Monday, May 20, 2013
John Rowe accomplished a rare feat among Dragons’ Den contestants when he secured a deal involving four of the five Dragons. Rowe’s appearance on the popular CBC show aired in January of 2011; the segment ended with the Charlottetown-based entrepreneur agreeing to trade a 35% stake in his company for $600,000 in cash and a $400,000 line of credit. (Rowe originally asked for $1 million in exchange for 20% equity.) Concluded the usually critical Kevin O’Leary: “Look at the quality of companies coming into the den this year!”
So what excited the show’s panelists? The answer is Honibe (pronounced “honey bee”), a line of honey candies, sweeteners, and lozenges made by Rowe’s Island Abbey Foods Ltd., which recently nabbed the No. 2 spot on Progress’s list of Fastest Growing Companies’ “Under $25 million in Revenues.” Honibe products are made from dehydrated honey using a method that Rowe began developing in his own kitchen in the late 1990s. The technique removes the moisture from honey without diluting any of its sweetness, flavour, or nutritional value.
The concept impressed the Dragons, as did Rowe’s announcement that 2010 sales were projected to edge close to $2 million. Despite their enthusiasm, however, the dragons didn’t ultimately receive a piece of Rowe’s company. After the spring 2010 taping, Honibe’s Honey Drop won the Global SIAL d’Or award for best new food product in the world.
Winning the prestigious award boosted sales and elevated the company’s value. Rowe felt the Dragons’ offer no longer suited the company’s changing reality. “They wanted too much for too little,” he recalled in a recent interview. “We politely declined. And we’re glad for it because the company has been growing on its own ever since.”
Island Abbey Foods now sells its Honibe products in 20 countries, from the United States to Japan. Before Rowe’s 10-minute appearance on Dragons’ Den, his company was shipping product to 1,000 retail outlets across Canada; that number quickly doubled following the prime-time spot. By the end of 2012, Rowe expects Honibe to be in 5,000 grocery and pharmacy locations, including stores under the Sobeys, Loblaws, and Shoppers Drug Mart banners. “Demand has been increasing steadily,” he says, noting the company has a backlog of orders. “That’s a nice problem to have, but it’s still a problem.”
Poised for growth
Rowe and his wife, Susan, the company’s CFO, formed Island Abbey Foods in 2004. Starting out in their Charlottetown basement, the pair eventually hired scientists from the PEI Food Technology Centre at the University of Prince Edward Island (UPEI), an arrangement that transformed Rowe’s honey technology from a homegrown novelty to a commercial product. In 2009 the couple leased a small building in a nearby industrial park; within a year the plant was running at maximum capacity. In response, the couple launched a two-year expansion plan. “And this is the result,” says Rowe, seated in Island Abbey Foods’ new 14,000-square-foot production facility, which opened in September in the PEI BioCommons, a small cluster of bioscience companies.
In the early days at UPEI, Island Abbey Foods was pumping out between 1,000 and 2,000 pieces of honey product per day; daily output is now in the 100,000-piece range. “We’re shipping everything we make out the door as fast as we can,” says Rowe, a sixth-generation Islander. The new plant, with its additional space and new packing equipment, will eventually boost output tenfold, allowing the 30-person company to stockpile inventory for the first time. “On day one our production capacity quadrupled,” he says. “It’s a significant jump from where we were. It’s all in response to demand and our view to the future.”
Rowe pegs his company’s current value at roughly $10 million. In a decade, he predicts, that figure could be $100 million. “There are very few companies on P.E.I. that have achieved that, but I think we can do it,” he says. “We would like Honibe to be in every country on Earth.” So how does Rowe plan to achieve a tenfold increase in value? By pushing beyond candy and cough drops and using his Honey Drop as a platform for delivering everything from vitamins to pharmaceuticals. “That’s the biggest opportunity we have,” he says. “We literally have the world’s only all-natural drug-delivery mechanism.”
Island Abbey Foods will introduce a line of honey vitamin lozenges later this fall. As well, the Honey Drop will soon travel to the International Space Station, part of a competition to identify snacks suitable for astronauts. “It’s still a small business, but one with great growth potential,” says Rory Francis, the executive director of the PEI BioAlliance, which is trying to expand the province’s 36-company bioscience sector. Francis says that Island Abbey Foods is navigating the precarious path from family business to large manufacturer. “That step is where lots of companies trip and struggle,” he says. “So far, Island Abbey Foods has avoided a stumble.”
To this point, the husband-and-wife team has largely self-funded their company’s growth to the tune of $1 million. For a time they worked on the business while holding unrelated full-time jobs: Susan as an accountant, John as a software developer. “I’m pleased to say that in 2012 we have finally started paying ourselves,” says Rowe.
The couple has received a number of buyout offers but insists there are no plans to sell. “Not until we’re 10 times our current value,” says Rowe. “We believe we have created something of significant worth. We intend to grow the business here at home so our economy benefits from that value.” Adds Susan: “It’s not about the money; it’s about doing something special. The rewards are far greater than just a simple paycheck.”