By GREGORY ZELLER //
From the Close Call file comes the story of American Culture, a Huntington Station hair-care manufacturer that nearly gave Long Island the brush-off.
Cofounder Louis Guarneri didn’t want to leave LI. He’s the third of what he hopes will be four (at least) generations in the beauty business, all on Long Island. He met his wife and cofounder, Doreen, when they were 13, and they dated throughout their years at Cold Spring Harbor High School. They even attended BOCES beauty school together in Northport.
And every move made by the duo, ever since the then-19-year-old partners launched their first hair-care distributorship, has been on the Island.
But by 2014, declining margins and rising overhead had pushed the entrepreneurs to the brink. If American Culture – a 2001 manufacturing startup that supplanted their original distributorship – was to survive, it would take more than a comb-over. And it seemed most likely it would happen off Long Island.
Instead, this tale has a silky smooth finish, thanks primarily to a grant from the nonprofit Workforce Development Institute that turned what could have been a very bad hair day for the Long Island economy into a stylish success.
It all started with Guarneri’s father’s father, who started a Long Island distributorship selling established beauty brands. Guarneri’s father entered and eventually took over the Bohemia-based family business, known then as Salon Essentials.
As graduation from CSHS approached, Guarneri prepared for his turn. But before he ascended to the throne, his father accepted a buyout offer from multinational kingpin Proctor & Gamble.
Determined to establish themselves in the beauty biz, Guarneri and his then-girlfriend launched their own distributorship, a “modernized and specialized” version of what his patriarchs had done, he noted, focused on two “small, up-and-coming” brands.
The first, Minnesota-based Scruples Hair Care, would grow into a preeminent supplier of American salons. The second was a masterstroke of smart planning and good fortune: Artec Hair Products was a true diamond in the rough, and in the seven years the Guarneris distributed the Manhasset-based company’s product line, Artec grew to over $4.7 million in annual revenues.
The brand did so well, in fact, that French titan L’Oreal Paris gobbled it up – and terminated all existing contracts, including Artec’s distribution deal with the Guarneris.
That massive disappointment quickly became a defining moment, Guarneri noted.
“I said that day that I would never build a brand for another person and end up losing it,” he told Innovate LI. “I said, ‘We’re going to become manufacturers,’ and we did.”
The couple sold the remains of their distributorship, “mortgaged everything we owned” and launched Deer Park-based American Culture, Guarneri added. Doreen was on board – “When it comes to business,” her husband noted, “we are always in agreement” – and soon the couple was managing their own hair-care product manufacturer.
At first, American Culture outsourced all manufacturing to third-party producers; its Deer Park facility was used exclusively for warehousing, shipping and administration. Soon the husband-and-wife duo were shipping Simply Smooth and other proprietary brands nationally, and eventually to overseas salons.
But economic and production realities were catching up fast, and by late 2014 the numbers were downright daunting. The biggest problem, according to Guarneri, was bottling: By then located in Brentwood, American Culture had its own bottling operations, but outsourced its labeling – and that required the company to keep an enormous store of empty bottles in stock.
“The best pricing you can get with bottles is basically 25,000 pieces a shot,” Guarneri noted. “So I would have to buy 25,000 moisturizing shampoo bottles and 25,000 for smoothing shampoo, and almost all of our space was just storing empty bottles.”
With tax-incentive packages rolling in from other states, it looked very much like American Culture’s days on Long Island were numbered. The couple “absolutely considered” breaking camp, Guarneri said.
But then the Workforce Development Institute swooped in with a save: an equipment grant that helped American Culture purchase a $30,000 silk-screening setup, allowing the company to label its own bottles and completely alter its margins.
The machinery, purchased from a Canadian distributor, meant the company could keep far fewer empties in stock, and that meant it needed less space. American Culture relocated from its 35,000-square-foot Brentwood facility to its current 22,000-square-foot Huntington Station digs, where 15 full-time employees handle everything from silk-screening and bottling – the products are still mixed elsewhere and arrive in Huntington Station “ready to pour,” Guarneri noted – to distribution and administration.
All told, including training and ancillary materials, the cofounder estimates a $55,000 buy-in to get the silk-screening machines up and running, an investment that has “really helped streamline our business.”
“We can make more product in less space,” Guarneri said. “Now I can buy 25,000 blank bottles and label them in whatever increments I want.”
Rosalie Drago, the Workforce Development Institute’s Huntington-based regional director, said the American Culture grant – the WDI prefers not to reveal dollar amounts – was an ideal fit for the statewide nonprofit’s jobs-creation mission.
“Helping local, home-grown businesses increase efficiency and expand their capacity is integral to growing jobs,” Drago noted. “WDI is doing that one community and one region at a time.”
In addition to reducing American Culture’s storage-space needs and increasing its working capital, the WDI grant created a new vertical for the company: bottling private-label products for third-party manufacturers. American Culture has produced products for six different companies over the past year, Guarneri noted, including a former salon owner who’s started her own Long Island-based hair-care product company, just like Louis and Doreen did over a decade ago.
Now the cofounders are considering further machine purchases, with an eye on expanding international sales to include “master distributors” across Europe, according to Guarneri.
“The WDI grant was the difference between our business barely getting by, and probably relocating, and growing right here,” he noted. “I can’t even explain how important it was.
“Now, if I can bring in more kettles and bottle more products in-house, that will allow us to sell more internationally,” Guarneri added. “In the same way I didn’t even know [the WDI] existed, I’m hoping to learn about other organizations and opportunities. The faster we can bring those machines in, the quicker we can grow.”