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The confectionery business segment is made up of many small companies, often with intertwined relationships and histories. Farley's & Sathers Candy Company, Inc. was created as an umbrella to roll-up many small companies, brands and products under a common management team.^[1]

Selection of Farley and Sathers product

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Catterton Partners formed the Farley's & Sathers Candy Company in 2002 as a vehicle for the purchase of some of the former Farley Foods Company and Sathers Candy Company assets and brands from Kraft.^[1]

[edit] History

The following history is organized to follow the company as it was formed, from the time when Sathers and Farley first came together under the umbrella of Favorite Brands International (FBI), a holding company which also came to include the Dae Julie Company and Mederer's U.S. Trolli operations. Under Favorite Brands' management, Dae Julie became part of Farley. Later, Favorite Brands became part of Nabisco, and then part of Kraft. As Kraft spun off companies and assets after its purchase of Nabisco, Farley & Sathers, as a new company in its own right, was created. Later, other candy companies were added to Farley & Sathers, including Trolli, which had been part of Favorite Brands before being sold by Kraft to Wrigley who then sold it to Farley & Sathers. Some of the history of these companies is intertwined: Sathers bought much of its bulk candy supplies from Farley; the growth of Farley Foods before Favorite Brands was in no small part due to the implosion of E.J. Brach's; the problems at Favorite Brands could be partially attributed to a resurgent E.J. Brach's after it had merged with the Brock of Chattanooga candy company (making their new company "Brach and Brock"). When sold by Kraft, Farley lost its fruit snack business but kept the Dae Julie plant; with Farley & Sathers' purchase of the Brach and Brock company, they regained a fruit snack business. Many plants and distribution facilities were closed, consolidated, or replaced over time. Try to follow along...

[edit] Roots of the Company

[edit] Sathers

Examples of Sathers product

John Sather, a local grocer in Round Lake, Minnesota, established the Sather Company in 1936.^[2] He purchased trainloads of cookies to sell to stores throughout southwestern Minnesota.^[3]

By the early-1960s, Sathers distributed products to the five state Midwest region. The territory grew and product lines and operations changed to include the addition of a nut roasting operation in the 1960’s. With the addition of telemarketing in 1967, the customer territory expanded to eleven Midwest states. With this increase, Sathers added tractor trailer units to its trucking fleet.^[4]

Sathers was primarily a rebagger.^[5] Rebaggers purchase product in bulk, in pallet-quantities or container loads if imported, and repackage it into smaller retail packaging. One source Sathers used was Farley Candy Company though many other sources were used as well. Many of its chocolate products were provided by the Haviland Candy Company, a division of NECCO.

The Sathers company is considered to be the innovator behind packaged "pegboard" or "hanging bag" candy, now one of the candy industry's primary marketing programs for general line candies. Another innovation was their telemarketing system they implemented when their sales force quit due to low wages. The sales people were required to not only sell the product, but also to deliver it and stock it on the shelves. Sathers' telemarketing initiative is considered to be one of the earliest implementations. Under this new process, orders were taken by phone and the customers would unpack and stock the shelves themselves.^[6]

The company continued to expand. In 1972, Sathers went nationwide with product distribution when it secured half of the national Kmart business. When the Chattanooga-based Kitchen Fresh Company was acquired in 1983, the rest of Kmart's national business became Sathers'. Sathers' expansion continued with the company purchasing the Bayou Candy Division of the American Candy Company in 1985; Powell's Candy Company (of Hopkins, Minnesota) and Northstar Candy Company (of Rogers, Minnesota) were both acquired in 1991. Sathers now had three manufacturing facilities (a nut roasting and processing plant in Chattanooga, Tennessee and two confections plants in Hopkins, Minnesota and in New Orleans, Lousiana), and two additional distribution centers.^[7][8][6]

[edit] Farley

Farley Candy Packaging and Promotional Materials

In 1870, Gunther Farley and two of his brothers founded Gunther Chocolate Company. Gunther Chocolate Company later merged with another, smaller, Farley-family-owned candy company in 1891, becoming Farley Candy Company.^[9]

Farley Candy moved its operations from Superior Street in Chicago, Illinois to the north suburb of Skokie in 1951. It passed to a third generation of the Farley family, represented by Preston Farley, who managed it until 1968. In that year, Preston Farley sold a majority interest in the company to Raymond Underwood.^[10]

During the Preston Farley and Underwood years Farley was primarily a manufacturer of jell products, manufactured in starch moguls; Farley also produced cinnamon imperials, a panned product and a line of hard candies including sanded lemon hard candy. Preston Farley invented the Farley Jet Cooker, subsequently licensed to the Staley Company. The Jet Cooker is still manufactured under the name of the Staley Jet Cooker and is still used widely today in the manufacture of confections and paper.

