can afford to re-enter the very aggressive retail
market. The margins are too low, the risks are too high and market
sentiment is against them. Equally, the foodservice market depends
on convincing a distributor to go up against Cuisine de France,
an unlikely prospect.
Make The Sales
To keep the brand alive means making sales. One solution might
be to identify speciality food shops locally that would take small
orders in order to keep the product in the market. Dave and Teri
could also investigate selling their cookie dough at local farmers'
markets, perhaps trading on the natural ingredients element.
While neither route will bring in a fortune, they will not involve
huge amounts of time, energy or capital. In the meantime, Teri's
IT skills and rent from the factory should put bread on the table
and also allow Dave to look for other opportunities.
Another solution would be to look for a buyer for the company;
someone who can see the potential in the brand and has the contacts,
experience and routes to market that Dave and Teri currently lack.
This might not realise a great deal of value but it would provide
a clean break and provide the base capital for a fresh start.
Brian O'Kane, MD, Oak Tree Press and webmaster for
www.startingabusinessinireland.com
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 It
completely goes against my nature to suggest that the course of action
that I would recommend for this firm would be to close down operations
and take time to regroup. While a gap in the market has been proven
to exist for cookie dough, such an opportunity is only of value if
it can be accessed effectively which is clearly not the case in this
situation.
I believe that Dave and Teri need to stem to current decline and
look to build again. To achieve this rebirth they have two options.
The first is to close down the business with Teri going back to
IT full-time and Dave returning to farming. Additionally, they can
lease out the factory, which will help bring in additional income
to assist in rebuilding their assets.
Spotting Another Opportunity
I am confident they will spot another opportunity in future and,
given their learning and experience from this business venture,
they will be in a strong position to take better advantage of that
opportunity.
If they do not wish to close the business, their best alternative
option is to manufacture for private labels. The key strength of
the firm is production and so focussing on this aspect would enable
them to concentrate on their core abilities. It would also significantly
reduce the issue of logistics and marketing. The negative to this
option is that you do have your own brand and you are at the mercy
of the owners of the private label.
Tom Cooney, Lecturer of Entrepreneurship, Dublin Institute
of Technology
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| POTENTIAL IN THE FOODSERVICE SIDE |
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 Failure
can be an excellent teacher and, while all is not lost, it really
is time for Teri and Dave to stop, step back and review all options
available to them before making any further decisions about their
business.
The building of a brand sounds so reasonable but it is extremely
expensive to construct and requires constant and consistent maintenance
to remain viable.
The retailers will demand demonstrations, discounts and redeemable
coupons until the cows come home and the producer is suckered
into thinking that in this way they are 'building up their
brand.' In fact the only thing that they are doing is boosting
the retailers' sales, while allowing them to retain their
margins, which are being underwritten by the producer.
Some Harsh Facts
The harsh facts are that there may not be a brand there at all
after price fluctuations, changed packaging, the pull out from
Sainsbury's, the delisting from Tesco's and their distributor
dropping them.
One glimmer of hope could be that, over the past few years, Teri
and Dave have had several enquiries about a foodservice pack and,
after positive vibes at IFEX, they have decided to make one available.
If Teri and Dave still have the will to persevere, this avenue
could be open to them. When properly planned and managed, this
could be the restart that they are seeking!
Mark Fielding, Chief Executive, ISME
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 I
think that none of the three options that Teri and Dave are questioning
are practical or realistic at this time.
Given that no funds appear to be available to continue with the
retail pack or with diversification, it is doubtful if the brand
retains a capital value.
I think they should dispose of the equipment at the best price
they can obtain and endeavour to fact the only thing that they
are doing is rent out or sell the sales, while allowing them to
factory premises.
Colm O'Doherty, Step Assessment Officer, First Step Microfinance
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