Connecticut Company Rides Recycled Plastics Into Clothing Industry [The Hartford Courant]
(Hartford Courant (CT) Via Acquire Media NewsEdge) Oct. 20--There's a dirty secret in the recycling world, Phil Tepfer says -- there's not enough demand for those soda and shampoo bottles and yogurt cups that folks so carefully clean and sort.
Tepfer's business, in a small way, is trying to change that.
Since the company pivoted to a focus on recycled materials in November 2009, it has used enough waste plastic in manufacturing clothing to fill eight football fields knee-deep.
Tepfer and his business partner, Charlie Bogoian, have learned about sales, branding, clothing design and the tradeoffs of Asian and local manufacturing in the five years since they graduated from college. They've been honored by a local magazine and a national magazine and by two Hartford nonprofits for their innovation and commitment to environmental sustainability.
But whether they can eventually get their product, now sold mainly to colleges, into stores -- and whether the CEO and headquarters will stay in New Britain -- is unclear.
Tepfer and Bogoian were seniors at Babson College in Boston when they founded a business called SailProud that specialized in clothing for sailors and yachters.
As Tepfer describes it, they were "two guys with no apparel industry experience. Just hungry for an opportunity, and to prove something. We're learning all of this on the fly."
They discovered that the eco T-shirt they developed, combining both recycled plastic and organic cotton, was appealing to customers, and they shifted their branding and design from SailProud to LiveProud.
Now, the company is on its third name, Kenai (pronounced keen-eye) Sports, but its aims are largely the same as when they were LiveProud: to leverage its commitment to using recycled materials into sales at college athletic departments. Kenai is the name of a town in Alaska, and they picked it because it's surrounded by pristine wilderness, and so represents their environmental aims.
"We're selling a lot more than we were under LiveProud," said Bogoian. "Colleges have been our biggest brand ambassadors. People are calling us now."
While the founders were able to start paying themselves as early as November 2008, it's been a slow process expanding their customer base.
The College Scene
The pair were among 25 finalists for Bloomberg Businessweek's "Best Young Entrepreneurs" in 2010, a group of companies run by entrepreneurs younger than 25.
In 2009, they told the magazine, they had $110,000 in revenue. By 2011, they had $210,000 in revenue, and last year, they were again around the $200,000 mark.
Their revenue goal this year is more than $900,000.
They started with sales at Babson. Now they also sell to teams at Harvard University, Rosemont College in Pennsylvania and Keuka College in New York. They thought they had a foot in the door at Eastern Connecticut State University, but after a change in athletic directors, no one there had heard of the company. And although Tepfer and a part-time administrative assistant work out of an office at Central Connecticut State University's business incubator, CCSU is not a customer either.
One barrier to faster growth with colleges is the fact that many large universities have deals with corporate giants to use their products. Instead of having to buy uniforms, those schools are paid for logo placement.
Harvard has such an arrangement, Tepfer said, but Nike doesn't care about crew, tennis and fencing, so that was their in.
"It's a slow process," he said. "Student athletes are very particular in what they're wearing." Nike, Adidas and Under Armour have established reputations. Kenai is an unknown.
Jeff Bray, athletic director at 1,000-student Keuka College, said his school ordered 600 T-shirts from Kenai last year to publicize the athletic department's commitment to teamwork and responsibility. There were 280 athletes, and the rest were ordered to give away to other students to bolster the marketing campaign.
"We're very pleased with the Kenai products," Bray said. "They're the softest T-shirts a person could ever wear."
Bray also was impressed by Tepfer's passion. "Rarely when you deal with a company do you speak with the person in charge," he said. "It's very refreshing. They have a reason to be very proud about what they do."
The company recently sold 4,000 promotional headbands to Protein Sciences in Meriden, which will be given to Ragnar Adirondacks Relay Race runners. The headbands can be mailed back to Kenai for recycling when they're worn out.
The men would like to sell more custom jackets rather than promotional T-shirts, because moving beyond the T-shirt increases the profit margin by 20 percentage points. Eco Ts are 25 percent of sales now.
The Right Location
Before renaming the company Kenai Sports, they worked on developing more products and more performance fabrics. They contract with an apparel designer in Massachusetts, and experienced manufacturers figure out the right mix of TV shells, yogurt cups, computer keyboards and plastic bottles to chip, melt and extrude to come up with the fabrics used in their jackets, polo shirts, hoodies, workout shirts and more. The plastic comes from landfills in Maine, Georgia and South Carolina.
Paying those manufacturers is the most expensive part of the company's operations. They also contract with a factories in Fall River, Mass., and Manitoba, Canada, to sew the garments. They didn't hire an employee until March 2012.
Bogoian no longer lives in Connecticut. He works in Needham, Mass., in the Boston suburbs, along with two part-time employees. There, they test the fabrics for strength, wear, odor resistance, washability and heat resistance.
The pair can't decide whether the company will stay headquartered in Connecticut or move to Needham. They are waiting to see how their next initiative develops -- selling to police departments, correction officers, fire departments and schools. They are certified state contractors in Massachusetts and Connecticut, and their first municipal sale was 25 jackets to the Peabody, Mass., police department.
"Our hope from the beginning was to have a strong Connecticut presence," said Bogoian, but if they make more sales to Massachusetts municipalities, that may tip the balance to unite the company in Needham.
Right now, about 75 percent of their sales are to colleges. While they have a lot of room to grow in these specialty markets, Bogoian said, "We know our end game is going to have to be direct to consumer at some point."
They tried to launch yoga pants made from recycled plastics and coconut shells through the crowdfunding site Kickstarter, but fell $35,000 short of the $45,000 goal earlier this year.
Tepfer said that to sell to national retailers, you have to be 14 months ahead of the season and have 20 to 30 new products every year.
"The challenge for us is getting our wholesale price down and keeping fresh products," he said.
Contacts at chain stores have told them that to receive orders, they would have to reduce their wholesale prices by 20 percent to 25 percent across the board. "They want to see a stronger profit margin on their end," Tepfer said.
Although they're not sure how to reach that target, and they work almost every waking hour, they're glad they didn't settle for 9-to-5 jobs.
Bogoian said while running your own company is a roller coaster, "The good heavily outweighs the bad."
(c)2013 The Hartford Courant (Hartford, Conn.)
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