In 1974 William Ellis purchased 100% of the company. In the same year he purchased the Lakeside Candy Company, located in Zion, Illinois and commonly known as Zion Candy, which produced a full line of individually wrapped hard candies such as starlight mints and butterscotches.

Example of product purchased in bulk from other manufacturers and repackaged for resale

In 1981 Farley was operating out of its plants in Skokie and Zion Illinois when a third plant was added. A 103,000 square foot plant, formerly used to produce the York Peppermint Pattie and Power House bar was purchased from Peter Paul-Cadbury. This plant became Farley Candy Company's primary chocolate manufacturing site, though other products were produced there as well.^[6]

In 1985 Farley bought a vacant 265,000 square foot warehouse in Chicago on 31st Street, and proceeded to convert it for confection manufacturing. This large plant became the primary manufacturing facility for Farley when it came online in June, 1986.

In 1988, Farley’s took over the operations of Jaffe Candy, located in Compton, California, establishing a 50,000 square foot packaging and distribution center on the West Coast. Also in 1988, Farley's leased a 253,000 square foot warehouse distribution center in Bedford Park, Illinois. With four candy manufacturing plants and two distribution centers, Farley Candy Company had the second largest bag candy manufacturing facility in the United States and was the largest private label general line candy manufacturer.

In 1990, Farley purchased a 142,000 square foot former E.J. Brach's factory located in Melrose Park, Illinois. This plant was used for a wide range of products, but primarily to produce hard candies, eventually replacing the plant in Zion, Illinois and concentrating production facilities within a smaller radius of the warehouse/distribution center.

In 1993, facing capacity shortages, Farley (which had changed its name to Farley Foods USA to allow for future expansion to products outside of confections) purchased a 144,000 square foot manufacturing plant in Oklahoma City, Oklahoma along with a 100,000 square foot warehouse in Moore, Oklahoma. These buildings had been the main production and warehouse facilities of the Bunte Candy Company since 1959 before being sold to the American Candy Company in 1990, which then sold the plant to Farley.^[11]

In 1994 Farley leased a 480,000 warehouse and distribution center on 43rd Street in Chicago, closer to expressways and closer to its major production facility at 31st Street. This new warehouse replaced the 253,000 square foot Bedford Park facility.

In September 1995, William Ellis received a heart transplant at the age of 71.^[12] In August 1996 Farley Foods was sold to Favorite Brands International with Ellis taking a 14.3% ownership stake in the new company.^[13]

[edit] Dae Julie

Dae Julie was founded in the 1960s as a candy importer by David Babiarz. In 1990 a new business was started by Babiarz, and a new plant came on line. The new business registered as Candyland, and the new plant was a 120,000 square foot state-of-the-art plant located in the Chicago suburb of Des Plaines, Illinois. The primary product focus of Candyland was Gummy candies, though the starch-molding equipment could be used for a wide range of products. A trademark search revealed 30 other companies using the name Candyland, so the decision was made to use the Dae Julie name on Candyland products.^[14] At the time of its acquisition in early 1997 by Favorite Brands, it was considered one of the top Gummy manufacturers in the country, with annual sales of over $40 million (at manufacturer prices). Overall retail sales of Gummy products was estimated to be between $150 million and $175 million in the year of acquisition, with Nabisco's Gummi Savers accounting for $40 million of that total (at retail).^[15] Trolli, Farley Candy and Ferrara Pan were the other large producers at the time for the U.S. market.

[edit] Trolli

Gummy Bears were developed by Hans Riegel Sr. of Bonn, Germany in 1922 who then started the Haribo (acronym for Hans Rigel, Bonn) company to produce the little rubber bears. Another German candy manufacturer, Mederer, developed Gummy Worms in 1981 and sold them under the Trolli brand name. In 1986 Mederer began producing gummies in a plant located in the U.S. in Creston, Iowa.

