Balmy business for Carmex
At the next Icons in Business event, leaders from the popular balm brand will share insight into the history, leadership strategies, and growth of the family-owned and operated Wisconsin company.
You may not think much about Carmex until you need it — when that little jar with the trademark yellow lid, or much more recently tube or stick, gets dug out from the bottom of a coat pocket or purse to be quickly applied before retreating to its resting place until summoned again by chapped lips — but the iconic brand has a rich history Wisconsin history.
That story will be shared at the next Icons in Business event, Friday, March 16, when Carmex/Carma Laboratories President Paul Woelbing and COO Rich Simonson will share insight into the history, leadership strategies, and growth of the family-owned and operated Wisconsin company.
In advance of that presentation, IB spoke to Woelbing to get the inside scoop on this unique brand.
In 1937, Paul’s grandfather, Alfred Woelbing, started production of a cold-sore remedy in his kitchen, pouring the concoction into what would become the iconic yellow-lidded jars Carmex is known for. His sales method? Visiting pharmacies one by one. That humble approach paid off. Just 20 years later, Alfred’s kitchen could no longer handle the demand for Carmex thanks to its growing popularity through positive word-of-mouth advertising. Production moved to Wauwatosa, but it wasn’t until the 1970s when the family business again outgrew production that the company would employ a mechanical pouring process at its current Franklin facility to keep up with consumer demand, selling its 1 billionth jar in 2008.
Carmex’s beginnings in that kitchen, though, were much more understated.
“My great grandparents lived on a farm in Mequon, a suburb north of Milwaukee,” says Paul Woelbing. While now a bedroom community for Milwaukee, at the early part of the 20th century Mequon was still quite a distance from the city. “If you needed something you often made it yourself. My great grandparents, like many rural people at that time, made soap, salves, and ointments needed by the family and the animals.
“Because of this my grandfather had a good working knowledge of how to combine various ingredients to make things,” Woelbing adds. “When I asked my grandfather how long it took him to create Carmex he said, ‘About two weeks,’ and he compounded it specifically to help with his own dry, chapped lips and fever blisters.”
For the greater part of its history, Carmex maintained its humble roots. The company’s only advertising was the recommendations passed from one satisfied customer to another.
“When my grandfather incorporated Carma Laboratories in 1937, his main concern was simply to make enough income to support his family,” notes Woelbing. “He wasn’t interested in the complexities inherent in running a large business. As such, our growth for the better part of 70 years came strictly from satisfied customers sharing their positive experiences when using Carmex. This was still the case when I joined the business in 1991. Our average growth rate at that time was about 8% per year.”
A big advantage of word-of-mouth is that customers obtained this way tend to be very loyal, says Woelbing. The down side is that it can be slow.
“It took us the better part of two generations for Carma Laboratories to become of any significant size,” states Woelbing. “The world of consumer products is very different now from what it was decades ago. Through the 1960s many drug stores were still small, independently owned businesses. If you could convince the owner to take your product you had time to develop a following. Now, 80% of the over-the-counter products are sold by four or five large chains. While this is much more efficient for a manufacturer to distribute its products, you are lucky if you have a year to demonstrate sales to the buyer. If you don’t produce sales, your products will quickly be replaced by something else.”
Because of this reality, Woelbing says Carma Labs had to learn how to truly market its product for the first time. The company now has its own marketing department and it’s learning how to advertise and use research to develop new products.
Despite generations of brand loyalty, Carmex also recognized a new to modernize its marketing approach because of an increasingly competitive marketplace.
“The lip balm category is as competitive as it’s ever been,” says Woelbing. “The rise of EOS and Burt’s Bees has really awoken all brands in the set. They have highlighted a number of insights that were not being met by other brands and products, including Carmex.”
According to Woelbing, retailers, and more specifically category buyers, have many more choices of what brand, type, or flavor to put on the shelf. Every year is a new battle to defend current shelf space and present new innovation for winning more space. Like any company that supplies a product or a service, Carmex has to innovate, learn, and execute, ultimately evolving to meet the every changing needs of the customer — retailer and user.
“While we could talk for hours on each of these attributes, the real key is to build a deep culture of improvement with a team of dedicated, competent professionals to face any challenge to the business, both today and in the future,” notes Woelbing.
Thankfully for Carmex, the brand already stands out.
“The main thing that is recognizable about our packaging is the distinctive color yellow that we use on all Carmex products,” says Woelbing. “My grandfather chose to use this color because he liked it and recognized that it stood out on a store shelf. The jars were our first and only form of packaging for the first 50 years. Our original jar formula is softer with a lower melting temperature than many other lip balms, and jars were the most obvious and most easily obtainable form of packaging for my grandfather when he started.
“The squeeze tubes, now our biggest seller, were introduced in 1988 in response to customer requests for a form of packaging that you wouldn’t have to apply with a finger,” Woelbing continues. “Similarly, the sticks were introduced in 1999 in response to our customers asking for both this form of packaging and a product with sunscreen.”
Carmex might also have another thing going for it, though it’s more perception than reality.
Woelbing is well aware of the long-held rumor among some Carmex users that the product has “addictive” qualities. Asked about it directly, he’s unequivocal in his response.
“This is a rumor that we hear frequently, especially during winter — our busiest time of the year,” Woelbing begins. “We only use the best ingredients, like Ghanaian cocoa butter, natural menthol, and lanolin from Marino sheep from Australia and New Zealand. The quality of the ingredients combined into our unique formula adds up to a product that works exceptionally well. I can assure you that Carmex is not addictive and that all of the ingredients are listed on the label as per FDA requirements.
“When people claim to be addicted to Carmex, what they are experiencing is the natural tendency for one to repeatedly use something that is effective and/or pleasurable,” Woelbing adds. “For example, I say that I am addicted to eating peanut M&Ms and collecting antique motorcycles.”
To hear more about Carmex and the company’s leadership strategies and growth, make plans to attend the next Icons in Business event on Friday, March 16, from 8–9:30 a.m., at the Madison Concourse Hotel. For more information and to register, visit IBMadison.com/Icons.
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