Got an itch for Gold Bond? Jim Cramer does. CNBC Mad Money host Cramer likes the maker of Gold Bond powder, the ever-growing consumer products company Chattem, or CHTT.
Chattem, founded in 1879 by Zeboim Cartter Patten, takes nearly dead brands or declining brands and rebuilds them. Chattem was mentioned today by Mad Money’s Jim Cramer, who recommended the stock and noted the ever expanding drug store shelf space the company was taking. Based in Chattanooga, Tenn., Chattem is one of the growing numbers of companies that are reviving dead or dying brands that have been neglected by big consumer products companies.
Brands that Chattem has revived include Icy Hot, Selsun Blue, Pamprin, Aspercreme, Flexall and Sun In. The company has also purchased a number of brands from Pfizer and J&J, including Kaopectate, Unisom and Act.
Cramer’s recommendation is a bit late in the game; just two years ago the company was trading at $29 and closed Jan. 7, 2008 at $74.01.
There are a number of great things about Chattem that can be copied by other companies:
- They solve (sometimes embarrassing) problems quickly and safely, with a minimum of effort and cost for consumers. This is the opposite of many big consumer product companies that make difficult and expensive solutions for simple problems.
- They do their marketing with a sense of humor; their commercials are the antithesis of slick. No wonder these products have established cult followings on campus, and lots of hilarious youtube spoofs.
- They do not try to extend their brands too far. Johnson & Johnson has extended the Tylenol brand into colds and sleep. Chattem, meanwhile, knows that Gold Bond=itch, Kaopectate=diarrhea and Unisom=sleep.
- They are vertically integrated. They do commercials in house, without fancy agencies. They make all their products. They use radio and regional TV buys to save money.
- They stay close to home. The company is wedded to Chattanooga. Like P&G in Cincinnati, being close to a town gives the parent company mystique.
- They are not outsourcing all their production.