Favorite Brands purchased the Trolli U.S. manufacturing facility in 1997 and licensed the Trolli name from Mederer for use in the United States for 10 years..^[16] The license applies only to North American sales. An example of a different Trolli license holder, is TREXCO.

As a component of Favorite Brands, Trolli next became part of Nabisco (1999), then part of Kraft (2000), was sold to Wrigley (2005), who then sold it to Farley and Sathers Candy (also in 2005).

[edit] Favorite Brands International

It was under the Favorite Brands International name that Farley and Sathers first came together in 1996. Dae Julie, and Mederer's U.S. Trolli operation were added shortly afterwards.^[17]

Favorite Brands was allowed to use the Kraft brand name for 2 years after the business was purchased. Beginning September 1, 1997 the use of the Kraft brand name was to end. This is a selction of Favorite Brands product showing the effect of the change.

[edit] Kraft Business Lines Acquired

Favorite Brands International (FBI) was originally formed in July, 1995 to purchase the branded and private label caramel and marshmallow businesses from Kraft Foods for an estimated $204 million.^[18] It was funded with investments from the Texas Pacific Group (TPG)and InterWest Partners.

With the purchase of the Kraft business units, Favorite Brands became the largest manufacturer of marshmallows and the leading manufacturer of wrapped caramel products in North America. They also produced a significant percentage of the private label marshmallows sold. The Kraft caramel business enjoyed a greater than 50% marketshare when purchased, while the Kraft marshmallow business enjoyed a greater than 60% share. In addition to consumer candy and marshmallows, Favorite Brands also acquired the industrial caramel and marshmallow businesses of Kraft. This business supplied the dehydrated marshmallows (with a 98% share of the market)^[17], marshmallow creme and caramel for use in breakfast cereals, instant hot chocolate mixes and taffy apples. Favorite Brands received film credit for supplying the truckloads of marshmallow creme used in the film What Dreams May Come.

With the acquisition came a confectionery manufacturing facility located in Kendallville, Indiana. Built in the 1920s and situated on 32 acres, it became the main manufacturing facility after 4 other Kraft marshmallow manufacturing lines were relocated from Buena Park, California, Canada and Garland, Texas (2 lines).

[edit] Kidd & Company Acquired

Kidd & Company was the second largest marshmallow and marshmallow creme manufacturer in the U.S. with sales of over $32 million in 1995. Founded in 1895 by Albert Eugene Kidd, it initially produced a wide array of products including face powders, roasted peanuts and lemon drops. In 1917 the company began manufacturing marshmallows and by 1938 Kidd & company had concentrated its focus on the marshmallow business, and especially marshmallow creme. It used a casting method of production, pouring marshmallows in molds. In 1947 they opened a 14,000 square foot plant in Ligonier, Indiana. In 1948 Alex Doumakes who later started his own marshmallow company, patented a new process for producing marshmallows via extrusion. This method forced out a rope of marshmallow through a die under pressure, which was then cut into the bite-sized pieces familiar today. Kidd's plant was updated and expanded over the following years and ultimately grew to be 110,000 square feet. This plant was closed by Favorite Brands in 1996 and production moved to their existing plant located less than 30 miles away in Kendallville, Indiana.^[19].^[16]

In 1987, Kidd & Company built an additional plant west of the Rocky Mountains, in Henderson, Nevada. This plant was 118,000 square feet and was later destroyed on May 4, 1988 when the PEPCON rocket fuel plant located next to it exploded..^[20] Rebuilt in 1989, it continued as the west coast manufacturing and distribution point for Kidd & Company.

[edit] Sathers, Farley Foods, Dae Julie and Trolli Candy Companies Acquired

In 1996 Favorite Brands purchased several other confectionery businesses, including the Sathers and Farley Food Companies, the Trolli Gummy Company and Kidd Marshmallow Company. In 1997 Favorite Brands added the Dae Julie Company to their portfolio, another large gummy candy manufacturer. After the purchase of Dae Julie, Favorite Brands became the, distant, fourth largest confectionery company in the United States, after Hershey, Nestle and Mars.^[21]

