Spice of strife.

• Author: Lamme, Robert
• Position: Rose Spice Inc.

A Wilmington company develops zest for success - and decides to take a bite out of the big boys.

Rose Spice Inc. President Stedman Stevens is a graduate of the Surf and Turf School of Management. After all, how many corporate boards encourage their president to ride waves and play golf on company time every week? "They want me golfing because of the contacts," he explains, "and they want me surfing because I've had some of my best ideas while I was out there thinking about nothing."

Stevens, who eschews ties and likes to quote Hermann Hesse's Siddhartha, is a self-described "wild man of the spice industry." He has boosted employment at Wilmington-based Rose Spice from three to 55 since he took over in 1987. And if he makes the acquisitions he says he will, sales will go from less than $1 million in 1987 to a projected $20 million this year.

Stevens hopes to make his Spice Rack brand of glass-bottled seasonings the Timex of the spice industry - a quality product a notch above plastic-packaged budget spices. Still, at 99 cents each, his spices undercut supermarket competitors by as much as 50%. You'll mostly find them in drugstores, including four of the seven largest chains in the country - CVS, Eckerd, Revco and Walgreen.

So far, he's managed to carve out a tiny niche in the $1.5 billion retail spice market by steering clear of supermarkets, where Sparks, Md.-based McCormick & Co. has 40% of the market, and Sydney, Australia-based Burns, Philp & Co., maker of Durkee seasonings, has 15%.

Those manufacturers pay a "slotting fee" to guarantee their product a place on supermarket shelves. In fact, last year, they waged a slotting-fee war in which McCormick spent about $210 million, more than 10 times Rose Spice's total sales. That's too formidable an entry barrier for Stevens, but he isn't complaining. The larger profits made in grocery stores keep McCormick uninterested in drugstores. "I like being invisible," Stevens says. "We've accomplished a great deal without a lot of publicity - our competitors didn't pay attention to us."

But now Stevens, who turns 38 in April, would like a little notice. About 97% of retail spices are bought in supermarkets, he says, and he'd like more of that business to come his way. With his products in 9,000 drugstores, he figures he's got the distribution channel. "We're going to change the way America buys spices," he declares, sounding like the Don Quixote of garlic powder. Last year, Rose Spice hired a PR firm...