August 16, 2004
Testing the waters | Neal Workman rebounds from the dot-com bust to launch Atlantic Saltworks of Maine
By Taylor Smith
Neal Workman wasn't the typical dot-com casualty. Unlike so many others who succumbed to the siren song of the Internet economy, Workman in 1999 wasn't trying to cash in with a cocktail-napkin business plan or cash out with a fat bag of stock options. Instead, he just wanted to diversify Seafax, the Portland-based seafood industry credit reporting firm he founded in 1985.
The plan was to fold Seafax's credit reporting business into Gofish, the company's fledgling online business-to-business marketplace that linked buyers and sellers of seafood. But, in the maelstrom of the Internet bust, Gofish failed and Workman found himself among the dot-com castoffs. Now, like other new economy veterans, Workman is reinventing himself to get back into the game. But in sharp contrast to many of his entrepreneurial comrades, Workman's game is decidedly old school. In early August, his new venture, Atlantic Saltworks of Maine, began churning out the first batches of sea salt harvested directly from the cold waters of the Bay of Fundy, which rolls just outside the company's Lubec factory. "I'm moving from bits and bytes to atoms," says Workman. "After 18 years of dealing with information and the Internet, salt is something you can hold in your hand."
The relative simplicity of salt seems like a perfect escape from the ephemeral uncertainty of the Internet market. But for Workman, Atlantic Saltworks doesn't signal an entrepreneurial retreat. In fact, the new venture poses its own set of risks and challenges. For one, the location of the company in Lubec ˆ an area that Workman says is starving for economic development ˆ already has locals stopping in to inquire about jobs. "It's a sensitive issue at a place like Lubec when you plant your stake in town," says Workman. "I'm trying to be really cautious coming up here and making commitments. [Locals] know who you are, where you stayed last night and what you had for dinner ˆ it's that small a community."
Another challenge is to get the product out on the market. The sea salt Workman's company produces, which will be marketed under the name Quoddy Mist, targets the upscale specialty foods market, a highly competitive niche industry where retail shelf space is difficult to come by and brands often don't have the financial resources or production capacity to compete on a national level. "It's not an easy market to get into," says Dennis Proctor, who, with his wife, Carol Tanner, has run Falmouth-based gourmet foods company Mother's Mountain since the early 1980s.
Atlantic Saltworks, however, is not a typical startup. Workman is bringing to the company nearly two decades of experience working in and around the food industry. In recent years, he's noticed that gourmet and specialty foods have been an increasingly fast-growing segment in the food industry: Retail sales of specialty foods topped $22.8 billion last year, up more than 20% from 2001 according to the National Association for the Specialty Food Trade. That compares to sales growth of just 7.2% for the overall food industry during the same two-year period. "When I walk into food markets, the aisles are getting wider for gourmet foods," says Workman. "I like that trend."
Workman was intrigued by an article on gourmet sea salts that appeared in a recent issue of Specialty Foods magazine. He figured sea salt was a small but growing niche within the relatively small specialty foods industry, and that the niche had yet to be exploited. The NASFT reports that the 2003 sales of seasonings ˆ the market category that includes salt ˆ represented just 3.4% of the specialty foods market. Workman also noticed that the majority of sea salt sold in the United States is imported from countries such as France, Italy, Spain and even Nepal. (The Guérande region of France is to sea salt what the country's Champagne region is to sparkling wine.)
With just a handful of U.S.-produced sea salts on the market, Workman saw an opportunity for brand building; he says he'd like to position Quoddy Mist as the domestic alternative to the raft of imports carried at specialty food shops. The strategy makes sense to at least one retailer. "There is a tremendous call for domestic brands, and people are always trying to back a U.S. product," says Nicole Brookings, general manager of Browne Trading Market, a specialty foods shop in Portland.
Salesman and salt farmer
Though the title on Workman's business card reads paludier, French for "salt farmer," he admits that his salt-raking prowess or engineering skills aren't the keys to Atlantic Saltworks' success. Instead, Workman's primary challenge is to market the sea salt and get Quoddy Mist in restaurants, specialty food shops, big-box natural food stores such as Whole Foods and Wild Oats, and mainstream supermarkets like Hannaford and Shaw's. Prior to starting limited production in early August, Workman spent the past few months generating interest from specialty shops and chefs along the 350-mile route between Lubec and his part-time home in Boston (he splits his time between Boston and Kennebunk).
