Munu Hicken-Gaberria and his wife Keena have dedicated the past nine years living for tomorrow, and the couple’s efforts have paid off big time by hitting the retail bull’s eye for exporting.
The owners of the British Columbia-based LFT Group Brands Ltd. recently inked a deal with colossal American retailer Target. With the stroke of a pen, LFT is essentially tripling their firm’s overall sales and showcasing their environmentally friendly “Live for Tomorrow” product line of household cleaners in hundreds of stores in the continental U.S.
“It’s exciting, because we get to test the U.S. market in one go,” says Munu, the founder and CEO of the Port Moody company whose products feature a unique combination of natural scent and ingredients, and reusable packaging that convey an image of sophisticated sustainability. “It’s a seven-week program featuring five new brands. We are the only company that is non-U.S. If it is successful, we have been given indication that we will get a regular listing in over 400 retail stores across the country.”
In 2015, Target posted $72.62 billion (U.S.) in sales and had more than 1,800 locations across the U.S.
But the deal almost didn’t happen, which would have put LFT’s future in jeopardy.
For a small operation, filling an order of this magnitude brings challenges, including scaling up production, ensuring the supply chain could deliver, and finding a short-term warehousing solution to stage the order. But the biggest challenge was securing funding to finance the immediate growth.
“Banks don’t like to take on risks,” explains Keena Hicken-Gaberria, Vice-President of Operations. “Going from annual sales of $109,000 to getting an order of more than $300,000 to be delivered in a few months is just not something (banks) have the appetite for.”
The predicament put LFT into a catch-22 position. As a consumer packaging company, they had a big order to fill, but not enough cash on hand to scale up operations required for fulfillment. With their company facing a do-or-die situation, Munu and Keena were forced to assume personal risk, as well as bank on financial assistance from Export Development Canada.
The combination paid off.
“We needed to put in our order for our aluminum bottles before we secured financing. If we didn’t do that, there’s no way we could have delivered on time,” says Keena. “Quite frankly, if we did not get funding from EDC, we would not have been able to deliver this order, and our reputation would have been negatively impacted, which would make securing new accounts challenging.”
With this crisis averted, American consumers will soon be introduced to what Keena describes as a “disruptive product.”
Refillable aluminum bottles sporting black labels are key brand elements of LFT’s premium products, which are non-toxic and formulated using less water and primarily with food grade ingredients.
“What differentiates our products is the level of concentration and the ingredients,” says Munu, a U.K. native who immigrated to Canada in 2006. “Our laundry detergent has 30 per cent water where other top brands have about 80 per cent. Our products are scented with 100 per cent essential oils and are also available fragrance-free.”
To put the concentration level into perspective, LFT Group’s 500-ml bottle of laundry detergent will last for 50 loads, saving money for consumers.
Since its inception, the company’s growth strategy has been both incremental and local, starting off in retail stores in Vancouver and gradually tapping into new markets across Canada.
However, that trajectory has changed dramatically, courtesy of the Target deal.
“Our end goal is to reach sales of $100 million,” Munu says. “This (Target) deal has chewed up a lot of our bandwidth. We have other retailers that are very interested but have been on hold – now they are my top priority.”
That stretch target is within reach, if the pieces to the export puzzle fall into place over the next decade.
“If the Target deal goes well and we get take up from the other interested retailers, very conservative projections show that we are on track to meet that goal of $100 million in 10 years,” Keena concludes.
Five questions with LFT Brands Group founder Munu Hicken-Gaberria
1. What was your first export sale?
Our first export sale was in March 2014 to a retailer in California. It was a small order valued at just under $500. Since then, we have had individual direct orders to consumers in the U.S., each valued at approximately $40 to $50, through Amazon.
2. How did that first export opportunity arise?
Exhibiting at the Natural Products Association’s ExpoWest. The retailer came to our booth and expressed interest in our products. After numerous follow-ups, a one-off order was placed.
3. When it comes to exports, what do you know now that you wish you knew then?
For many years, we attended trade and consumer shows in the U.S. with the goal of getting a foothold with the independent, natural grocers. Without representation from a distributor, however, this is a significant challenge – akin to the chicken or the egg – because distributors will not take on a brand unless it is already sold in a number of retailers. Focusing on direct sales with larger chains has provided a greater ROI.
4. How has the trading world changed since you started in business?
E-commerce opportunities have increased with the advancements in technology that support consumer behavioural changes. There is a growing trend that consumers purchase “on the fly” online without the limitations of geographical borders. When we rebranded “Live for Tomorrow” in 2013, we took this factor into account to ensure that our line of natural cleaning products provided the greatest value for money and performance through highly concentrated non-toxic formulations. The result was smaller, lighter packaging that is easier to ship globally, reducing our carbon footprint and costs of logistics while also providing retailers with a greater ROI in terms of shelf space and consumers a compact premium product that meets today’s urban lifestyle.
5. What is the #1 thing new SMEs need to know about export and trade?
SMEs need to know that the devil is in the details. Securing and fulfilling an export order may seem straightforward, but it is not. Government regulations, trade partner requirements (such as EDI and Good Guide ratings), contract terms, NAFTA and customs clearance procedures all have to be understood and followed through with exact precision. But that just gets you to the point of fulfilling your order. To maximize the opportunity, it is critical to then have the funds, capacity and the right skills available to develop and execute a marketing plan to leverage your export order to increase brand awareness for market growth.