P.F. Candle Co.’s Made in America strategy (RERUN)

0:09Hello and welcome to the Modern Retail Podcast where we discuss the ways retail is changing and modernizing. I am senior reporter Gabi Barkho and happy July 4th. We are on a brief summer hiatus for the next two weeks and with the holiday this year focused on America's 250th anniversary, we wanted to re-air an episode featuring PF Candle Company, which produces its candles in Los Angeles. My co-host Melissa Daniels and I talked to founders Kristen Pumphrey and Thomas Neuberger about the advantages and the challenges of making products here in the USA. At the time, the Made in America debate was heavily tied to importing tariffs, But interest in domestically made products is still high, which makes the conversation a worthwhile revisit.

1:05Melissa Daniels:One of the biggest stories in retail this year is the Trump administration's rollout of higher tariffs on imports from other countries. And this is defining so much of retail brands' operation these days. While the changes are purported to support domestic manufacturing, even brands that are made in America are not immune from the effects of tariff policy. That's because so many components might come from other countries. Spray pumps, glass jars, other packaging materials just aren't made here, and there's a whole other kind of trickle-down effects in the supply chain. Today to talk about all this, we have Kristen Pumphrey and Thomas Neuberger from PF Candle Co.

1:45Melissa Daniels:Hi, Thomas. Hi, Kristen. Yeah, thank you for having us. Thanks for having us. And we're here still with my co-host, Gabby Barco. Gabby, how are you doing today? I'm good. I'm excited to talk about candles. I mean, what better topic? Yes, many people may know PF Candle Co. from their signature amber jars, and their candles are made right here in Southern California. But what we've learned at Modern Retail from our reporting and research on companies being affected by tariffs is that even companies who make their products here are not immune from tariffs. So let's get into a little background for those who aren't associated with PF Candle Co.

2:23Melissa Daniels:yet. But, you know, why did you decide to make your candles here? How did you become a business that manufactures candles in the U.S.? PF really grew out of just an Etsy shop and craft fairs. So I definitely consider us a manufacturer now, but in the beginning, we were just makers. And I started it on my kitchen stovetop. Tom came on board about five years after I started it and just started to help me scale it. And that's when we really turned into a manufacturer. But why we keep it here, I would say, is we can control the cost and having an excessively priced, like, nice candle is really, really important to us.

3:00And that's a huge component, but also the quality is really important too. We watch that quality so closely and we know that we can stand behind our product. We're not just sort of selling a brand, we're selling the whole product. Yeah, well, let's just dive in, I think. For the past seven months, things have been crazy for a lot of brands. Obviously, for those importing from China specifically, they've been really hard hit. But today we're going to be talking about, you know, how you've specifically felt it, at least in relation to one specific product that you were trying to launch. Right. Do you want to tell us a little bit about the mini candles and some of the troubles you ran through?

3:41Yeah, I mean, the last seven months have been nothing but chaos. It's really hard to plan anything, but we do have a very specific story about how that chaos affected us. So I think Kristen ideated this new product last fall, maybe. I think we were doing comp shopping, shopping around. Last holiday season. And she was like, oh, you know what our customers would really like? They would like something really giftable, a combo pack to where you can buy this thing and you can give it to someone. So our development teams are ideating it. Last year, we came up with our suppliers and everything. And then Liberation.

4:17Actually, it may have been before Liberation Day. I think one of the first things Trump may have done was to increase tariffs on metals. I think it may have been like steel. So one of the candles were actually going to be made out of metal. They're tin. So the price was going to double for us. So a product that we were aiming to sell for$30 or so was going to end up being$60. And when that was brought to Kristen, I don't know, in like March, late March or so, she was like, oh, no, no, no, no. That's not a price we want to sell for that's so much more expensive than anything else we sell it's not giftable it makes it almost like why wouldn't someone just buy a regular candle at that point why would they do that so what we had to do at that point was the development team went back to the drawing board they realized like oh we used to make these mini candles that we've been trying to discontinue for years one of the reasons we don't is because we have a lot of supply of the glass jar for it so like so instead of doing a tin jar why don't why don't we do it in glass so we have the material So they made the switch to the glass and we were moving all smoothly.

