Since Bugs Bunny, carrots have not had so ardent an advocate as Ido Leffler. One who makes a point of wearing at least one orange-colored item of clothing, and whose perpetual smile radiates the type of health only vegetable enthusiasts usually enjoy. The ebullience emanating from him is a perfect match with the brand he built, Yes to Carrots. "We don’t sell beauty products," Leffler says, "We sell a good feeling. We're all for the power of the word 'yes'. Apparently, by the time an infant has is two years old, even before he has learned to talk himself, he has heard the word 'no' a thousand times. We bring 'yes' back into the lives of people who use our products. Yes to health, yes to care, yes to singing while you're in the bathtub, yes to a good feeling in general, yes to a simple, happy life."
Recently, Yes To Inc. USA received a big 'yes' from a group of US investors, who gave it $14 million to promote its retail activity. It previously also received another big 'yes' from US online pharmacy and cosmetic products chain Walgreen Company (NYSE: WAG), which began marketing its products exclusively at thousands of stores across the US. The collaboration was an unqualified success, and Yes to Carrots became Walgreen's leading launch in recent years. Yes to Carrots products are now marketed to more 10,000 stores in 17, in chains such as Target Corporation (NYSE: TGT) and Duane Reade in the US, Shoppers Drug Mart in Canada, Boots in the UK, Sephora in Russia, and others. For a company which is headquartered in Tel Aviv and whose products are made in Arad, this is definitely something to be proud of. All the more so when considers that, just three years ago, the brand was sold in just ten stores in Israel.
The motto: Gentle strokes, while singing
Leffler is a Hebrew-speaking Australian. Together with his partner, Lance Kalish, he headed a group of marketing and business development consultants who specialized in brand building. They had just decided that it was time to stop working for other people and build a brand of their own, when they came across the Yes to Carrots product range, which combines carrot extract (beta carotene) with mud from the Dead Sea. It was one of a number of brands owned by Sea of Life, an Israeli company which specializes in products based on Dead Sea minerals and markets them to high-end cosmetic stores and spas. Excited by the combination of beta Carotene and Dead Sea mud, Leffler and Kalish decided to buy the product and build it as a leading brand.
They began by adding a range of new items to the product range. "We saw the carrot as the standard bearer for the family of orange-colored fruits and vegetables, and accordingly, we also developed products based on the pumpkin and watermelon. We then branched out in subcategories, Yes to Cucumbers and Yes to Tomatoes. There are now 40 products in the range, including body, facial and hand creams, shampoos, hydrates and others," says Leffler.
Uri Ben Hur, the owner of Sea of Life and a renowned formulator of Dead Sea products, is still chief formulator of the product line, and it is thanks to him that they have remained uniform and pleasant to use and do not separate into layers of carrot and mud. But the company's secret lies not just in its products, but also in its marketing approach. For example, the jolly orange look to the products, and Leffler's blog, "Note from the Carrot Lover", and his habit of personally replying to queries from consumers, especially the more bizarre ones. "One woman wrote to me saying that she used our shampoo to groom her horses, which looked excellent and were winning a lot of races. I've also had people send me their bar mitzvah photographs. But usually, people write to me to say that the 'shampoo works even if you don't sing,' in response to the product's instructions which stipulate that you should shampoo daily while singing."
"Marketing in the US isn't easy," Leffler says, and explains; "We printed millions of catalogues, and spent millions of dollars on advertising - and didn't leave out a single fashion and beauty magazine, and we handed out hundreds of samples. After this initial blitz, which was accompanied by a viral campaign in which emphasis was placed on partner relationships at college dormitories, we embarked on an even larger campaign to select the company's presenter. We trawled colleges looking for unknown models," he recalls. "There were 6,800 applications and 150,000 votes cast online." The models chosen were young, vibrant, with a classic beauty - the originality of the brand did not go as far as choosing a model that looked "real", but there was something special even about that.
In Israel, Yes to Carrots sponsors the Israeli National Netball team. Those readers who are unfamiliar with the sport will be happy to learn that it is the most popular women's sport in countries which were once part of the British Empire such as Australia, the country of origin of the company's founders. Since Yes to Carrots' motto is vitality and female empowerment, it comes as no surprise to learn that the team's first win of an international game in the recent European Netball Festival in Dublin, was achieved under the company's sponsorship.
