VOL. 36 | NO. 48 | Friday, November 30, 2012
Nashville investor helps light fire under candle business
By Linda Bryant
Paddywax’s Relish Collection loads scent pairings of blood orange and citrus, gardenia and tuberose, vanilla and oak moss, and pomegranate and spruce into iconic glass jars. -- Submitted
Gretchen Hollingsworth says she never planned on selling her artisan candle business. Then she met Nashville investor Joe Moore.
He made an intriguing offer – a strategic partnership – after the two met at a New York trade show in 2009.
He’d buy an equity stake and take over the management of the business, manufacturing and distribution aspects of the company. Hollingsworth would remain a part owner and spend 100 percent of her time on the creative side of Paddywax, the specialty candle company she started on her kitchen table in 1995.
Now, three years after Hollingsworth accepted Moore’s offer, Paddywax is considered a leading candle brand. Moore says the company grew at a 65 percent rate in 2011 and is on track for similar numbers in 2012.
Moore, who recently entered a joint-equity venture with a small California skin care company, plans to buy into more businesses in the personal care and gift industries but says it’s not easy to find a good match.
The owner-partner needs to be unusually dedicated and focused heavily on the creative, design-driven aspects of their company, he adds.
Wholesale, now retail
Hollingsworth and her product fit Moore’s profile.
Paddywax candles are sold at thousands of retail venues in the United States and abroad, from small independent boutiques and gift stores to big retailers such as Nordstrom, Urban Outfitters, Crate & Barrel and Barnes & Noble.
In addition to its wholesale business, Paddywax recently opened a retail store and showroom in Cool Springs at 3343 Aspen Drive.
“Our wholesale sales are really paying off, but we want to get closer to the customer,” Moore says. “Opening a retail store will allow us to get daily, first-hand feedback from consumers.”
Moore is no stranger to Middle Tennessee’s business community. He is former president and vice chairman of stationary and gift company CR Gibson, and son of Sam Moore, former president and CEO of Thomas Nelson Publishers Inc.
During Moore’s tenure at CR Gibson, the company achieved widely noted growth, including broadened distribution and expansion into new product categories. He sold CR Gibson to CSS Industries Inc., a large, publicly traded company, in 2007. He founded DesignWorks, the gift-industry specific private equity firm that co-owns Paddywax, in 2009.
‘I needed money and know-how’
Hollingsworth, who lives in the Atlanta area, has had to get used to a few changes as a result of her partnership with DesignWorks and Moore.
She’s no longer the majority owner in the business, and some physical relocation was involved in new partnership. The manufacturing and distribution arms of Paddywax were moved to Middle Tennessee. The candles are now made in Old Hickory and distributed from a warehouse in Lebanon.
“In the beginning, I had to be convinced to sell part of the company,” Hollingsworth says. “But it felt right. I was successful, but it had gotten to the point where my sales had stagnated. I realized I’d grown it as far as I could. I needed money and know-how.”
Blending, packaging … and traveling
These days Hollingsworth spends her time designing new lines for Paddywax from her Georgia office and travels to Middle Tennessee once a month. Her job duties include anything from working with perfumers to perfecting a scent to traveling overseas to check out containers and pottery for the line.
Hollingsworth used to introduce two new collections a year, but now she debuts six or more. She’s already working on 12 collections for the fall and holidays of 2013.
A Paddywax candle generally sells for $5-$30 and is known for its unusual blended scents, creative packaging and niche collections. As an example, the Literary Collection pays tribute to various world-famous authors such as Jane Austen, Mark Twain, Charles Dickens and Emily Dickinson.
The soy wax candles are packaged in book-cloth covered boxes and include quotes from the authors. The scents are matched to the individual writer.
Mark Twain’s scent is vanilla and tobacco flower. The Leo Tolstoy candle burns with the aroma of black plum, persimmon and oak moss. Emily Dickinson’s signature smell is lavender and cassis.
An environmental line, Eco Green, is poured into recycled wine bottles, and the Relish collection features candles in colorful old-fashioned, relish jars.
“I like for the candles to tell stories,” Hollingsworth says. “They are more than a candle; they are a very special gift.”
Moore admits the vast majority of private equity investors don’t get involved in the day-to-day operations of a firm. Generally, the idea is to back the company and make a significant profit while watching from the sidelines.
But for Moore, the joy is in the creative and collaborative interplay within a partnership. He said he’s in it for a lot more than the money.
“I have a love of the artistic, design side of the industry,” Moore explains. “I know how hard it can be (for the original owners) to manage all aspects of their companies, grow at a healthy rate and still have time to develop their products.”
Hollingsworth and the joint-equity agreement between Paddywax and DesignWorks is the only kind she would have considered.
“It was of prime importance to me,” she says. “I want some skin of the game.”
Earlier this year, Moore entered another joint-equity partnership with Olivina, a skincare company based in California’s Napa Valley. The earth-friendly line features lotions, body washes, hand creams, soaps and oils made from olive and grape seed oils.
Moore says he’s eager to “take the company to the next level.”
Susan Costner-Kenward, the founder of Olivina, says she purposefully held the company back from dramatic growth until meeting Moore.
“I kept it small on purpose because I was afraid I wouldn’t be able to manage it,” Costner-Kenward says. “Joe is the perfect partner. He works harder than any of us. He has a terrific design sense and knows so many ways to help us.”
For Moore to consider a venture, a company must have been in operation for at least five years and have revenues of $3-$25 million.
Costner-Kenward says the deal with Moore is beyond her wildest expectations.
“I feel like I hit the jackpot,” she says. “I have somebody to talk to. We are going to shoot for the moon.”