5:20And then one day my AP team flagged that we were going to be ordering a bunch of packaging supplies from a vendor in China. And I was like, whoa, I think this may have been April. So it was right after Liberation Day. And I was like, how are we going to do this? Aren't the effective tariffs like 120 % on this? They're like, no, no, no, it's fine. It's still cheaper than if we get a domestic. And I'm like, oh, you know, maybe it is, but I don't know, because five days ago, the pricing was different. And then so we argued about it for a bit because I was like, you know, I'd be willing to pay more money just to make sure that we knew what the product pricing was going to be.

5:59But I think what ended up happening was that there was a stay. The U.S. administration in China had an agreement to where they would lower tariffs from that above 100 percent range to, I think, in the 40 percent range. And at that point, we're like, well, this is cheaper. And if we can get it not only on the boat, but to us before this ends, because that's how tariffs work is it's the effective tariff rate when it actually reaches the port, not when it leaves or before it leaves. But at that point in time, which over the past like seven months, it's been eight different rates. So you really don't know what it's going to be at any time.

6:36So we ended up going forward with that and getting it shipped through at an OK rate. So there's a lot to unpack there.

6:44Melissa Daniels:And I feel like it kind of does exemplify how there's so much that has been in flux, where even if you think you have in front of you a plan on what you're going to do, something could change that all the next day. So do you go ahead with that plan? Do you wait and see what happens? Just a lot of uncertainty. I'm wondering if there's anything that you sort of learned through that process. It sounds like you and your team had a lot of dialogue about this. Just wondering if there's anything you can kind of share for folks who maybe are also running brands or just sort of interested in these kind of discussions.

7:19Melissa Daniels:How do you orient yourselves in these discussions where there is so much uncertainty? That's hard because I think with this in particular, we knew we could make it work. with another vessel that we had loaded on a ship as the effective tariffs were in over the 100%. We were just gambling. We didn't know what to do at that point. We just gambled like, hey, it's rolled the dice. What is it going to be, one price or another? So intellectually, I'm not sure how to plan for that. I think, and maybe this may be the intention of all this, but if you can find a domestic supplier that's competitive, you know your pricing will stay the same, whereas otherwise it's complete chaos and you're just you can buy a bunch at once and try and get it in i know i know that's what a lot of large uh companies are doing if if you can afford to buy a half a year's worth of inventory which is really hard uh you'd have to have access to a lot of capital to do that then then maybe you can you have an idea of what it's going to be right then and there but again like let's just say someone had done that during their initial liberation day tariffs, the reciprocal tariffs.

8:26And then a month later, they were reduced by like over half and maybe they had overpaid because they weren't sure what it's going to be. The uncertainty has been the hardest part as being a small independently owned business, because if you can't predict, you don't know how to run it. But beyond just component prices going up and sort of having to redirect where things are coming from, one of the biggest things that I know we'll never get back is that bandwidth that we spent. I'm like, I never want to talk about tariffs again. I'll talk right now I'll talk about tariffs, but I feel like it consumed so much of our energy and our actual time where it really took time away from our production planning process and getting prepped for the rest of the year.

9:04So now we're here in July and we're really trying to play catch up on just getting ready for the holiday season because that's our big candle time. So that's sort of been the challenge and just not looking back, just really thinking of yourself like you're going down a river, your river rafting, and some of the rocks may have moved, there might have been a big landslide, but you essentially have to just figure out how to navigate it and not get so stuck on the frustration, right? Because that can really hold you in place. Yeah, I would add to that. And this is, I don't know, a good advice to give to someone.

9:37But I think the idea of not focusing too much on it, because so much of it is unknowable and chaotic, that it's really hard to make any intellectual plans on. I know we've had conversations with our team here where they're like focused on, they're like, well, it's gone up 50 % over the day. And I'm like, yeah, but then like in a week, it's going to go down 50%. We don't know. And so we're spending a lot of time on this uncontrollable aspect of it going up and down when we could be focusing on the things we can't control here. Thomas, you mentioned sourcing, and I feel like you really get in the weeds here.

