When Karen Marshall saw her godson manage his friends’ musical group and take on odd jobs like shoveling driveways and mowing lawns to make money growing up, she gave him a book titled “Reallionaire” by Farrah Gray, who made a million dollars from running a food company by age 14.
Known as “the book auntie,” Marshall gives books to the young people in her life and follows up with them to ask if they read the books and what they got out of them. She learned that her godson, Ethan Holmes, read “Reallionaire” from cover to cover. The book inspired him and showed him a career in entrepreneurship was possible.
Holmes, who is from Shaker Heights, started working on an applesauce business when he was 15 and launched the company when he was a student at Hiram College in 2015.
Since then, it’s been growing slowly, and this past August, it took another step forward. The company, Holmes Mouthwatering, redesigned its packaging and started selling its applesauce in pouches instead of jars and cups at Walmart, Meijer, and Giant Eagle Market District stores. Holmes, who was honored on this year’s Forbes 30 Under 30 local list, also visits classrooms and holds virtual workshops to teach and mentor young entrepreneurs.
“Lots of entrepreneurs get started when they’re in high school. That is common. Not all entrepreneurs who start in high school are working on the same business as when they were in high school. And that’s what’s interesting about Ethan,” said Ilene Frankel, executive director of the Young Entrepreneur Institute (YEI) at University School, a partner in Holmes’ youth mentorship efforts.
How it started
After a short time trying to sell chocolate bars inspired by Malley’s Chocolates at Shaker Heights High School, Holmes saw a jar of Mott’s applesauce in the fridge and decided to switch products.
When he was 15, Holmes asked his grandfather to show him how to make applesauce. He then spent about a year working on his recipe.
“It’s a staple, specifically in America. We want to take it to the next level,” Holmes said.
Made with a base of apples, apple cider, and pears, Holmes Mouthwatering offers “homestyle-inspired” applesauce with a chunky texture, available in three flavors: original, apple pie cinnamon, and strawberry peach.
He asked for apples for Christmas, and when his classmates asked what presents he got, they thought he meant an iPod when they heard his response.
“I had to clarify, ‘No, you know, it’s apples, like the fruit,’” he said.
The independence that comes with entrepreneurship is what drew Holmes to this career path. “I’m a risk-taker, and I like to move to my own beat,” he said. But he also embraces the need for mentorship and community support.
Holmes said he learned about business plans, pitch decks, and “how to be an entrepreneur” from organizations like LaunchHouse, which used to be based in Shaker Heights but is now located in Highland Heights. Holmes would go there after school to spend time around other entrepreneurs. He also attended his first competition there and then won $20,000 at the same competition years later, he said.
In 2015, Holmes Mouthwatering averaged $40,000 to $50,000 in sales, and it averaged $50,000 to $60,000 a year in sales between 2015 and 2021, Holmes said. Now that the company has increased its production capacity and updated its packaging, its sales have increased significantly. It brought in about $150,000 in sales since July, the owner said, and is on track to earn $200,000 this year and reach half a million in sales next year.
Growing the company, Forbes 30 Under 30 award
In 2020, Holmes began a rebranding process, raising about $600,000 in funding from investors. The company updated its packaging, shortened its name from Holmes Mouthwatering Applesauce to Holmes Mouthwatering, and switched from selling the applesauce in jars and cups to pouches, which Holmes said are more profitable and competitive.
It also moved its production from a facility in Bedford to a contract manufacturer in Chile. The company sources its apples from Chile, too.
When Holmes Mouthwatering started out producing its own applesauce, it had a team of six employees who worked on production. Now Holmes’ applesauce company pays the contract manufacturer in Chile to produce its applesauce, but the workers there are not employees of Holmes Mouthwatering.
Holmes said the company tried to keep production in Cleveland, but due to infrastructure, costs, and logistics, the manufacturer in Chile “was the most cost-effective option” that would allow the company to increase its capacity. The manufacturer can produce over 50 million applesauce pouches a year, he said.