[edit] Favorite Brands - formed and flamed out quickly

Founded in 1995, by early 1997 Favorite Brands was the largest United States manufacturer of marshmallow products, which include marshmallows, marshmallow creme and dehydrated marshmallow bits. Number one market position in branded and ingredient marshmallow products. The Jet-Puffed marshmallow brand having a 79% share of the branded marshmallow market and a 47% share of the total marshmallow market. The market leader in the ingredient marshmallow category, which includes dehydrated marshmallow bits that are used primarily in cereals and hot beverages, selling dehydrated marshmallow bits to every major cereal manufacturer in the United States and believed to have a 98% share of the dehydrated marshmallow bits market. In Fruit Snacks, holding the number two market position with a 22% market share. The second largest general line candy supplier in the United States; the Sathers line is the leading brand of general line candy in the convenience store channel. Trolli has the number two market position in the gummi market with a 15% share.^[22] With over $750 million in annual sales ^[22] from brands and products combined from smaller, profitable, mostly family-owned and controlled businesses, how did Favorite Brands go bankrupt within 3 years?^[23]

[edit] What Happened

The president and CEO of FBI, Al Bono, formerly CEO of California Gold Dairy Products of Petaluma, California, was quoted as saying: "Business is business, whether it's dairy or chocolate confections or selling lamps". David Bonderman speaking for TPG which had invested $512 million in the venture, was later quoted to say that Favorite Brands was one of the worse investments his group had ever funded.^[24][25] Favorite Brands was TPG's first major investment in the food and beverage industry.^[16]

Before coming together under the Favorite Brands umbrella, the individual companies were mostly privately-owned, with their owners taking a daily, hands-on interest in their operations.^[26] Under Favorite Brands ownership, the companies were stripped of these owners and replaced with a management team that had little experience in candy. The first management group was replaced by an interim set of management.^[22] This interim management was then replaced within a year by still another group. The parallels with the recent experiences at E.J. Brach's (see section below)were striking: rapidly changing upper management^[27]...3 CEO's at Favorite Brands in as many years; a disconnect with customers and their needs...reducing promotional support and product choice; a marked increase in overhead expenses, including a large office complex located apart from manufacturing, as well as increased spending on overhead for financing and consultants.

FBI was the market leader in the ingredient marshmallow category...dehydrated marshmallow bits that are used in cereals and hot beverages, selling bits to every major cereal manufacturer in the United States and believed to have a 98% share of that market.

The deal seems to have been structured so that the investors' options would remain open: one option being to hold the investment briefly and then flip it, either as a whole or by spinning off the acquired components. To keep this option a viable one, the individual components that made up the Favorite Brands group needed to remain individual and separate operations, with their own production, distribution and support groups. The stated option was to operate the companies so that their synergies could be tapped to reduce the costs of production and distribution sufficiently to offset the ongoing financing expenses associated with the formation of Favorite Brands. Interest expenses were an ongoing negative cash flow; projected cost savings did not materialize as quickly as hoped, and efforts to consolidate operations lagged.^[22] While systems and reporting were integrated, operations were slow to consolidate, resulting in higher than expected cash outlays^[22]. As private companies, with family management, Farley and Sathers both had long histories of acquiring, absorbing, integrating and consolidating the operations of other candy companies.

As cash balances dwindled, Texas Pacific Group was asked to contribute additional funds for operations.^[22] It was not until 1998, three years after the formation of Favorite Brands and facing bankruptcy, that 12 distribution centers were closed.^[22] Until that time, these centers had added to overhead costs and negative cash flow. Also adding to overhead costs, and millions of dollars of cash out of the business, were consultants hired to explain the business to management and to help them plan a course of action.^[22] Under private ownership, a layer of consultants explaining the business was rarely needed.

In addition the high costs of maintaining the separate operations acquired, separate, there was also a culture clash. The brands acquired from Kraft relied on a well-known brand name to drive sales. This culture did not mesh with the brands which sold product based on consumer value.^[28] The sales forces remained separate, never combining to handle "Favorite Brands" products for all customers, instead, continuing to sell only to the same customers they had always sold to. Again, there were no synergies realized under the combined umbrella of "Favorite Brands".^[29]

[edit] Conclusion

In the end, the continued separation of the acquired operations allowed them to be sold easily. Nabisco had purchased Favorite Brands in November, 1999. Kraft purchased Nabisco in June, 2000. Kraft then proceeded to either sell-off or absorb the components that made up Favorite Brands. The Farley and Sathers operations, complete with plants, distribution centers and headquarters were sold, stripped of Farley's fruit snack production plant and product line.^[30] Trolli was sold separately with its plant and headquarters operation. The marshmallow business was absorbed back into Kraft. Unfortunately, the value of the component pieces of Favorite Brands did not equal the price paid. Nabisco purchased Favorite Brands for $475 million in cash in 1999,^[31] far less than the approximately $700 million paid to acquire and fund operations of Favorite Brands by its investors.^[22][23]