10:10So maybe this is a good time to transition to talk about what you do source domestically. And I think you were sort of hinting at the fact that it could be an advantage in some cases. But yeah, do you want to talk about some of the other components and why the stability at the very least domestically helps with planning? Because I know as we speak, all of this is happening with the backdrop of trying to plan for the fall and the holidays, which is, I call it candle Super Bowl season. But yeah, I mean, I guess, yeah, if you can give us some color on that, that would be great. Yeah, I think in terms of our materials and things, we sourced here from the US, I think, as a matter of necessity.

10:53We started very small. When Kristen was making, I don't know, what were you making, like 10 candles at a time? This made no sense for her to go and source from a major supplier over in China and get 10 ,000 jars over here. That just didn't make any sense. A higher price over here was fine because the MOQs, the minimum order quantities made sense for us at that time. So we have a mix. And as we've grown, we've diversified where we get things. So the wax is domestically sourced from here in the US. It's soybeans grown in the Midwest and they hydrogenated in Louisville. We actually visited their factory.

11:29It's really cool. The wicks are made domestically, though the cotton is probably sourced from wherever they can get cotton from at the time. It's primarily our vessels and packaging that we get imported from abroad. But that isn't always the case. It's kind of just circumstance when we need something and what we need depends on what we'll end up getting for. So let's just say our classic straight-sided amber, nine-ounce amber jar that we use. If we were to get it domestically sourced, there's a couple of companies who run amber like that color. They'll run it like once a year and they'll do that one style.

12:02And so if we were going to buy like a year supply of that jar and store it in a warehouse somewhere. We could source from domestically all the time, but we try to keep our money out of inventory. So we're always sourcing from whoever we can get it from at the time. So it moves all around. And China or Taiwan tend to make amber year round. So we can always kind of just move it around. So it's really the packaging just when we can get it at what price is competitive and I was so surprised to understand how much packaging is actually done now in China and internationally. We didn't really run into this issue until we released our luxury line, the Hi-Fi line, last year.

12:43And it comes in boxes because our standard jars, they're not sold in boxes. And the gift box industry is really overseas now. And there's also little components like incense sticks. They just do not make incense sticks in the U.S. So it's not even a matter of, oh, couldn't you find a U.S. supplier? It's just not made. here. So that's one of those little things you don't necessarily think about, but so many of our other components are sourced here or working with middlemen here in the US.

13:10Melissa Daniels:So that's been an interesting, that's definitely been interesting to see is the middlemen has been interesting too, because some of them are sourcing internationally, but they're based here. And occasionally you can get locked in pricing with them. I imagine having that kind of locked in pricing really helps with your budgeting then because you don't have that necessarily like unknown extra cost because the tariff kicked in for this particular type of cardboard that I use for this packaging that I know I'm going to be wanting to order in Q3. If you can lock that in through there, great. Yeah. Yeah.

13:46I was going to say, so you can sometimes find, I know this is probably less for complete goods, but for materials, like a component of something you're making, you can generally find a person who they'll go out and they'll buy like a year supply of it for you, lock in a price, warehouse that supply, and then sell to you for a different price. So what they're doing is they're buying a year, a year supply of, let's just say jars. They're getting an amazing price because they're buying on a half a million jars or something. And they import it in, they keep it in a warehouse, and then they double the price for you, which ends up being good for you, but it does lock in the price for a good amount of time.

14:21That's something we do to keep our prices similar.

14:24Melissa Daniels:And this kind of makes me think about what we were sort of chatting about a little earlier too. And that's that even if something is already in the U.S., it still might be affected by these other discussions. Because I imagine those folks who have all those jars to sell might be in a pretty good place if there's other brands that want glass jars and don't want to buy them overseas right now. That there's a sort of a supply and demand effect that happens with the goods, even if they are not affected by tariffs directly. That's absolutely true. We have pretty good relationships with most of our vendor partners.

