Stepforth hives: birds of a feather get stuck together in a honey jam

RMA Journal, The, Oct, 2004 by Dev Strischek

In the best of all loans, inventory is never defective and collateral holds value, commercial real estate retains its value during lengthy periods on the market, and personal circumstances do not affect guarantor strength. Unfortunately, all these are sticking points in this spilled milk about a honey distributor. Happy Halloween!

Despite the mist enshrouding her car and the rest of Stepforth, Illinois, senior lender Irene LeVan stole a glance through her rear window. She wanted another glimpse of an eerie opening in the sky that revealed October's second full moon. Irene smiled and drove more confidently into the night, convinced that opportunities like Stepforth Hives really did occur only once in a blue moon. She marveled at the honey of a $2 million deal one of her lenders, Buck Wheatley, had presented. Buck had told her how far Stepforth Hives had come in the three years following a near-fatal car accident involving its chairman, Warner Hartless, and president, Mark Markoff. Their wives and co-owners, Marnie Hartless and Rebecca Markoff, had stepped in to save the company, Buck had reported, and in the process created its blueprint for success.

The Making of Stepforth Hives

Warner and Mark's original plan had been to produce honey with a new breed of aggressive, quick-maturing bees developed by Warner. Theirs had been a time-consuming and somewhat introverted existence up to that point, as they strove to develop their product. Anyone who had seen Ulee's Gold would understand the lifestyle.

One rainy afternoon, Warner and Mark were moving the hives to an alfalfa hay farm when a beer truck coming from the opposite direction careened across the slick road, smashing into Mark's van and flipping it over. Trapped inside, Warner and Mark lay with multiple fractures, attacked repeatedly by the agitated bees.

As their husbands recuperated, Marnie and Rebecca decided to abandon beekeeping and shift to processing and distributing honey. They quickly farmed out the hives to local apiaries and began to purchase raw honey from Midwestern beekeepers. Warner and Mark, meanwhile, couldn't imagine how to fill the suddenly empty hours, so Marnie and Rebecca brought home dozens of Tom Peters and Dale Carnegie tapes. With nothing else to do, Warner and Mark listened. And learned. Emerging just a few months later, the two men gamely assumed the sales and marketing responsibilities, leaving the top management roles to their wives. The hours of listening to motivational tapes had worked, and the two were a hit on the road, able to "sell honey to the bees themselves," as Marnie and Rebecca often remarked.

Solid Credentials

Irene was even more impressed by the four principals' diverse backgrounds and broad experiences. Just a year after receiving her veterinary medicine degree, Marnie left a promising small-animal practice to manage a Minneapolis pet store chain's public relations department, which was soon spun off to a genetic foods research company. That's where Marnie met Warner Hartless, an entomologist whose father encouraged his apiculture hobby on the family's game bird farm near Billings, Montana. When not tending to grouse and pheasant, Warner learned the care and feeding of apis mellifera, the honeybee.

"To their disappointment, the economy and office politics reduced their respective careers, and the following spring they moved back to the tall prairie country around Stepforth, about the same time Rebecca and Mark Markoff got there. Rebecca had been raised on the shores of Lake Okeechobee, Florida, where her grandparents managed a large dairy operation. Soured on the milk business, Rebecca buttered up a few Florida citrus industry lobbyists to win some scholarships that financed her organic chemistry doctorate. She began to pay back the industry by taking a research position with the citrus division of the state's agricultural extension service. Orange groves had a symbiotic relationship with local beehivers, whose bees pollinated Florida's vast citrus acreages.

As a guest speaker on citrus-honey interdependency at a natural-foods industry conference, Rebecca met Mark, a patent attorney from Duluth. Mark was an enthusiastic tropical birdwatcher who represented a Des Moines apiary supply house. After they married, Rebecca quickly ascertained the region's honey potential, and when she saw a notice for the sale of a well-established apiary near Stepforth, the newlyweds jumped at the chance to become apiarists in the midst of some of the nation's best honey country. At a National Honey Board conference in Stepforth a few months later, Mark and Rebecca met Warner and Marnie, and they decided to merge their apicultural interests.

The Making of the Deal

Stepforth Trust Bank had some experience with the honey trade, but until Stepforth Hives, the area's producers had been relatively small operators and borrowers. For years, honey had been a low-priced commodity, and beekeepers were lucky to get 50 cents a pound. A few years ago, nationwide drought and honey's reputation as a natural health food pushed prices to $1.50 a pound, and connoisseurs introduced considerable gourmet differentiation into the product. Besides the established orange blossom, clover, and tupelo honey flavors, more exotic varieties emerged, such as honey flavored with hot pepper, raspberry, orange, and lemon. Wholesalers typically ship honey in 55-gallon drums, and the contents sell at around $1,000 per drum.