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August 2005
Building ’Block
By Sara C. Shoemaker
Del-Ray Dermatologicals’ hopes for overexposure of its patented Blue Lizard Australian Suncream through a lucrative deal with Walgreens may have to wait indefinitely.
The distribution agreement, as described by Del-Ray CEO Jeff Bedard, was well publicized in the Tri-Cities media earlier this year, which touted that the company’s flagship product would be within reach of literally millions of customers nationwide. But a management change at the mega-drugstore chain apparently thwarted Del-Ray’s plans to ship upwards of half a million five-ounce bottles of the dermatologist-recommended suncream (the Australian term for sunscreen) to all 4,800 stores throughout 2005.
This was a tall order for the five-year-old Johnson City company with 25 employees and a single production line, but Bedard was ready to take it on. “We had spent much time, effort and money looking to promote with Walgreens, and we did not get the distribution,” he says. He had expected the new business to bring in an additional $2 million in revenue this year.
While this deal is dead for 2005, a Walgreens corporate spokesperson explains that the company maintains an informal vendor relationship with Del-Ray, allowing customers to request Blue Lizard at the pharmacy counter. Plus, Walgreens did add all five suncream types to its Web site in May to “see what happens,” the spokesperson says.
Del-Ray’s mission had never been to compete head-to-head with sunscreen heavyweights Coppertone and Hawaiian Tropic, but rather to promote skin cancer awareness and fill a void in the so-called “disease market.”
With guerilla flare, Del-Ray takes its suncream to events like the annual Nextel Cup Trans- porter Parade at Bristol Motor Speedway to shed some light on the effects of Blue Lizard and to heighten race fans’ awareness of the seriousness of skin cancer. This strategy naturally progressed to Del-Ray’s first NASCAR race sponsorship in June, the Blue Lizard Australian Suncream 200, an entry-level race held at Infineon Raceway in Sonoma, Calif. “We’re stepping into this lightly,” Bedard says, contemplating the addition soon of the Charlotte, Atlanta and Las Vegas tracks. Having Blue Lizard involved with NASCAR aids in the total fan experience, says Graig Hoffman, account manager with Bristol Motor Speedway. “It’s important for us to educate [race fans] about proper skin cancer prevention,” he adds.
Bedard is playing several other cards to grow production of other health care-related products. He says one deal in the works could put his company in the black.
Del-Ray’s parent company, Crown Laboratories, has paired with an unnamed major pharmaceutical company to develop three private label products to be launched in 2006. The details Bedard offers are sketchy, partly to conceal information from the competition, and maybe to avoid too much publicity before making an official announcement. (Bedard is also CEO of Crown, which operates in the same Johnson City facility.)
If all goes well, Crown could see first year revenue of around $4 million, which will “more than triple our contract manufacturing revenues in 2006,” Bedard says. “This agreement along with the tremendous growth of the Blue Lizard brand should bring our revenues to $10.5 million in 2006, up from $2.9 million in 2005.”
The company could grow to 70 employees by the end of next year and eventually expand its facility to 180,000 square feet. But for now, Bedard will get another chance to rekindle the flame with Walgreens corporate officials this summer and discuss a new Blue Lizard distribution plan for 2006.
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