14:58So that's sort of the key leverage there is knowing your partners and knowing that they're going to save something for you. But I remember being a small business. There was this one winter where I was just producing candles as fast as I could and selling them as fast as I could. This must've been like 2014, 2015. And I'd be on the phone all the time. Can you get me more jars? And that's when I started developing those personal relationships with the account rep, because I'd actually get on the horn in this day and age, you know, and I'd say, look, I just need like 240 jars. That's all I need. I got you.

15:31I'm going to go out to the warehouse and earmark them for you. And that's when that relationship can really make a difference. Yeah, that's actually a good time to maybe start talking about your domestic assembly or actual production operation. You are made in California where you guys are based. So why don't you just tell us a little bit about, you know, once you do source everything, what kind of, I guess, advantages you do have, you know, to kind of just, it's not all doom and gloom. There are some upsides, of course, to this. I know Made in America, quote unquote, has become this sort of hot button topic recently, but it sounds like you're trying to lean into it a little bit more.

16:13Yeah, Made in California in particular has always been such a core ethos of what PF stands for. It really aligns with our values. It speaks to the design that we have. We use the inspiration of California scents within our fragrances. It speaks to, you know, when it evokes this image of environmentalism and outdoor lifestyle. So we've really used that at our branding always. And what we noticed is that people have been searching and we've been seeing keywords in particular for wholesale of made in the USA candles. And for me, I think it really comes from a place of the certainty aspect because they want to know that they can get a candle.

16:52They know how much it's going to cost when it lands for their shop, but they're going to be able to resell it. So we started to see that tick up on wholesale and also Amazon. So we integrated keywords of not only made in California, but made in the USA and started putting that on all of our pages. And it was this moment of, okay, made in the USA, here we go. How's it going to go? But But I definitely think in particular on Amazon, it's helped people find us because you find a lot of sort of the drop ship style knockoff candles on there. And that's been a benefit. Yeah. I mean, speaking of that, I actually wanted to ask you about, you know, how does your unique supply chain and the fact that you do own a lot of the production, you literally oversee it firsthand.

17:34And has there been any other impact to, let's say like, you know, an account like a retail partner where you can supply them because maybe you're one of the brands that do have a product on hand right now? We did send emails out to our major accounts because major accounts basically in the past couple of years have really been looking for cost reductions. And we've seen a lot of them go more the white label route. This is sort of like large retailers, nationwide retailers. And we just sent them emails and just said, hey, if you need a quick turn on candles, rather than buying this amount of your supply, we're still here and we're ready for you.

18:13And I think Tom can speak to some of the potential upside. I don't think like retailers want to get rid of their just-in-time supply chains that they have. Like, I know that they've had to buy, like I said earlier, maybe a half a year supply of inventory so that they can resell. But the amount of capital that are required for a large retail like Target or something to buy, like, I don't know, I was thinking about it. Like in the trillions of dollars to buy a year supply of inventory, there's no way that a store like that has access to that amount of money to buy that amount of inventory. So at some point, they're going to need to return to the ability to just get inventory as they need it because it allows their business to run more smoothly.

18:55So one of the advantages we have is we have a stable price. We're here. People know our price. Our turnarounds are pretty good. We've always worked really hard to make sure that our operations were pretty solid, that we can fulfill orders for people within weeks or days, even depending on what it is, because we keep inventory in hand. We try to project out a certain amount of time so we can turn around pretty quick. so we're hoping that as a company who may have transitioned internationally because consumers have become cost sensitive that they may do the same thing and come domestically as we have because that way they know what the prices are that it's stable that they don't have to figure out the hey i'm going to bring this product and it's going to become a hit but then all of a sudden it's going to be five times more expensive because all of a sudden the price changed on me without any ability to control that.

19:45So we're thinking that maybe with the larger accounts that we become more competitive with the lower price items. That's our hope. One of our big accounts, Urban Outfitters, we've worked with them for over a decade now. And they were one of the accounts that really helped put PF on the map. We had an incredible relationship with them where they carried our classic line for years. But obviously trends change and they're bringing in new things and bringing in white label stuff. But they've actually reached out to us to manufacture some of their white label stuff. And it's a special project that'll be launching this fall, but that account has really been reinvigorated.

