Raining Rose soaking up lip balm demand

Raining Rose's production facility in Cedar Rapids.

By Dave DeWitte

CEDAR RAPIDS—When Raining Rose Inc. was consolidating into its new $12 million facility two years ago, the day when more space would be needed seemed far, far away.

Today, the producer of natural lip balm and other personal care products for the private-label market has nearly filled its 120,000-square-foot space at 100 30th St. SE, and is looking to lease about 50,000 square feet of additional warehouse space to provide a cushion for incoming inventory and outgoing product.

Supplying natural lip balm products that its customers are proud to sell under their own brand names or give to customers as promotional gifts has become a profitable niche for Raining Rose, according to CEO and owner Chuck Hammond.

Sales have grown by a factor of 50 times since Mr. Hammond and his late partner, Art Christoffersen, acquired the business from founder Steve Shriver in January 2003.

“We’re still growing at a crazy clip,” said Mr. Hammond, who was named the Iowa Small Business Person of the Year by the U.S. Small Business Administration in 2013.

Sales have grown have grown 125 percent in the past two years alone, which would rank the company 7th on the CBJ’s list of Fastest Growing Companies.

“One of our biggest challenges has been hiring enough people,” Mr. Hammond noted.

Despite a regular hiring presence at Corridor job fairs, Mr. Hammond said Raining Rose has still needed the services of about 150 temporary employees to help out its full-time work force of 300.

Demand from some of the company’s largest customers has grown so quickly that efforts to automate some of the more tedious and repetitive production tasks have had limited effect. By the time a new lip balm cylinder capping machine is installed, for instance, the customer’s needs have grown so much that Raining Rose has added temporary workers rather than redeploying or reducing the number of existing workers.

Fueling the factory are natural products such as virgin olive oil, palm oil and beeswax, in addition to natural flavorings ranging from mint to vanilla to cocoa.

“We are told that we are the largest consumer of organic beeswax in the country now,” Mr. Hammond said.

Although most of the ingredients are all natural, the products are still highly regulated by the Food and Drug Administration. FDA labeling requirements on lip balms containing sunscreen have increased so significantly in recent years that the wording can no longer fit on the cylinder of a lip balm, and must instead be placed on a “double-wrap” label sealed to the cylinder that customers can open and read.

One of the big changes Raining Rose made after moving to its new facility from several scattered locations was to add a digital printing press so that it can set up and print its customers’ labels on site. The capability has reduced lead times and allowed Raining Rose to turn around orders faster, which can prove to be the winning difference with some customers who decide late in planning for an event that they want to sell or give away lip balm.

Raining Rose also contract produces products ranging from hand balms to face paint. Mr. Hammond declined to disclose any of the customers’ identities because of contractual arrangements.

“Unfortunately, everybody kind of wants us not to be known,” said Mr. Hammond.

That secrecy is part of the unusual relationship that private label and contract manufacturers have with their customers. The manufacturer must supply a product that meets the customer’s high standards, but won’t get any recognition for it at the consumer level. The customer will only deal with the most trusted suppliers.

“The next person who opens it (the lip balm) is their customer, and it’s not going to have our name on it; it’s going to have their name on it,” Mr. Hammond explained.

Raining Rose has been helping to bring lip balm manufacturing that had been offshored to China back to the United States, Mr. Hammond said. It’s not only the matter of the natural goodness and quality Raining Rose puts into its products, but that natural products made without preservatives don’t ship well over long distances in high-heat conditions.

“We have a natural advantage, being able to provide a safer, more natural product,” he said.

For the Corridor economy, Raining Rose’s growth has helped diversify an industrial base that is concentrated in food, telecommunications and communications technologies, according to Curt Nelson, CEO of the Entrepreneurial Development Center of Iowa.

“It’s a very tangible, human-consumable product,” said Mr. Nelson, whose organization works to help growth-stage companies expand in the state. “That, in itself, is building diversity in our economy, not only growing and adding jobs, but in a new industry. The more of that we have, the more recession-proof we become.”

Raining Rose recently installed its seventh lip balm filling line and its sixth blister-packing machine. The company is contemplating acquisitions, and may eventually open a West Coast location to service accounts in the Asia-Pacific region.

Mr. Hammond says Raining Rose has no major material suppliers in the Corridor, although it does have a strong base of professional service relationships and a fully-engaged workforce that always seems to impress visiting customers.

“I’m one of the few who can really, truthfully, say ‘It’s our people,’” Mr. Hammond said, describing a culture of empowered employees who take pride in what they produce.

When the record flood of 2008 shut Raining Rose down, the company had to work out of seven different locations until it restored its facilities. Nevertheless, by the end of the year, sales were up 7 percent.

“That didn’t just happen,” Mr. Hammond said. “We grew because people gave a damn.”