His marketing plan starts with selling Quoddy Mist through specialty food shops and to restaurants (for use both in the kitchen and on patrons' tables), and Workman says he already has about a dozen customers in place ˆ including some regional specialty foods chains ˆ who are waiting for production to start in earnest. (Workman expects to have the brand in restaurants and specialty stores by early September.) "Selling and marketing is my meat and drink," he says. "I like interacting with the customers, hearing what they like and don't like."
Workman, a native of West Nyack, N.Y., honed his sales and marketing chops in the commercial collection department of credit reporting firm Dun & Bradstreet, where he worked for six years as a field sales representative in the firm's Portland office. After leaving Dun & Bradstreet, he started Seafax in Portland in 1985 as a credit reporting agency for the seafood industry. The niche was unique to the seafood industry: Unlike the beef or dairy industries, which are dominated by a handful of players, the seafood industry remains highly fragmented. A seafood distributor in Boston, for example, might find the day's catch in Santiago, Chile or San Diego, Calif. That open market, while convenient for filling orders, also opens sellers and buyers to increased business risk. Workman's goal with Seafax was to reduce that uncertainty by offering customers on-demand, faxed credit reports on potential business partners.
In the mid-90s, the company started offering online credit reports and in 1999 launched Gofish, an online business-to-business marketplace to link buyers and sellers in the industry. The company that year rebranded itself as Gofish and made a splash in Portland as a flourishing Internet firm. "We had a rare opportunity being between the buyers and the sellers, because we knew who the good guys were and who the bad guys were," says Workman. "We could be the intelligence between the two markets."
That kind of thinking made sense to a string of investors, who pushed capital into Gofish and helped the company expand to meet what was expected to be a crush of business. The staff swelled, but the business plan didn't pan out. As a result, the company's investors in November 2001 sold Gofish to three longtime employees (including James Bonnvie, who at age 19 had been Workman's first employee), who changed the name back to Seafax. Workman, who had recently moved to Boston, needed a break and declined to buy back into the business. "It was no fun to hire and fire 140 people in a year and a half," says Workman. "I admit I licked my wounds for six months before I was able to regroup."
During the next few years, Workman spent time with his family ("I didn't miss one of my kids' sporting events," he says). He took on consulting work with banks that had credit risk in the food industry and private companies in the food industry trying to reorganize their credit departments. He also joined the board of directors at groups including the Home for Little Wanderers, a Boston-based nonprofit child welfare agency, and the Mt. Auburn Hospital in Cambridge, Mass. But with his oldest child heading off to college this fall, Workman decided the time was right to get back into business. "I like Maine and I like the experiences I've had in Maine. I've spent 23 years in Maine, and it's a great place to build a company from scratch," he says. "I guess I was predisposed to getting something else going."
Brick by brick
After deciding to concentrate on sea salt, Workman visited this spring with Stephen Cook on Bailey Island. Cook's company, Maine Sea Salt, produces between 10,000 and 14,000 pounds of sea salt a year. After roughly two weeks of discussions ˆ including talks via an intermediary hired by Workman ˆ Workman made an offer for Cook's operation, which Cook entertained but eventually turned down.
So Workman began looking for a spot to start his own company. He had read about restructuring in the salmon industry that left vacant and affordable facilities in the state's down east region. Dianne Tilton, executive director of the Machias-based Sunrise County Economic Council, helped Workman search for a turnkey facility that had all-day ocean access ˆ a sometimes difficult proposition in an area where the difference between high and low tide can be as much as 50 feet. "It's hard to find available land on the ocean, and it's also hard to find available buildings suitable for commercial use," says Tilton.
After looking at properties in Milbridge, Machiasport and Eastport, Workman found his match in Lubec. The 20,000-square-foot building, which dates back to the 1920s and is owned by Bob Peacock, was part of R.J. Peacock Canning Company until the facility was shut down in 2002. Since then, Peacock has installed his company's sea urchin hatchery in the building and has rented out other space out to retail tenants. Workman in June agreed to rent roughly 7,500 sq. ft. of the building to serve as Atlantic Saltworks' headquarters and production facility. "I wanted to lease so my financial resources could be ready for manufacturing rather than acquiring hard assets," he says.
