The great thing about market niches is
that they're often profitable.
The bad thing about market niches is
that their very profitability draws the sort
of competition that quickly turns a niche
product into a commodity.
That's the challenge at Damon
Industries, the Sparks-based outfit that sells
non-carbonated beverages ranging from
fruit drinks prepared for institutions to justadd-
liquor cocktail mixes. Customers for its
200 products range from casinos in Reno to
universities, prisons and other institutions
across North America. A few products ship
to Europe and Central America as well.
It's a wildly competitive business everyone
from Coca-Cola to local bottling companies
wants to take a sip from the bottle
and it's a business dominated by commodity
products.Who can remember, for instance,
whether the orange juice at the hotel breakfast
bar came from a machine marked Fruitful
Juice Products Damon Industries' brand
or one of its competitors?
"We need to focus on finding new niches
and increasing our top line," says Douglas
Damon, president and chief executive officer
of the family-owned corporation.
The company targets a 15 percent annual
sales increase, Damon said in an interview.
That requires a combination of a small
company's nimble, fast-moving approach to
the market with the discipline and systems
of a large company.
Damon Industries' 34 employees have
plenty of motivation to help the company
find those niches and hit them profitably.
The company's bonus program, available to
every employee except Damon, is linked
directly to profitability.
"We try to get people who realize the
importance of their jobs," said Damon.
"Everyone here understands what this
company is about."
A profitable niche for Damon
Industries needn't be merely a product such
as a mix for granita desserts or a smoothie.
A niche might be a type of account.
Military orders, for instance, have been a
recent focus. Or a niche might be geographic
such as Mexico with the unique
taste buds of its consumers.
"We're trying to fly below the radar
screen," Damon said of the company's work
to identify niches it can mine for a while. At
the same time that Damon wants his company
to hit opportunities quickly, he also
pays a lot of attention to strategic thinking.
Damon's a big fan of his membership in
The Execcutive Committee groups of
chief executives from different industries
who meet regularly to share their experience
and he puts considerable effort into
mission statements, formal succession planning
and other tasks more typical of big
companies than little ones.
The company's mission statement is the
height of simplicity: "Premium Products.
Perfect Orders. Every Time."
Succession planning at the company
owned by Damon and his wife, Diana, is
equally direct: Their two sons, Aaron and
Josh, have begun working in the business
and will take a larger role as the 56-year-old
Damon gradually reduces his involvement.
That sort of careful succession planning
is a far cry from the simple purchase agreement
that Damon reached when he bought
the company from Ernest Damon, his
father, in 1977.
But the business was simpler then.
Founded in 1963, the company was selling
soft drink syrups and orange juice around
the Reno area, mostly to bars and casinos.
Its big breakthrough came in 1977, when
Damon moved to bag-in-a-box technology
(think of the wine in a box you bought at
the market when you were younger).Today,
nearly everything it sells is distributed in a
shelf-stable bag-in-a-box.
"I wish I could tell you it was a wellthought-
out strategy," Damon said. "But it
just sort of happened."
That proved to be a big niche for Damon
Industries. It beat its biggest competitors by
more than two years into the bag-in-a-box
distribution of juice concentrates.
The company today works from a
50,000-square-foot facility filled with the
aroma of whatever product is being cooked
up today. Every week or so, a railcar filled
with orange juice refills a large tank in the
facility. Other large tanks are filled with
high-fructose syrups for the Fruitful drinks
that are less than 100 percent juice.
Some small bottles near the packaging
room contain the oils, essences and aromas
that contribute the smells that consumers
associate with products' taste. Other small
bottles, meanwhile, contain a sample drawn
from every batch the company makes.
They're stored for quality control testing.
Because so many of its customers are in the
hospitality industry, Damon Industries was
pinched by the slowdown after the Sept.
11, 2001, attacks.
Today, Damon said, the company has
regained its footing, and he described the
business as healthy.
The company serves Canadian customers
through a sister company that's 50 percent
owned by Damon and his wife. The company
also is working through a joint venture
to develop packaging and distribution
facilities in Mexico.
