Portland food manufacturer Eliot’s Nut Butters is shutting down with the last of its inventory running out.
The move comes even as the company had its best sales year ever in 2022. However, it still wasn’t enough to put the small company on more solid ground following a series of costly hiccups with various contract manufacturers.
"The runway we had left undercut what was possible and trying to find another co-packer and create longevity, it seems like to be fair to employees and everyone else that a quick decision had to be made," said founder and CEO Michael Kanter. "Unfortunately, it made the most sense to pull the plug."
The most recent challenge — which proved to be the breaking point — started at the end of last year. The company had a production run set for November with its co-packer, however, that was delayed seven weeks. That meant the company ran out of inventory in December and January and had to stop online sales and cancel retail orders.
The company took a direct hit of $40,000 in losses, Kanter said.
Then, the co-packer demanded upfront payment or another three-week delay. Plus, the co-packer was being acquired and the new owner was increasing production costs 20% to 30%.
“Instead of being in a space to recover we were not able to recover and there was demand for payment immediately,” Kanter said. “It was an inflection point. If we were in stronger capital position or had more backers it would have been an annoying setback. But instead it was (existential).”
Kanter sent an email to customers last week announcing the move. The last production run was in January.
The company had three full-time employees and a handful of part-time help. It made a line of nut butters and started by focusing on “grown-up” flavors like Spicy Thai Peanut Butter. Product was available online and in more than 600 stores.
Last year, it had sales of $400,000.
Over the company’s nine years it has seen capacity constraints and co-packer challenges. In 2020 it was testing a new co-packer that had a recall on products made in its facility, which included Eliot’s. That turned into $50,000 in direct costs to Eliot’s after the co-packer ownership disappeared, Kanter said.
That ordeal killed an equity investment that Kanter was finalizing and sent the company looking for help. That help would eventually turn into an announced sale to Gaithersburg, Maryland-based Verus (OTCQB: VRUS).
However, in 2021, that deal was unwound.
Kanter is in the process of closing down the company. He noted that he is proud of what he built on an initial $5,000. He is unsure what he will do next.
“On one hand I just learned an immense amount in this space,” he said. “And certainly I feel like I have a lot to give. But ultimately I’m trying to figure out the best use of my talent and abilities.”
Food and beverage manufacturing is a tight-knit community in Portland. Between the Covid-19 pandemic and subsequent rising inflation, the community has been tested. Kanter added that he was proud the company made it as long as it did.
“The idea that nine-and-half years later is when we are shutting down, it’s sad for how far we came and that we could never hit our stride, (but) I’ve seen countless companies in Portland come and go in the time we have been around.”