[edit] Farley and Sathers has been Created --- and Begins Acquiring Other Brands

Farley and Sathers, as an independent company, was formed in January, 2002 from assets purchased from Kraft Foods. At the time, 2001 sales were estimated to be $220 million. Included in the sale were trademarks, Sathers Trucking and main distribution facility. Also included in the sale were six other facilities including three Farley production plants, one of which was actually the former Dae Julie plant located in Des Plaines, Illinois.^[32] Since then it has continued to acquire the brands and businesses of others.

[edit] Brands purchased from Hershey

[edit] Henry Heide Candy

Jujube candy

freshly picked jujube fruits

Jujyfruits candy

In May, 2002, Farley & Sathers acquired several other brands from Hershey.

Known for products such as Jujyfruits, Jujubes, Dollars, and Gummi Bears, it was founded by its namesake^[3] Henry Heide^[33] in 1869. In 1920 "juju" candies were introduced: Jujyfruits and Jujubes. The only real difference between Jujubes and Jujyfruits, other than the shapes, is that Jujubes use potato starch instead of corn starch as their primary thickener and Jujubes are cured longer, making them firmer.

Both candies originally used Ju-Ju Gum at one time as an ingredient which is similar to many of the other vegetable gums such as Gum Arabic, Acacia, Agar or Guar used by the confectionery industry. Ju-Ju gum comes from the Jujube tree, which produces date-like fruits. Today, corn syrup is the primary ingredient.^[34] The Jujyfruits shapes are Pineapple, Tomato, Raspberry, Grape Bundle, Asparagus, Banana, and Pea Pod. The banana shape is stamped with "HEIDE". Flavors include raspberry, licorice, lime, orange, and lemon.

In the 1930s "Red Hot Dollars" were developed. "Red Hot" being 30s slang for a "dollar". Hot cinnamon flavor was not available until after Farley and Sathers purchased the brand from Hershey. Prior to that, the flavor had been a mild raspberry.

In 1995 Hershey purchased the New Brunswick, N.J. based Henry Heide Candy Inc. from the family.^[35] Farley and Sathers purchased the brands in June, 2002 from Hershey, when they had an estimated $40 million in annual sales.^[3]

[edit] Chuckles

Also in May, 2002, the new Farley & Sathers company acquired the Chuckles brand from Hershey.

Demonstrating once again the intertwined nature of the industry, Chuckles was developed by Fred W. Amend, who at one time worked for the Heide Candy Company. He began working for Henry Heide in 1875 in New York, a period when Heide was concentrating on the production of almond paste. After a series of other jobs in the candy industry, he moved to Danville, Illinois in 1921 and started his own Amend Company to produce marshmallow. Later that same year he began producing a jelly candy. It was Fred's wife, Tulita, who suggested the name of the product. "All candy bars at that time were chocolate. But what if you didn't want choclolate? Our jelly bar was the answer" She dubbed them Chuckles because the name suggested enjoyment. Even during the Depression, when people couldn't afford more expensive treats, they bought Chuckles, she said.^[36]

The Amend Company was sold to Nabisco in 1970. In 1986 Nabisco sold the company and manufacturing plant to a newly formed company of local investors and former Nabisco employees for $10 million. After the brand name and licensing rights were sold to Leaf Inc., a unit of Huhtamaki Oy of Helsinki, Finland, the company with its production plant was renamed Tempo Confections which began manufacturing product under contract for others.

In 1996 Hershey acquired the Chuckles brand and license when it purchased Huhtamaki Oy's Leaf, Inc. confection business.

[edit] Amazin' Fruit

Purchased from Hershey in May, 2002 this product had originally been introduced by Hershey in 1992 as a heavily promoted attempt to gain a foothold in the growing market for gummy candies. It was designed to compete with the Trolli brand as well as other gummy brands. It included real fruit juice (much like Farley fruit snacks) and came in bear shapes. Later the shapes were changed to fruit designs. During a cross-promotion with the film Jurassic Park: The Lost World dinosaur designs were sold as well.^[37]

[edit] Brands purchased from Kraft

[edit] Now and Later

Purchased from Kraft late in 2002, this product was originally introduced in 1962. The name was a suggestion for its customers that they eat some of the squares right away and save the rest for later. The old ad slogan for the candy was, “Eat some now, Save some for Later”, later replaced by, “Hard ‘N Fruity now and Soft ‘N Chewy Later”. The later slogan describing the candy’s consistency over time.

