Passion revs up profit

Huntington Beach businessman Tim Miller never expected to get into the car wax business.

“It wasn’t even on the radar,” he says.

Which makes sense, given that Miller is chief executive of Miller Construction, a builder of supermarkets and shopping centers he founded in 1977. He also sits on the board of a local bank.

With those commitments, why would he want to take on such long-established brands as Mother’s and Meguiar’s by entering the car wax industry?

Well, enter it he did, by founding Surf City Garage six years ago. The company markets a full line of premium auto detailing products with such evocative names as Barrier Reef carnauba wax and Pacific Blue wash and wax.

The Surf City brand was released in retail stores two years ago and took off like a muscle car.

“We’ve had 400% growth year over year for the last two years,” Miller said, and he anticipates to exceed that in 2010.

It’s a remarkable success story and came about only because of Miller’s own auto enthusiasm. His vehicle collection, housed at the Surf City Garage, has some 130 muscle cars and vintage vehicles, including his father’s 1958 Chevy pickup, the one in which Miller learned to drive.

His staff restores two cars a year and keeps the collection detailed to the nines. And that’s where car wax comes in. When it came to detailing his meticulously restored cars, Miller found that the available products weren’t really up to his standards.

“There are a lot of detailing products on the market,” he said, “but almost all of them are geared toward the consumer — a discount, ever-cheaper kind of product line.”

Miller used that kind on his father’s 1958 Chevy pickup, the one in which he learned to drive. And for Miller, that just wasn’t good enough. So he asked some chemist friends to come up with something better that he could use on his own cars.

“We had them create the products just for us. We never planned on selling them,” Miller said.

But the custom waxes, polishes and cleaners the chemists developed worked so well that Miller’s collector friends wanted samples. He obliged, handing out small bottles identified only by pieces of tape on which he would write “wax” or “wheel polish” or whatever. When those friends started sharing with their friends, Miller found himself handing out thousands of samples.

“It just kind of spread,” he said.

He still didn’t want to be in the car wax business, but he did start thinking about it.

“Being business guys, we looked at the market and did a lot of research,” he said. “And what we found was there were hundreds and hundreds of products on the market but nobody at the national retail level was selling a really high-end product.”

That market gap led Miller to believe that there was business potential in a new line of products. So he started Surf City Garage in 2004 to produce and market the line.

“We didn’t change the formulas at all,” he said.

Miller did extensive homework before he tried to sell a single bottle of wax, including category research, package design, branding and marketing.

He had ergonomic bottles and special sprayers designed and produced. Miller trademarked tag lines. And with a local designer he created a colorful logo reminiscent of the vintage neon signs he collects.

Miller also came up with a trademarked term that differentiates his products and acknowledges the new market segment they target: Enthusiast Grade.

“Then we set up an entire facility to produce and package the product on a very big scale because we knew that if we were successful at getting on a retail shelf the ramp is very steep,” Miller says. “There are tens of thousands of retail outlets, so we knew that we had to be able to produce a high volume before we ever tried. So it was a huge risk and a huge investment.”

With everything in place, Miller took the product line on the road, selling it at car shows and auto events around the country as well as online. But the big volume — and big returns — would come from going retail, not an easy step for a new company.

“The biggest thing was convincing the retailers that they needed a high-end product,” he said.

He solved that problem by explaining to store owners that high-end customers were already in their stores buying tires and other products, so selling them a higher grade of wax wouldn’t be a big leap.

“And I also told every retailer, ‘Put our products in your store and if they don’t sell, I’ll buy them back,’” Miller said.

That kind of commitment helped put the Surf City Garage line into test markets around the country in 2008 with retailers such as Pep Boys, Advance Auto, NAPA and Kragen/O’Reilly — where it quickly started to sell well.

The following year was even better as distribution expanded from the test markets to nationwide distribution. Today the line also is sold in 19 foreign countries, though the company itself is an O.C. operation all the way.

“Our corporate offices are here, as are our warehousing and shipping facility. We package the product ourself, on our own machines, and we manufacture everything that we sell,” Miller said, adding that keeping operations local results in better quality control.

The company has about 30 employees in Huntington Beach, including Miller’s daughter Carrie, who serves as vice president in charge of operations. Though Miller says you only need a few focused products to detail a car, Surf City continues to develop new offerings. This year it added four new products, including Black Max vinyl and trim dressing, which uses a gel formula as opposed to the liquid offerings of other companies.

“We do a lot of research to find out what the consumer is saying about our competitors’ products — and then we try to improve them,” he said.

For marketing, Miller uses several venues including YouTube, TV commercials and ads in enthusiast publications. Also, two big rigs carry the products and some of the cars from the Surf City Garage collection to automotive events around the country.

“Wherever enthusiast crowds are, that’s where we want to be,” Miller said.