The Peacock connection was fortuitous: Clayton Lank, a former Peacock plant manager, serves as operations manager at Atlantic Saltworks. Bob Peacock also loaned Workman Mick Devin, a marine biologist who is in charge of the plant's seawater filtration and analysis; Devin also is overseeing the Peacock sea urchin hatchery that shares the building with Atlantic Saltworks. In addition to Lank and Devin, Workman hired Linda Zawaski as a customer service representative, bringing the total staff to four. He expects to hire one or two more people when production ramps up later this month.
Workman explains that he wanted to keep the staff as lean as possible during the company's startup period. Despite his cautious hiring forecasts, Workman says he still gets stopped on Water Street by people asking how many jobs Atlantic Saltworks will create. "I tell people we're going to create one pound of salt, get one customer and create one job," he says. "We're going to build it brick by brick."
While Workman's employment estimates are conservative, his production goals are aggressive. Cook of Maine Sea Salt cautions that his own relatively small annual production capacity has limited his company's growth, cutting off access to potentially lucrative contracts with large-volume clients. Denise Shoukas, communications director for the NASFT, says that's a risk for a company like Atlantic Saltworks. She's seen production volumes sink a number of new specialty food companies. "The product may be great and people are going to use it, but if you get a huge order and you can't fill it, then customers like Whole Foods are going to hate you," she says.
As a result, Workman has sunk much of the $250,000 in self-funded startup capital into new, specially manufactured production machinery that will allow him to produce salt year round (see "The salt mines," this page). Workman estimates that Atlantic Saltworks will produce 80,000 pounds of salt in the first 12 months of steady operation. "I didn't want to get into a gunfight with a peashooter," says Workman. "If you're going to bump into the big boys, you have to be able to deliver the volume."
Workman's long-term goal for Atlantic Saltworks is to have the company firmly entrenched in the specialty foods market while assembling a strong workforce. He says he can't estimate how many employees the company will have in five years ˆ nor will he divulge what he expects the firm's revenues to be in the first year of operation. (However, he does have detailed sales projections and cash flow analysis calculated on a biweekly basis for the next three years.) Workman may be cautious about projecting the company's prospects, but it's clear that he knows what's involved in growing Atlantic Saltworks. "It's going to be a lot of heavy lifting," he says. "It's won't be a $100 million company. It's a very niche business that will find its customers one at a time."
The plan was to fold Seafax's credit reporting business into Gofish, the company's fledgling online business-to-business marketplace that linked buyers and sellers of seafood. But, in the maelstrom of the Internet bust, Gofish failed and Workman found himself among the dot-com castoffs. Now, like other new economy veterans, Workman is reinventing himself to get back into the game. But in sharp contrast to many of his entrepreneurial comrades, Workman's game is decidedly old school. In early August, his new venture, Atlantic Saltworks of Maine, began churning out the first batches of sea salt harvested directly from the cold waters of the Bay of Fundy, which rolls just outside the company's Lubec factory. "I'm moving from bits and bytes to atoms," says Workman. "After 18 years of dealing with information and the Internet, salt is something you can hold in your hand."
The relative simplicity of salt seems like a perfect escape from the ephemeral uncertainty of the Internet market. But for Workman, Atlantic Saltworks doesn't signal an entrepreneurial retreat. In fact, the new venture poses its own set of risks and challenges. For one, the location of the company in Lubec ˆ an area that Workman says is starving for economic development ˆ already has locals stopping in to inquire about jobs. "It's a sensitive issue at a place like Lubec when you plant your stake in town," says Workman. "I'm trying to be really cautious coming up here and making commitments. [Locals] know who you are, where you stayed last night and what you had for dinner ˆ it's that small a community."
Another challenge is to get the product out on the market. The sea salt Workman's company produces, which will be marketed under the name Quoddy Mist, targets the upscale specialty foods market, a highly competitive niche industry where retail shelf space is difficult to come by and brands often don't have the financial resources or production capacity to compete on a national level. "It's not an easy market to get into," says Dennis Proctor, who, with his wife, Carol Tanner, has run Falmouth-based gourmet foods company Mother's Mountain since the early 1980s.