Charles Cari learned to make toffee while working for W.F. Schrafft's & Sons in Boston. In 1919 Cari moved to New York to begin his own candy business in Brooklyn. He sold his business to father and son Harry and Joseph Klein in 1953 for $25,000. They named their company Phoenix Candy Company. At the time, their product line was Salt-Water Taffy, Peanut Brittle, and Halloween candy. It was a very seasonal business, concentrated around Halloween. Now and Later was developed as a product which could be sold year-round. The Kleins invested in new equipment and technology and expanded distribution nationwide, growing the company to the point where production was running two shifts a day, six days a week.^[38]

The Kleins sold the Phoenix Candy Company to Beatrice Foods in 1978. In 1983 it was sold to Huhtamäki Oyj of Helsinki, Finland which had also purchased the Leaf Candy Company. The two acquisitions were merged under the name Leaf, Inc. In 1986 Leaf, Inc. sold the Phoenix Candy Company to Kouri Capital, a Finnish investment firm, who changed the name to Phoenix Confections. In 1992 Kouri sold Phoenix Confections to Nabisco^[39] and then in 2000 Kraft acquired the Now and Later brand as part of its purchase of Nabisco.^[38]

The original flavors were Red, Green and Blue. Under Beatrice Foods these flavors became Strawberry, Apple and Grape. In 1983 for April Fools' Day, three special flavors were released: Broiled Salmon, Chicken-Fried Steak and Huevos Rancheros.^[40]

[edit] Intense Fruit Chews

Purchased from Kraft late in 2002. Originally part of Nabisco's Lifesavers brand of confections. Kraft gained control of this product when it purchased Nabisco in 2000.

[edit] Gum Brands purchased from Hershey

Purchased from Hershey in 2003: Fruit Stripe chewing gum, Rain-Blo gumballs and Super Bubble bubble gum brands.

Fruit Stripe gum was purchased by Hershey in 2000 as part of a larger gum brand acquisition of Nabisco products.

Rain-Blo gumballs and Super Bubble bubble gum were acquired by Hershey in 1996 as part of the Leaf brands purchase.

[edit] Bobs Candies

Ranked as the largest candy cane maker in the world, Bobs Candies was formed in 1919 by Bob McCormack in Albany, Georgia. Originally called the Famous Candy Company, the name was changed to the Mills-McCormack Candy Company when Bob Mills bought out the other investors and began working on the administrative side of the company. In 1924 the name was changed to Bobs' Candy. In 1933 the apostrophe was dropped and the company became known as Bobs Candy Company.

Initially, coconut, peanut, stick, and hard candies were sold, as well as taffy. Chocolate and pecan candies products were then added to the company's product line. Pecan candies, later were marketed as "Bobs Pe-Kons" and "Bobs Pe-Kon-ettes," became a mainstay product until World War II. On February 11, 1940 a tornado destroyed the factory. Within 6 months the plant had been rebuilt and was producing product again.

Hard candies were popular during the late 1940s, but high humidity in southern Georgia caused production, shipping and shelf-life problems. Production issues were addressed in 1946 by installing large air conditioners to de-humidify the company's wrapping room. Shelf-life and shipping issues were addressed in 1949 with a new machine that sealed candy stick in moisture-proof wrappers. Increasing production rates via automating the production was accomplished with a creation of Father Harding Keller, McCormack's brother-in-law. Keller invented a machine to dispense ribbons of peanut butter on the company's peanut butter crackers. In 1950, Keller invented a machine that twisted soft candy into the spiral striping that defined the look of candy canes.

Bobs Candy occupied approximately 100,000 square feet spread across 6 buildings in downtown Albany. In 1967 construction began on a new 130,000 square foot facility that doubled the production capacity of the company. This new facility was expanded several times and by the end of the 1970s had doubled production capacity yet again.

In 1984 a second production facility was opened in Kingston, Jamaica. The 13,000-square-foot plant produced unwrapped, pure-sugar stick candy.