Holmes Mouthwatering had its first round of production at the Chile manufacturer in June. “The biggest growth is we’ve already now hit six figures in less than six months,” Holmes said.
The company currently has three employees, and Holmes is the only full-time employee. The company plans to hire four “demo workers” to market Holmes Mouthwatering at events and stores.
Meijer, Walmart and Giant Eagle Market District stores in Ohio and select areas in surrounding states sell Holmes Mouthwatering. The applesauce is also available online, with free shipping in the U.S. Holmes said he plans to expand to more grocery stores and concession venues like stadiums next year and to launch additional products like juice boxes.
What’s fueling all this growth? The owner says in addition to sales revenue, funding sources include angel investors, pitch competitions, and incubators and accelerators like Chobani Incubator and SKU Accelerator. Chobani and SKU contributed a combined $50,000 in the past few years, on top of training and connections to investors.
Along with his successes, Holmes has faced multiple rejections and plans that didn’t work out the way he hoped. He said he’s gone through the Shark Tank process at least four or five times. A few months after a Shark Tank rejection, he got a call from his mentor and ended up having dinner with Shark Tank investor Daymond John.
Holmes received a nomination for Forbes 30 Under 30 in 2022 but didn’t receive the honor. This year, a month before his 30th birthday, he found out that he made it on the Forbes 30 Under 30 local list. Holmes gave out over 2,000 applesauce pouches at the Forbes Under 30 Summit, which took place in Cleveland last week. He also got a shoutout from Mayor Justin Bibb, who was a local list judge.
“I think it’s all about timing, and sometimes things don’t work out for you in the past, but they will work out for you when they’re meant to be,” Holmes said.
As a young Black entrepreneur, Holmes said he has experienced people staring at him when he walks in a room and assuming he works for the company rather than being the owner. Last year, he was the first Black participant in the USApple Association’s NextGen Apple Fellowship, which provides leadership and training to leaders in the apple industry, he said.
Mentoring young entrepreneurs
A few years after reading Farrah Gray’s book “Reallionaire,” Holmes got to meet the author at an event with his godmother. Now, in addition to running his business, Holmes introduces kids to entrepreneurship through a program called the Holmes Entrepreneur Initiative. He visits classrooms and holds virtual workshops for students in Ohio and other areas. Along the way, he also gives away a lot of applesauce. Marshall, Holmes’ godmother, worked at an internship nonprofit called INROADS and said she encouraged him to work with young entrepreneurs.
Holmes also partners with the Young Entrepreneur Institute, which helps him connect to teachers and schools who are interested in teaching their students about entrepreneurship. He is also part of the YIPPEE Exchange Marketplace, a platform for educators to teach entrepreneurship.
At his classroom visits, in addition to sweetening his crowd with free applesauce, Holmes shares his story and talks about marketing and how to start a business.
“To be a successful entrepreneur, it takes a community. And he knew that, he observed that, and so he became part of the community giving back in other ways to sort of pay it forward,” said Frankel, the YEI executive director.
Holmes will speak at this year’s YEI Enspire Conference on youth entrepreneurship, which runs from Thursday, Oct. 19 through Saturday, Oct. 21, with a Zoom session from 3:45–5:30 p.m. on Thursday, in-person sessions from 3:45–6:45 on Friday at University School, Hunting Valley, and in-person sessions from 8 a.m. to 2:30 p.m. at the Cleveland State University Student Center (2121 Euclid Ave.) on Saturday. You can sign up for the event here.
“I was a young entrepreneur, and it was so hard for me to get started,” Holmes said. “I’m very active in working with entrepreneurs in general because I know how hard it is. And I feel like I’ve had a lot of opportunities that I can now just give to people.”
Visit Holmes Mouthwatering’s website to learn more and purchase applesauce. Contact Ethan Holmes at ethan@holmesapplessauce.com. For resources on teaching entrepreneurship to youth, visit the Young Entrepreneur Institute’s website and the YIPPEE Exchange Marketplace
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