By Eric Peterson | Feb 21, 2022
American Fork, Utah
Xylitol-based healthcare products and sweeteners
An underwater welder by trade, Nate Jones founded Xlear, Inc. after his father successfully treated a child's ear infection with xylitol, a sugar alcohol that research has shown to have benefits in oral care and preventing ear infection.
"They've been using xylitol in chewing gum since the '50s," says Slaughter. "Essentially, the effect of the xylitol in the chewing gum is that it creates an anti-adhesive environment so the bacteria have a hard time invading the tissue and congregating."
A study out of Finland noted a lower rate of inner ear infections among children chewing xylitol gum. "You can't give really young children chewing gum, so he [Jones' father] came up with other methods of delivery and ultimately settled on a nasal spray," says Slaughter.
Jones patented his father's spray, and launched it into the sinus-care category in 2000 with Xlear (pronounced "clear"). "The name comes from keeping the nose clear," says Slaughter.
The Spry line includes toothpaste, oral rinse, mouthwash, mints, and gum. "Xylitol in oral-care products has been used significantly throughout Europe and Asia, but even in the early 2000s hadn't taken off in the U.S.," says Slaughter. "[The mouth] is highly acidic throughout the entire day. Popping in some xylitol mints or xylitol chewing gum, it helps the saliva get the mouth up to a neutral point."
XyloSweet "is a low-calorie sweetener, it's diabetic-friendly, it's a good sugar substitute for paleo, keto diets and people with diabetic concerns. It's not one of the super sweeteners and it's natural, so it's a good competitor against aspartame and Sweet'N Low."
When the COVID-19 pandemic hit, demand for Xlear's sinus-care products skyrocketed. Early orders from Target and CVS wiped out the inventory of nasal spray and cut deeply into the company's stock of xylitol. "We had a bit of a paradigm shift on how to manage big growth like that," says Slaughter. "We've got a new range, and our new range model is called historical to hysterical."
The million-dollar question: "What's the true cost of making too much versus the opportunity cost of a lost sale? For us, it was close to four or five times the opportunity cost lost on a missed sale versus the cost of making too much."
It follows that the company ordered a two-year inventory of raw materials, went from one production line to four, and developed relationships with two co-packers.
Another big spike in demand came in September 2021, and another in early 2022. Slaughter says it all adds up to "exponential" growth during the pandemic era. "It's been a crazy couple of years," he says.
Challenges: "We've been affected by COVID and supply chain issues and increased labor costs like everyone else," says Slaughter. "A lot of the things that were accepted as de facto facts within operations are being challenged based on massive global disruptions. We're starting to question some of those things we've never questioned before."
For example, nozzles for the nasal spray have been hard to find, leading Xlear to stock up in a significant way: "We brought in essentially several years worth of nozzles -- which of course created a different issue from a warehousing and inventory management perspective."
The company's bottle supply was subsequently reshored from China. "We invested in a mold with a company in Utah and they gave us some nice priority on some new equipment," he adds. "We would have run out of bottles from the other supplier if we had not made that move."
As one of the larger users in the U.S., Xlear's supply of non-GMO xylitol has been steady, but the shipping rates shot up by a factor of six in 2021. "The biggest yield is from the byproduct of corn harvests -- the stalks, husks, and cobs of the corn -- where we get our xylitol," says Slaughter. "Our xylitol all comes from China, as does most xylitol in the world. There's only minor production in other places."
Another challenge: "Anticipating demand -- where on that scope of historical to hysterical do our products' future demand lie?"
Opportunities: Oral care is primed to grow, says Slaughter, as Xlear is pushing into international markets. "We're pretty careful about expansion into different points of distribution. On the nasal spray side, we've got pretty wide distribution throughout most categories in the U.S., so doing that with our oral care products as well. On the nasal spray side, we're doing a lot of international expansion -- there's a lot of opportunity internationally -- and then deciding what that looks like, whether we produce here or partner with a co-packer or open an international location to do that."
Needs: Good employees. Slaughter says it took four months to staff a second shift that just went operational in January.
A second manufacturing facility is another potential need. "One of the things we're assessing this year is whether it makes sense to open an eastern facility that services the eastern part of the United States," Slaughter says.