50% non-drug potential products. That turned many customers away, including Whole Foods Market in Texas, which for some reason chose to only buy our empty capsules at one of their stores. These incidents seem humorous today, but Elwood’s choices clearly pointed NOW in an ethical direction which said that profits would not prevail over doing what is right. LABELS CHANGE COLORS By the end of 1985, it became apparent that if NOW was to satisfy its customers, new labels had to be developed. Until this time, people who bought into NOW’s concept of low prices were the same shoppers that would buy black and white private label brands at grocery stores. This market was very limited because many people perceive that a low quality label is a clear sign of a low quality product. And NOW’s vitamin label was as low quality a label as possible. Elwood had come up with an excellent game plan for making healthy foods and vitamins affordable by selling direct to stores and packaging inexpensively, but marketing proved to be the weak point of his game plan. Every customer clamored for a label that would not be such an embarrassment, one that would at least be a label that would look decent on the shelves. Somehow, after years of resisting spending more money on frivolous things like labels, Elwood agreed to a more expensive label design. The new look took several months to finalize as typesetting was done by an outside firm for the first time. In the past, Elwood considered it a cost advantage to do primitive typesetting in-house, without regard to how most customers viewed the company’s labels. Starting with a clean artistic slate, a local graphic artist came up with a number of designs and we chose one that, at the time, looked as beautiful as could be. (Looking back, the situation seems similar to when a new baby is born and the only one who thinks the child is beautiful is the mother!) This beige label was a huge upgrade over the former black & white, or yellow-orange tandem that filled few health food store shelves. Most customers reacted positively, though the memory of one sticks out more than them all. Ina Walker, of Sunflower Seed in Chicago, said that the new label was almost as ugly as the old one and that was just fine with her. She had made it a practice to sell the NOW brand BECAUSE the labels were so ugly! She reasoned with customers that since the label was made to look so incredibly ugly, the product inside and the value to customers had to be exceptional. Sounds a bit like the marketing campaign for Smuckers® years later, when we heard – “With a name like Smuckers®, it has to be good.” Anyway, as NOW’s top customer, her response was quite a blow to my pride. But it was a lesson to listen to customers, and next time to ask them what they think before committing to something they don’t want. One final note about this period is one that affects almost all private family businesses. By the end of 1986, it was apparent that NOW would survive and growth seemed certain for years to come. At that time Elwood Richard began estate planning and was told that if he intended to pass the business to the next generation, he would need to “gift” some of his stock to family members to avoid income taxes in the event of his death. In 1986, the business had reasonably little value, so Elwood gave away about 20% of his stock to his children: David, Sharon and Dan within one year. He has continued his giving over the years and this has had a very positive effect besides saving estate taxes. Elwood 58 BEATING THE ODDS
