Page 48 - Forbes - USA (November 2019)

Bigelow Cont.

pretty significant conversation to get to that place.”

Bigelow now produces two billion tea bags from
Little Big Picture its three plants every year, feeding a product line
RELATIVE FAILURE that comprises 150 flavors. It shuns the more in-

dustrial “cut-tear-curl” drying practices as well as
There are nearly 5.5 million family-owned businesses
44 in the U.S., but not many of them are especially long buying cheap tea like a popular kind used by many
in the tooth. Some 88% of family-business owners say competitors, which is officially classified as “dust.”

they’d like to pass the firm on to Junior or Granddaugh- While most competitors long ago stopped sourc-

S ter, but companies that try to keep it in the bloodlines HOW TO PLAY IT
R over the decades mostly just end up bloodied: ing from Sri Lanka because of the high costs there, by William
U
E 30% Bigelow still buys from dealers it has worked with Baldwin
N for years, purchasing tea leaves only from moun-
E 12% Bigelow Tea

R taintop farms, where the flavor is crisper. has designated
P 3%

E Says Richard Enticott, a veteran botanicals bro- itself a “benefit
R corporation,” one
T of family-owned get to the third make it to the ker who works with Bigelow and its competitors: that purports to
N businesses survive generation fourth generation
E into the second “They’re not hard negotiators because they recog- have the interests
of society and
• generation nize their partners need to be successful. In a lot of
the environment
N negotiations we do, price is everything.” in mind as much
A Source: The Family Business Alliance.

I Bigelow is now registered as a benefit corpora- as those of profit-
R grasping share-
A tion in Connecticut, which requires businesses to holders. Smart
R
T er in 1959 and ran it for 45 years, transforming it have a positive impact on workers and the envi- move, given that
N from a niche, mail-order gift shop brand into a ronment. It also received national certification this socialists are on

O the warpath. You
C grocery store staple. Cindi, the younger of his two year as a B Corp thanks to longtime practices like can’t buy shares
daughters, joined in 1986 armed with an M.B.A. giving bonuses to all plant workers based on annu- of Bigelow, but
from Northwestern and spent two decades work- al sales and converting its three plants to renewable you can tilt
to companies
ing her way through the business, starting in the energy. that apply a
accounting department. It has also defied an industry consolidation trend, protective layer

of “stakeholder”
This is not to say the Bigelows didn’t spill a lit- led by Unilever, which has rolled up brands like talk over their
tle tea along the way. They both had to contend Lipton, Pure Leaf, Pukka and, most recently, Tazo, affairs. In the

with a generational transfer—a particular chal- which it acquired from Starbucks for $384 million Forbes ranking of
socially conscious
lenge for David—and keeping up in a $12 billion in 2017. Bigelow, the only independent top-selling exchange-traded
global industry that favors mass commercializa- tea company left, would likely fetch far more, and funds, the leader

tion, consolidation and low costs. Nonetheless, PE firms and public companies call at least once a in cost efficiency
is Xtrackers MSCI
Fairfield, Connecticut-based Bigelow Tea, which, week, Cindi says. So far they’ve all been rebuffed. USA ESG Leaders

like all our Forbes Small Giants, values greatness David and his wife, Eunice, both well into their Equity; holdings

include Microsoft,
over growth, has doubled in revenue since Cindi 90s, still mix each batch of Constant Comment Alphabet and
took over in 2005, now with $200 million in an- monthly, working behind the only door in the plant Walt Disney.
nual revenue. that doesn’t have a window, taping over the security Vanguard’s
environment-so-
“He felt, I’m sure for years, that he was the best cameras before they start mixing. They shared the cial-governance

one to probably run the company,” says Cindi. recipe with their daughter only five years ago. Cindi fund is almost as
“Sometimes that generation will be very control- may have to decide someday when to share it with cheap.
ling; it has to be their way. That’s a kiss of death.” her two children, both in their 20s, who will inher- William Baldwin is
Forbes’ Invest-
As Cindi’s experience at the company grew, so it the business when she’s gone. ment Strategies
did the pushback. She proposed a line of holiday- “One of the reasons we never sold this compa- columnist.
themed teas, but David didn’t have any interest in ny,” says David, “was because the first day we sold it,

flavors like pumpkin spice or eggnog. Then came they’d open up a Constant Comment tea bag, count
a push into natural grocery stores, but he disliked the number of orange peel pieces and go, ‘There
the idea of piling on more costs to get shelf space were 15 pieces of orange peel in it. That’s ridiculous.
and consumer awareness. The tense arrangement They don’t need more than 10.’ ” F
lasted for years and wasn’t sorted out until Cindi
called a family meeting to unload on her 79-year-
F I NA L T HOU G H T
old father.
“I explained to him what his actions were doing “IN A FAMILY BUSINESS STRUCTURE,
SOMETIMES WHAT IS NEEDED IS PATRICK WELSH FOR FORBES
to me personally. And once he heard that, every-
A SENSE OF DISCIPLINE RATHER
thing melted away,” she said. “It became about do- THAN CREATIVITY.”
ing the right thing for the family, but it did take a —Ashwin Sanghi

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