Atlantic Saltworks, however, is not a typical startup. Workman is bringing to the company nearly two decades of experience working in and around the food industry. In recent years, he's noticed that gourmet and specialty foods have been an increasingly fast-growing segment in the food industry: Retail sales of specialty foods topped $22.8 billion last year, up more than 20% from 2001 according to the National Association for the Specialty Food Trade. That compares to sales growth of just 7.2% for the overall food industry during the same two-year period. "When I walk into food markets, the aisles are getting wider for gourmet foods," says Workman. "I like that trend."
Workman was intrigued by an article on gourmet sea salts that appeared in a recent issue of Specialty Foods magazine. He figured sea salt was a small but growing niche within the relatively small specialty foods industry, and that the niche had yet to be exploited. The NASFT reports that the 2003 sales of seasonings ˆ the market category that includes salt ˆ represented just 3.4% of the specialty foods market. Workman also noticed that the majority of sea salt sold in the United States is imported from countries such as France, Italy, Spain and even Nepal. (The Guérande region of France is to sea salt what the country's Champagne region is to sparkling wine.)
With just a handful of U.S.-produced sea salts on the market, Workman saw an opportunity for brand building; he says he'd like to position Quoddy Mist as the domestic alternative to the raft of imports carried at specialty food shops. The strategy makes sense to at least one retailer. "There is a tremendous call for domestic brands, and people are always trying to back a U.S. product," says Nicole Brookings, general manager of Browne Trading Market, a specialty foods shop in Portland.
Salesman and salt farmer
Though the title on Workman's business card reads paludier, French for "salt farmer," he admits that his salt-raking prowess or engineering skills aren't the keys to Atlantic Saltworks' success. Instead, Workman's primary challenge is to market the sea salt and get Quoddy Mist in restaurants, specialty food shops, big-box natural food stores such as Whole Foods and Wild Oats, and mainstream supermarkets like Hannaford and Shaw's. Prior to starting limited production in early August, Workman spent the past few months generating interest from specialty shops and chefs along the 350-mile route between Lubec and his part-time home in Boston (he splits his time between Boston and Kennebunk).
His marketing plan starts with selling Quoddy Mist through specialty food shops and to restaurants (for use both in the kitchen and on patrons' tables), and Workman says he already has about a dozen customers in place ˆ including some regional specialty foods chains ˆ who are waiting for production to start in earnest. (Workman expects to have the brand in restaurants and specialty stores by early September.) "Selling and marketing is my meat and drink," he says. "I like interacting with the customers, hearing what they like and don't like."
Workman, a native of West Nyack, N.Y., honed his sales and marketing chops in the commercial collection department of credit reporting firm Dun & Bradstreet, where he worked for six years as a field sales representative in the firm's Portland office. After leaving Dun & Bradstreet, he started Seafax in Portland in 1985 as a credit reporting agency for the seafood industry. The niche was unique to the seafood industry: Unlike the beef or dairy industries, which are dominated by a handful of players, the seafood industry remains highly fragmented. A seafood distributor in Boston, for example, might find the day's catch in Santiago, Chile or San Diego, Calif. That open market, while convenient for filling orders, also opens sellers and buyers to increased business risk. Workman's goal with Seafax was to reduce that uncertainty by offering customers on-demand, faxed credit reports on potential business partners.
In the mid-90s, the company started offering online credit reports and in 1999 launched Gofish, an online business-to-business marketplace to link buyers and sellers in the industry. The company that year rebranded itself as Gofish and made a splash in Portland as a flourishing Internet firm. "We had a rare opportunity being between the buyers and the sellers, because we knew who the good guys were and who the bad guys were," says Workman. "We could be the intelligence between the two markets."
That kind of thinking made sense to a string of investors, who pushed capital into Gofish and helped the company expand to meet what was expected to be a crush of business. The staff swelled, but the business plan didn't pan out. As a result, the company's investors in November 2001 sold Gofish to three longtime employees (including James Bonnvie, who at age 19 had been Workman's first employee), who changed the name back to Seafax. Workman, who had recently moved to Boston, needed a break and declined to buy back into the business. "It was no fun to hire and fire 140 people in a year and a half," says Workman. "I admit I licked my wounds for six months before I was able to regroup."