In 1985 Bobs Candies acquired a competitor, Fine Candy, which had $4 million in annual sales at the time.

In 1994 another 175,000 square feet was added to the Georgia production facility to address capacity issues.

In 2005, Farley and Sathers acquired Bobs Candy Company. By the end of 2005, all of the Albany, Georgia operations of Bobs Candy had been shut down.^{[41][42] [43]}

[edit] Brach and Brock Candy

[edit] Brock Candy Company

William E. Brock settled down in Chattanooga, Tennessee in 1906 and bought a small wholesale grocery shop, which sold candy produced on the premises by the Trigg Candy company. This candy operation consisted of handmade penny and bulk candies, peanut brittle, peppermints and fudge. The name was changed to Brock Candy in 1909.

In the early 1920s a major expansion occurred when it modernized its 120,000 square foot factory with the installation of automatic (starch) moguls. He then eliminated all slab-produced products such as peanut brittle and fudge and concentrated on jelly and marshmallow candies which were produced in his new mogul equipment. Later in the decade, Brock became one of the first candy manufacturers to package its products in cellophane bags. In the 1930s Brock introduced what would become one of its biggest sellers for the next 60 years, Chocolate Covered Cherries. In the 1940s, during World War II, Brock introduced the Brock Bar, a coated nut roll using corn syrup and peanuts, during a period when sugar was strictly rationed.

In the 1950s Brock added 60,000 square feet to its plant in downtown Chattanooga. By the end of the decade though, additional space for expansion was needed, so a 30 acre site on the outskirts of Chattanooga was purchased. On this site in 1964, Brock added a 64,000 square foot distribution center, expanding the warehouse another 25,000 square feet by the end of the 1960s.

Also in the late 1960s, the company purchased the Winona, Minnesota candy company, Schuler Chocolates, adding to its seasonal candy capacity.

In 1976 the company moved its production to a new facility on its 30 acre site on the outskirts of Chattanooga.

In the 1980s Brock added gummy candies and fruit snacks to its product offerings. It also began contract and industrial production of its fruit based products.

In 1990, Brock purchased the Shelly Brothers, Inc. candy company of Souderton, Pennsylvania. In 1993 Brock bought a 30% share in Clara Candy of Dublin, Ireland. By then, Brock had gone public, with an initial public offering of 2.3 million shares for almost 63% of the company's stock.^[44]

[edit] E.J. Brach's Candy

Founded in 1904 by Emil Brach, he invested his life savings in a store front candy store which he named "Brach's Palace of Sweets".

Construction began on a plant on Chicago's west side near railroad tracks in 1921. This plant eventually grew to 2.2 million square feet and became the largest candy manufacturing plant in the world.^[45]

In 1966 American Home Products Corporation purchased the company. In 1986, the last year of ownership by American Home Products, it accounted for two-thirds of the U.S. market for bagged candy and 7% of the $9 billion U.S. candy market. It employed 3,700 and had an estimated pretax profit of more than $75 million^[46][47] on sales of $640 million.

[edit] Things changed quickly

In 1987 Jacobs Suchard Limited, a Swiss chocolate and coffee conglomerate, purchased the company for $730 million. By the end of 1989 the company was in serious trouble. Losses that year were an estimated $50 million and sales had decreased to $470 million. By 1993, sales had dropped to $400 million though losses had been stemmed somewhat at only $26 million that year. All this, during a period when overall per capita candy consumption in the U.S. had increased 25%. By May, 1994, after 7 years of Suchard ownership, Brach's had had 9 different CEO's, had moved its headquarters from the plant property to a penthouse office in one of Chicago's wealthiest suburbs, saw a lost of nearly 900 jobs (42% of the workforce at that time), and suffered a loss of key customers and market share.^[48][45]

[edit] What Happened

Klaus Jacobs almost immediately fired Brach's top officers and gutted the leadership of its sales, marketing, production and finance departments. some of these positions were filled with executives from Suchard's European operations; people with little experience in the candy industry (see: Favorite Brands above).^[49] Former executives cited Jacobs Suchard's autocratic management style and inability to recognize the difference between American and European candy consumption habits. In addition, the name of the company was changed to Jacobs Suchard Inc., a name few retailers or consumers recognized. Also, product lines were trimmed from 1,700 to 400 in an attempt to cut costs.^[45] This alienated many of its largest customers, including Walgreens and Walmart, who found other sources, including Farley Candy. In addition to the cuts in product selection, Brach's also chose to curtail holiday promotional activities.^[50][47]

