Address: Continental Mill, 2 Cedar St., Lewiston
Principals: Jack Karkos, Scott Karkos
Product: Product development company, blenders
Funding: Two MTI seed grants
Blenders, both disassembled and whole, line work benches at the former Bates Mill Store in Lewiston, where father and son entrepreneurs work side-by-side, testing and comparing competitive brands in their effort to build a better mousetrap, or in this case, a quieter commercial-grade blender.
Jack and Scott Karkos say they are targeting two trends: The first is an unexpected boom in demand for boutique home-use blenders costing up to $600, while the other is a need for quieter commercial blenders that don't put users at risk of noise-induced hearing loss. Either way, it means no more screaming to converse when the blender is turned on.
The company, Karkos Group LLC, has two Maine Technology Institute seed grants totaling $37,180, with matching funds of $45,800, and will seek additional investment from various sources after deciding whether to move ahead on its commercial or home-use blender.
It currently is developing 10 alpha-stage products that are a hybrid between a commercial and a residential blender. Those are to be completed by mid-summer and then evaluated by key customers to complete the design. The company will then decide if its first product will be for the commercial or residential market. The next step will be making 50-100 beta-stage units for in-store tests by the end of this year. If all goes according to plan, the company could have its first blenders in production next spring or summer.
"The quick service restaurant we are taking it to has 2,000 stores. So with two blenders per store, that would be 4,000 blenders at $1,000 each," says Scott Karkos, pointing out the market potential for the commercial blender, which is more expensive than the residential model.
He and his dad, Jack, are principals of Karkos Group, which Scott Karkos says would only need a small portion of that market to have significant sales.
The residential version would tap a rapidly growing market for commercial-grade blenders for the home. The average price of a blender a few years ago was a mere $35 but it quickly doubled to $100 and now is $300 and up for elite brands, a surprising trend during the recession, explains Debra Mednick, home industry analyst at The NPD Group, a Port Washington, N.Y., information and advisory services company.
"What makes these products attractive is people want to have whole foods rather than juices, and have them blended as well as possible," Mednick says, adding that retailers like Williams Sonoma and the Food Network have done a good job of marketing the high-priced models. "People are attracted to anything with a plug, plus they've seen it on TV and it is healthier."
Another trend pushing sales of elite blenders is people wanting to buy "countertop jewelry" to impress others with their tricked-out kitchen.
"People are splurging if there's a product that's attractive, and they'll forego other things," Mednick adds.
Mednick estimates that the demand for all types of countertop blenders grew 5% to 12.1 million units in 2012 compared to 2011. But sparked by the high-priced models, the dollar value rose 38% to $642 million in 2012 compared to 2011. Blenders priced $200 and higher comprised 20% of retail blender market sales in terms of dollars last year, and that's up 204% over 2011. Sales of less pricy models rose only 8% in dollar terms. Mednick says the average price increase is driving the market growth.
A quieter blender, she says, has potential to make a difference in homes of people with babies or who entertain frequently.
Keeping it down
"Our machine runs at conversational level," says Scott Karkos.
That's below 85 decibels at all speeds, which is a selling point.
"Blenders on the market operate above 85 decibels, which can cause permanent hearing damage," Karkos says, "and they go up to 105 decibels in both commercial and residential models."
For comparison, normal speech is about 60 decibels and a vacuum cleaner is about 70 decibels, according to the American Speech-Language-Hearing Association. The hearing system can be injured not only by a loud blast or explosion, but also by prolonged exposure to high noise levels, according to the association.
That's the reason behind the Occupational Safety and Health Administration's 90-decibel exposure limit for an eight-hour work day. The National Institute for Occupational Safety and Health allows 85 decibels.
"I saw an opportunity for a customized blender that was quieter," Jack Karkos says of a visit to a McDonald's restaurant, during which he heard a loud blender. Karkos Group previously designed the McDonald's smoothie machine, which is different than a blender.
Using the first seed grant, the company had independent tests of its quiet motor run by the University of Maine's Advanced Manufacturing Center against the competition of $1,000 commercial blenders.
The second seed grant went toward sound reduction and a quieter coupler in the blender, Jack Karkos says. And unlike competitors, he says, the Karkos blenders have a blade that can run in both directions, so it is possible to have mixing and cutting edges in one blender cup. The price of the blender will be about the same as the competition, and Jack Karkos says the company will have significant margins using the same price point. The company has one provisional patent that he expects will turn into a number of patents. It also has nondisclosure agreements with a number of potential customers, he says.
For now, Karkos has enough space, with 4,000 square feet of manufacturing and an option for another 4,200 square feet. It's space the company might use if it makes its blender in Lewiston, where Jack Karkos says Karkos Group could hire six to eight direct hourly employees in 2014.