Growth in Surprising Places
(FORTUNE Magazine) – While most companies on our annual Fastest-Growing list cluster in a handful of hot sectors--tech, pharma, and this year energy and real estate--some find growth in even the most unlikely corners of the economy. For this special section, we've singled out five such overachievers: businesses that made our 2005 list without riding today's hot trends. These surprising companies are putting up sizzling numbers--and trouncing the competition--thanks to products like batting cages, armored Humvees, energy drinks, frialators, and vodka. Read on for the secrets of their success.
COLLEGIATE PACIFIC Building a winning team
Need a Big Bubba batting cage in a hurry? Collegiate Pacific is the company to call. Run by the father-son team of Michael Blumenfeld, CEO, and Adam Blumenfeld, president, Collegiate Pacific manufactures sporting equipment and distributes its own and others' gear to more than 175,000 schools and organizations across the U.S. Revenues have jumped from zero to an estimated $106 million in the past seven years; last year sales rose 168%.
With the industry growing at around 5% a year, Collegiate Pacific has produced those gaudy numbers mainly through acquisitions. In a highly fragmented sector dominated by mom-and-pop shops, Collegiate has been rolling up rivals across the country, broadening its geographical presence and increasing the number of salesmen in the field and the number of products reps can sell. Its latest trophy, Sports Supply Group, was the only other big player around, which clears the way for further consolidation. Integration is "mostly by brute force," says the elder Blumenfeld. With a training team of ten executives in the field, salesmen are pushed to make the most of the growing product line. It's a game plan that works.
HANSEN NATURAL 'Unleash the beast!'
Not too long ago, Hansen Natural was a sleepy alternative-beverage company built around a bohemian lineup of blends like Mandarin Lime soda. Then CEO Rodney Sacks noticed people gulping down so-called energy drinks during several trips abroad, and everything changed. He decided to take a shot at the "functional drink" market.
Hansen's first effort--a smoothie with ginseng, taurine, and vitamins--quickly became one of the company's hot sellers. Yet Sacks wasn't satisfied. His core customer (affluent, female, and health-conscious) was very different from the typical energy-drink consumer: male, irreverent, and interested in extreme sports. To truly compete with industry leader Red Bull--without alienating Hansen loyalists--he would have to conceive a whole new brand.
When the company launched an energy brew in 2002, the Hansen name wasn't on it: Monster, it was called, and it came in a black can with a clawlike logo. It had an edgy slogan ("Unleash the beast!") and sponsored events like surfing competitions and music tours as well as a motocross team. The strategy worked. Monster has become a monster in the energy-drink biz: In the most recent fiscal year the drink helped fuel a 244% increase in Hansen's profits. New Hansen brews to watch: Monster Lo-Carb, Assault, Joker, and Rumba.
MIDDLEBY A new recipe
Hot is good. That could be the mantra of Middleby CEO Selim Bassoul, who took over the jack-of-all-trades maker of food-preparation equipment in 1999 and promptly dropped all the cold-food appliances. Focusing on ovens, grills, and cooktops (under brands such as Blodgett, Pitco, and Toastmaster)--and on major restaurant buyers, particularly chains like Papa John's, Olive Garden, Red Lobster, and Subway--the company has found new traction.
It has helped that Bassoul also placed a renewed emphasis on product innovation, drawing inspiration from focus groups with restaurant chefs (particularly women chefs, he notes: "When you ask [men] how to improve a kitchen, they just say, 'More BTUs' "). The company learned to embrace bigger digital readouts on its equipment, an internal meat probe for ovens (to cut down on door openings and closings, which create inconsistent temperatures), and nonclog burners that ease maintenance.
In all, Middleby, based in Elgin, Ill., has introduced an impressive 24 new products in the past three years--including a high-efficiency pizza oven and a wall-mounted charbroiler--adding to a lineup that cooks five million pizzas and seven million pounds of French fries each day. The results have been supersized: Earnings rose 26% last year.
CENTRAL EUROPEAN DISTRIBUTION Vodka with a twist
As any college fraternity president will tell you, the key to a successful party is the distribution of alcohol. The same is true for Central European Distribution, a U.S. company that sold $581 million of beer, wine, and liquor in Poland last year. CEDC distributes about 850 brands, including Johnnie Walker and José Cuervo, but 75% of its business is in domestic vodka. Poles drank an average of 6.5 liters per person in 2004, according to Euromonitor, making their country the fourth-largest vodka market in the world.
How did a company incorporated in Delaware get such a strong foothold in Poland? By using good old American capitalism to fund acquisitions. "At the time CEDC went looking to raise cash," says First Albany analyst Randy Scherago, "capital markets in Poland were immature." CEDC was able to raise $10 million when it went public on Nasdaq in 1998. It then went on a buying spree, plowing those resources --and subsequent securities proceeds --into 14 distribution centers and 86 satellite branches across Poland, from which it now sells to 37,261 outlets, including supermarkets and gas stations. This summer CEDC announced a bond offering that will help fund its acquisition of the second- and third-largest vodka producers in Poland, instantly establishing it as a power in making liquor as well as peddling it.
ARMOR HOLDINGS The right stuff for risky times
"We did not predict that President Bush would invade Iraq," says Armor Holdings president Robert Schiller. But as a maker of the M1114 HMMWV--an armored Humvee with some 3,000 pounds of protective steel plating, Kevlar, and other reinforcements--Armor has been invincible ever since. The numbers: Armor produced roughly 60 armored Humvees in December 2003; today it produces 550 a month, all headed to the U.S. military in Iraq and Afghanistan. Revenues: up 168% in 2004, to $980 million.
Armor's business isn't just Humvees. The successor company to American Body Armor, which sold primarily security products to law-enforcement agencies, the firm has made some 25 acquisitions over the past nine years. By following an aggressive expansion strategy, which Schiller describes as "grow or die," Armor has added an array of products to a menu that now includes everything from helicopter seats that offer crash protection to CSI-like forensic tools.
"As a nation we need to invest in assets that will protect civilization," says Schiller. As a company, Armor has made the most of that reality, investing heavily, and wisely, in all types of protective gear. Management's motto for the company--"The world isn't getting any safer"--may be a perfect expression of these unsettling times. It has certainly been a lucrative one.