During the next few years, Workman spent time with his family ("I didn't miss one of my kids' sporting events," he says). He took on consulting work with banks that had credit risk in the food industry and private companies in the food industry trying to reorganize their credit departments. He also joined the board of directors at groups including the Home for Little Wanderers, a Boston-based nonprofit child welfare agency, and the Mt. Auburn Hospital in Cambridge, Mass. But with his oldest child heading off to college this fall, Workman decided the time was right to get back into business. "I like Maine and I like the experiences I've had in Maine. I've spent 23 years in Maine, and it's a great place to build a company from scratch," he says. "I guess I was predisposed to getting something else going."
Brick by brick
After deciding to concentrate on sea salt, Workman visited this spring with Stephen Cook on Bailey Island. Cook's company, Maine Sea Salt, produces between 10,000 and 14,000 pounds of sea salt a year. After roughly two weeks of discussions ˆ including talks via an intermediary hired by Workman ˆ Workman made an offer for Cook's operation, which Cook entertained but eventually turned down.
So Workman began looking for a spot to start his own company. He had read about restructuring in the salmon industry that left vacant and affordable facilities in the state's down east region. Dianne Tilton, executive director of the Machias-based Sunrise County Economic Council, helped Workman search for a turnkey facility that had all-day ocean access ˆ a sometimes difficult proposition in an area where the difference between high and low tide can be as much as 50 feet. "It's hard to find available land on the ocean, and it's also hard to find available buildings suitable for commercial use," says Tilton.
After looking at properties in Milbridge, Machiasport and Eastport, Workman found his match in Lubec. The 20,000-square-foot building, which dates back to the 1920s and is owned by Bob Peacock, was part of R.J. Peacock Canning Company until the facility was shut down in 2002. Since then, Peacock has installed his company's sea urchin hatchery in the building and has rented out other space out to retail tenants. Workman in June agreed to rent roughly 7,500 sq. ft. of the building to serve as Atlantic Saltworks' headquarters and production facility. "I wanted to lease so my financial resources could be ready for manufacturing rather than acquiring hard assets," he says.
The Peacock connection was fortuitous: Clayton Lank, a former Peacock plant manager, serves as operations manager at Atlantic Saltworks. Bob Peacock also loaned Workman Mick Devin, a marine biologist who is in charge of the plant's seawater filtration and analysis; Devin also is overseeing the Peacock sea urchin hatchery that shares the building with Atlantic Saltworks. In addition to Lank and Devin, Workman hired Linda Zawaski as a customer service representative, bringing the total staff to four. He expects to hire one or two more people when production ramps up later this month.
Workman explains that he wanted to keep the staff as lean as possible during the company's startup period. Despite his cautious hiring forecasts, Workman says he still gets stopped on Water Street by people asking how many jobs Atlantic Saltworks will create. "I tell people we're going to create one pound of salt, get one customer and create one job," he says. "We're going to build it brick by brick."
While Workman's employment estimates are conservative, his production goals are aggressive. Cook of Maine Sea Salt cautions that his own relatively small annual production capacity has limited his company's growth, cutting off access to potentially lucrative contracts with large-volume clients. Denise Shoukas, communications director for the NASFT, says that's a risk for a company like Atlantic Saltworks. She's seen production volumes sink a number of new specialty food companies. "The product may be great and people are going to use it, but if you get a huge order and you can't fill it, then customers like Whole Foods are going to hate you," she says.
As a result, Workman has sunk much of the $250,000 in self-funded startup capital into new, specially manufactured production machinery that will allow him to produce salt year round (see "The salt mines," this page). Workman estimates that Atlantic Saltworks will produce 80,000 pounds of salt in the first 12 months of steady operation. "I didn't want to get into a gunfight with a peashooter," says Workman. "If you're going to bump into the big boys, you have to be able to deliver the volume."
Workman's long-term goal for Atlantic Saltworks is to have the company firmly entrenched in the specialty foods market while assembling a strong workforce. He says he can't estimate how many employees the company will have in five years ˆ nor will he divulge what he expects the firm's revenues to be in the first year of operation. (However, he does have detailed sales projections and cash flow analysis calculated on a biweekly basis for the next three years.) Workman may be cautious about projecting the company's prospects, but it's clear that he knows what's involved in growing Atlantic Saltworks. "It's going to be a lot of heavy lifting," he says. "It's won't be a $100 million company. It's a very niche business that will find its customers one at a time."
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