LOS ANGELES -- The allure of ants may escape most people, but Uncle Milton Industries Inc. has based decades of success on the creatures.
The Westlake Village, Calif., toy maker is famous for inventing the ant farm in 1956 as well as other playthings in the science-and-nature niche. Uncle Milton's Ant Farm is so popular and has spawned so many imitators that company President Frank Adler may be only half joking when he says: "We do supply the ants from a secret source; we'd tell you but then we'd have to kill you. ... Competition is always seeking out that information."
After 64 years of family ownership, the company was sold last month to Transom Capital Group, a Los Angeles private equity firm with plans to jump-start Uncle Milton's growth. Details of the transaction weren't disclosed, but Transom said that the company was valued between $30 million and $40 million.
The deal comes at a time of evolution for both the toy industry and Uncle Milton, which bears the name of its 96-year-old co-founder, Milton Levine.
"There's this known thing that's affecting the industry called kids getting older younger," said Adler, 47. "It's challenging to create products that are still exciting to kids who have more computing power in their Xbox than there was in the lunar lander."
Increasingly sophisticated young consumers, combined with a rocky economy, have squeezed the industry in recent years. In 2009, traditional toy sales in the U.S. (which exclude video games) fell about 1 percent to $21.47 billion from $21.65 billion in 2008 and were off a steep 6 percent from 2003's sales of $22.9 billion, according to a report by NPD Group.
One bright spot is the science-and-nature category, which has bucked trends because of increased product innovation, said Anita Frazier, an industry analyst at NPD Group. In 2009, sales of scientific toys rose 4.6 percent to $128 million from $101 million in 2008.
Uncle Milton Industries was founded in whimsy. Milton Levine joined forces in 1946 with his brother-in-law after returning home from serving in World War II.
He and E. Joseph Cossman sold mail-order oddities such as plastic shrunken heads and toy guns that shot potatoes.
After moving to Los Angeles from Pittsburgh, the duo created the first ant farm in 1956 by repurposing plastic tissue dispensers and adding sand. They settled on the now-familiar green farm scene to lend the toy a fun and kid-friendly vibe and have sold more than 20 million over the years.
Toys that dabble in the educational and the scientific have become the company hallmark.
Last August, Uncle Milton began selling Force Trainer, a high-tech toy that excited "Star Wars" fans, science fiction buffs and anyone wishing to defy the laws of physics.
With a headset that reads brain waves, a player can move a ball up and down a glass tube by increasing and decreasing levels of concentration (a fan actually does the work).
Yoda's rasping voice guides aspiring Jedi knights through 15 levels of "force training."
Force Trainer flew off store shelves in some areas. Its only competition -- Mattel's Mindflex, which utilizes the same technology -- sold out during the 2009 holiday season.
Since launching, several thousand Force Trainer toys have been sold, said Russ Roenick, a managing director at Transom Capital.
Despite the toy's success, annual sales at Uncle Milton have remained flat the last three or four years, though "total sales have doubled since 2000," Roenick said.
Slow growth can be attributed to the economic downturn, along with resource limitations and some operations problems, Roenick said.
For instance, the procedure for ordering ants has remained unchanged since Uncle Milton first offered the creatures for sale.
A customer must fill out a coupon, include a check and then mail it. A team at corporate headquarters then opens the mail, processes the check and rekeys that data into a computer.
Orders are then sent to the ant fulfillment center.
Comments