In 1990 Phillip Morris purchased Jacobs Suchard for $3.8 billion, except for its U.S. subsidiary, E. J. Brach Corp. A holding company named Van Houten & Zoon Holding AG was formed by Klaus Jacobs to run Brach and other businesses. Disagreements with Klaus Jacobs on marketing and management strategies continued, particularly over commodity vs. branded (Brach's) products. In 1993 alone, Brach's saw 3 different CEO's, and there continued to be a high rate of turnover and dismissals within the sales and marketing departments. Many of Brach's sales personnel began to work for its competitors.^[51]

[edit] Conclusion

In September, 1994 Brach purchased the Brock Candy of Chattanooga for $140 million, a year in which Brock's had sales of $112 million and profits of $6.5 million. This was the second attempt by the two companies to join together. The first time had been while Brach's was under American Home Products ownership. The merger attempt at that time was canceled due to concerns of an antitrust suit.

In 2003, Barry Callebaut AG purchased the new company. The principal owner of Brachs, KJ Jacobs AG, was also a majority stakeholder in Barry Callebaut. As part of the deal, Barry Callebaut agreed to assume $16 million in debt, fund restructuring efforts for 5 years and paid a symbolic $1 (one dollar) for the company.

[edit] Brach and Brock become Brach's Confections and is sold

On September 17, 2007, Barry Callebaut AG announced their intention to sell Brach's Confections to Farley's & Sathers.^[52] The acquisition was completed on November 16, 2007 for an undisclosed amount.^[53] This acquisition brought with it Brach's existing fruit snack business as well as its other general line candy products.

[edit] Currently

The company’s headquarters are located with the packaging and distribution center in Round Lake, Minnesota. Farley's & Sathers Candy Company, Inc. currently operates three manufacturing facilities and three packaging and distribution centers.A manufacturing, packaging and distribution center is also located in Chattanooga, Tennessee. Facilities in Creston, Iowa, and Reynosa, Mexico, manufacture and package products, as well. These facilities combined employ approximately 1,000 people. Made up of the distilled product of many different companies, brands, products, and families, built up over more than a century, by founders with dreams, ideas and innovations. At their combined peaks, the predecessor companies had utilized 5,000,000+ square feet spread over dozens of plants and warehouses, and had more than 10,000+ employees. Today, the company is a set of brand names, formulas and processes, and state of the art production facilities under one set of managers, owned by an investment company.

[edit] Summary Timeline

To summarize:

* 1860's Henry Heide Candy Company begins business

* 1890's Farley Candy Company established

* 1900's Brach's Candies begins production in the backroom of a Chicago store. Brock's Candy of Chattanooga begins production of penny candies, peanut brittle and jelly candies.

* 1920's Bobs Candies is formed

* 1930's Sathers Candy Company begins operations

* 1960's Dae Julie begins business as an importer, later as a manufacturer

* 1980's Trolli Gummi's begins production

* 1994 Brach's Candy purchases a controlling interest in Brock's Candy of Chatanooga

* 1995 Favorite Brands International created with purchase of Kraft Caramel, Marshmallow, Dinner Mints and Peanut Brittle businesses. Henry Heide, Inc is sold to Hershey Foods.

* 1996 Favorite Brands International acquires Farley Foods, Sathers Candy and Kidd Marshmallow businesses

* 1997 Favorite Brands International acquires Dae Julie and the Trolli Gummi businesses

* 1999 Nabisco buys Favorite Brands International

* 2000 Nabisco is merged with Kraft Foods by Phillip Morris

* 2002 Catterton Partners form Farleys & Sathers Candy Company made up of assets from the former Farley Foods, Sathers Candy Company, and the Kraft Taffy business from Kraft; Chuckles and several other Henry Heide brands purchased from Hershey Foods.

* 2003 Catterton Partners continues its acquisitions with the purchase of 4 old-line gum lines from Hershey Foods.

* 2005 Catterton Partners buys the Trolli Gummi business, which had been part of the Favorite Brands group of products, from Wm. Wrigley Jr. Company, which had acquired it as part of a larger group of businesses from Kraft. Bob's Candies is acquired.

* 2007 Catterton Partners buys the Brach & Brock Candy Company

[edit] References

[edit] External links

• Official website
• Heide History