20:19And I definitely, although they haven't said it directly, assume that tariffs might be partially sort of, I guess in our case to think, where they're like, oh, we know the supplier can turn it around this amount of time, you know? So there's definitely that. Yeah, and I think another upside is though we're not an inexpensive candle, we're definitely not on like the par of the most expensive luxury candles or things like that. So people who may be buying those candles and those prices may increase because some of the luxury candles are made in France. And I know that's part of the tariffs that may go up in August or so.

20:52They may be looking at us as an alternative to keep their prices stable because, you know, we do care a lot about quality. We do make a good candle, but we've always wanted to make sure we do it at an accessible price, which is one of the reasons why we do control all of our own manufacturing. Yeah, from a marketing standpoint, we've really, really leaned into the craftsmanship aspect, to the quality aspect. to sort of send a message out to those luxury consumers that might be, their wallets are probably hurting too. Like the economy has been really tough for everybody. So there's potential that they may then sort of start buying PF to watch their wallet a bit.

21:24And that's also why we released the HiFi line is that we understood with the luxury candle market in particular being this white space that we didn't have yet. We don't have a ton of luxury candle customers. We're really just for people to burn every day, which is pretty cool. We understood there's still room to grow. Yeah. And one of the commitments that we've had internally we knew was the winning message here is that we don't plan on increasing our prices because even if we do see increases, it's going to be on a component, which means it's only a small amount of the price that would be increased.

21:55So our goal is to figure out how to lower prices, lower our costs other places so that we can keep our prices the same. Because I know as a consumer myself, when I hear brands like, oh, we're raising our prices tomorrow, double in anticipation of the tariffs. I'm like, well, you know, your stuff is already expensive. Why are you doubling the price? I don't know if I can afford that. So I'm being selfish and thinking about what I'd want. I was going to say, he's thinking about his bike tires. Yeah, I'm thinking about bikes in particular because a lot of bikes are made in Taiwan and China. And a lot of the brands just get them imported and are already really expensive.

22:28So if they're going to double the price, they're unaffordable. Yeah, I think speaking of the customers, yeah, this idea that you want to stay a staple for them as a candle brand. Maybe you can tell us a little bit about what has been some of the reaction from customers recently. I know you have the Made in California moniker across a lot of your branding, but it sounds like maybe you're testing some Made in America marketing or at least language, even though I think, Kristen, I think you were a little bit wary about it or thought maybe it could be used as a dog whistle in this political climate.

23:10Yeah, it's so silly that Made in America sometimes makes people's hackles go up because they think it's some sort of dog whistle. Like, you're trying to say your values. I'm like, you know, we are Made in America. We support American jobs. And we, especially here in Los Angeles, we really pride ourselves that we have a strong minimum wage when you come into our company. You know, our base wage is$23 an hour, and we offer fully subsidized health care. So that's like, we're trying to build good jobs and potential careers for people. And I think there's, I just said, there's nothing to be scared of, of saying it's what we're doing.

23:47And if people want to kind of put their own interpretation on it, that's up to them. But there's no bald eagle coming down like, when we did it, although we did, we definitely, we had a laugh as we put Made in America on there. I understand the version that some people may have been Made in America because certain type of brands leaned into it. But I feel like where we came from and where we built our company from, it was all about being local. And if you're supporting local, you're supporting America because that is what's local. So they mean the same thing at the end of the day. If you're someone who's supporting local jobs, supporting local businesses, you're supporting American-made.

24:24I mean, it's all the same thing. Yeah, it's a little silly. It's become a bit of a charged statement. Yeah. I'm wondering if you've seen in your data, just in the e-commerce, whether your customers have been searching for it. Has anything changed on that end where you actually are seeing the insights there? That's such a good question. I don't think that I followed up to see, I know that our web traffic has stayed really strong and consistent and we definitely put those changes into place a couple months ago. So I think they would be correlated. And then the bigger place that we put that as well was putting it on FAIR, the wholesale marketplace that we work with to ensure people that they understand.