Another important relationship is the one with retail chains. Walgreens, for example, worked together with Yes to Carrots on the development of the brand's retail look, something which undoubtedly contributed to its successful launch at the chain's branches. But that wasn't all. "They understood that we can't keep growing if we turn over exclusivity to them, but they also know they're still number one for us," says Leffler, adding, "We view them as partners in the full sense of the word. For example, company CEOs usually meet retail chain managers once every three months. We meet with Walgreens every Thursday."
The goal: to become the number two brand
Yes to Carrots' positive approach is not limited to talk and viral advertising; it also finds expression in actions. Like the many other cosmetic brands that take pride in their natural and organic approach (and what could be more natural than carrots?), the company is also active on behalf of communal causes - both overseas and in Israel. "We established the Yes to Carrots Seed Fund, a non-profit fund which operates worldwide and in Israel," says Leffler. "We bought land for battered women's shelters and drug rehabilitation centers, and we are about to build a greenhouse in which to grow food for a soup kitchen. We've also raised money for a group of Somali refugees in the US, who want to preserve their unique agricultural methods. In Israel, we have adopted the Ethiopian community in Pardes Katz, in a project that brings together successful women with women who need empowerment."
Yes to Carrots has not only made Israel a target for aid but also a source of aid in its own right. The company will award scholarships to agricultural experts from around the world to study desert agriculture in Israel. The philanthropic activity is led by Leffler's wife Ronit. "When I retire from the company, I would like to take a role in the management of the non-profit fund," Leffler promises.
It goes without saying that the company's products are not tested on animals, and that the raw materials are purchased as much as possible from "empowered communities", which sell them directly to the company rather than through a corporation. It even recently launched a scheme in which every worker spends one day a month volunteering in his local community.
Yes to Carrots became an international company in 2006, but its products are still made at the original factory in Arad. The company will set up another production line in the US, as part of its expansion following the investment it recently received, and a second head office will open in San Francisco in addition to the one in Tel Aviv.
Globes: Where will you be in five years time?
Leffler:"The market for cosmetic products based on natural concentrates is the fastest growing market in the cosmetics sector, and all the giants want to join it. Recently, Burt's Bees, which makes products based on beehive oils and substances was sold to Clorox for no less than $1 billion. Our goal is to become the world's number two in beauty products based on natural ingredients.
After whom?
"I don't know after who, but I like being number two, it's more challenging. I'm number two at home as well, my wife is older than me and she's the boss. All in all, this is just the beginning. We were only born recently, and I feel that relative to our abilities, we're only just beginning to crawl." At this point, Roy David VP corporate finance at Poalim Capital Markets adds, "And you've already heard the word 'yes' a thousand times."
How Poalim Capital Markets raised $14 million
Last June, Yes to Carrots received a big 'yes' from a group of US institutional investors, which decided to invest no less than $14 million in the company. One reason why the investment was so unique was that it was led by Israeli investment house Poalim Capital Markets, even though the company is managed by Australians, and the investors were from the US. "Leffler met Nir Brunstein, our CEO, while he was giving a lecture in Australia. He was impressed with Nir and asked him to lead the round on behalf of the company," David recalls. Leffler explains, "We were looking for a strategic investor who understood the field, and who could both help us expand in it and understand the strength we had already accumulated, so that he could give us the value we felt we deserved."
The company's original interest was to raise the funding from Israeli institutional investors for reasons of Zionism, but the Israelis did not appear - so they claim - to have an adequate understanding of the retail world. "They didn't understand what it meant to be a company that was already selling at 6,500 sales points," says David. He compares it to, for example, "Ahava" - one of the leading Israeli consumer product ranges worldwide - which is sold at a few thousand sales points only.
"We realized that we needed to focus on a select number of quality US investors who deal solely with consumer products and are specialists in this field," says Leffler. "Our investors are all people who sit on the boards of the large retail chains on a full-time basis, know the field well, and can open doors, and not merely give money." Together with its partner, William Blair & Company, Poalim Capital Markets managed to bring in board the right investors. "We chose the Simon Family, and San Francisco Equity, two investors from the consumer products sector, which previously invested in Method Products, which is similar to us, and they turned us into a company with $120 million in sales," Leffler sums up.
Published by Globes [online], Israel business news - www.globes-online.com - on October 2, 2008
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