Summer’s end Heats Up Candy Acquisitions

by Bernard Pacyniak
Within a span of two weeks in mid-August, two major players within the U.S. confectionery industry and an up-and-coming manufacturer of diversified health products dug into their corporate pocketbooks to snatch up brands, market segments and manufacturing expertise.
First, Hershey, Pa.-based Hershey Foods announced its Mexican subsidiary, Hershey Mexico, would acquire Grupo Lorena, a Guadalajara, Mexico-based confectionery company that figures prominently in the spicy candy segment with its Pelon Pelo Rico brand.
“Grupo Lorena’s solid brands in key consumer segments will strengthen our leadership position in the Mexican market,” said Juan-Carlos Zayas, director of marketing for Hershey Mexico.
“This portfolio will broaden our offerings for Mexican consumers, especially as its strength in the youth market complements our established success in the adult segment,” he added. Its Pelon Pelo Rico brand is a great entry to the popular spicy candy segment for Hershey Mexico. Equally important, Grupo Lorena’s commitment to product quality and innovation is a perfect fit with Hershey’s reputation for manufacturing products that meet consumer expectations for great taste and top quality.
Grupo Lorena posted sales of more than $30 million in 2003. The company operates two manufacturing facilities in Guadalajara. It also has a U.S. subsidiary, Lorena USA, based in City of Industry, Calif.
Rick Lenny, chairman, president and CEO of Hershey Foods, said the purchase “significantly increases our existing business in Mexico and supports our strategy of profitably building scale in the key North American market.”
The chief executive noted that the addition of Grupo Lorena will enable “expanded retail channel and customer growth opportunities for Hershey, both in Mexico and the United States…and we’re very excited about the potential to build the brand in the United States in a meaningful way.”
Hershey expects to finalize the deal during the fourth quarter of this year.
In a separate border move, Chicago-based Tootsie Roll Industries acquired Concord Confections, the Canadian producer of Dubble Bubble bubble gum and other children’s confections, for $197 million in cash and $20 million of debt.
Ellen Gordon, president and chief operating officer of the 107-year-old American confectionery icon and producer of Tootsie Rolls, Tootsie Roll Pops, Blow Pops, Dots, Charms and Charleston Chews, said the acquisition represents a “nice addition to our company.”
She added that Concord Confections adds another strong brand, Double Bubble, to the company’s portfolio. “As a world leader in gum balls and twist-wrapped gum chews, the Concord Confections addition complements our children’s brands well.”
Last year Concord Confections’ sales reached $95 million. The company operates three facilities, two in Concord, Ontario, Canada, and a joint-venture plant in Barcelona, Spain.
The final confectionery acquisition that took place last month was confined to one state—Pennsylvania. Doylestown, Pa.–based The Quigley Corp. will acquire stock and assets of JOEL, Inc., a producer of FDA-approved lozenges and organic candy products, for $5.1 million.
JOEL, which is based in Elizabeth, Pa., operates two manufacturing facilities, one in Elizabeth, the other in Lebanon, Pa. It has been the contract manufacturer of Cold-EEZE lozenges for Quigley Corp., a developer and marketer of diversified health products that posted sales of $41.5 million.
According to David Deck, president of JOEL, the sale represents “a win for both ourselves, and Quigley, who has been our largest customer for the past several years. We believe the manufacturing expertise we will bring to the deal coupled with the marketing expertise that Quigley brings will create a robust synergy. JOEL currently has 72 employees, and no immediate change to the employee base is contemplated. The owners of JOEL sought to preserve American jobs in the communities in which we operate, and we believe this sale honors that goal.”
Deck and Dave Hess will assume president and chief operating officer responsibilities, respectively of the newly formed division at Quigley.
As of press time, no decision had been made whether Quigley would continue producing JOEL’s other products, which include organic hard candies under the Simon’s, Pharmaloz, College Farms and HealthCare brands.
In commenting on the acquisition, Quigley’s chairman and CEO, Guy Quigley noted that the company expects to generate savings by owning its own manufacturing facility. “The real benefit to the company is the manufacturing expertise this acquisition provides. Producing Cold-EEZE is a highly complex process, which requires very specialized and technical know-how developed by the company. Ownership of these assets will further protect our interests while tightening our control over the process, thus insuring the manufacturing formula is held secret.”
Warrell Presented
Kettle Award
Lincoln Warrell, CEO of The Warrell Corporation, Camp Hill, Pa., was honored this spring with one of the candy industry’s top honors, the Kettle Award.
The award, presented by Confectioner’s sister publication, Candy Industry magazine, recognizes distinguished achievements and contributions to the confectionery industry.
Unlike many of the award’s past winners, Warrell didn’t grow up in the candy business. He began his confectionery career in 1965 when he purchased Pennsylvania Dutch Candies with his brother, Carrol, and father, Jonas. In the years since then, his business relationships have been characterized by an emphasis on quality and fair pricing. His vision and leadership created The Warrell Corporation through acquisitions and internal growth. Today the business produces an extensive line of candy products and has substantial co-manufacturing and private-label capabilities.
Beta Brands Consolidates
Canadian Facilities
Beta Brands Limited, London, Ontario, Canada, is in the process of consolidating two of its facilities.
Manufacturing operations at North York, Ontario, and Hamilton, Ontario, are being transferred to Beta Brands’ 500,000 square-foot facility in London, Ontario.
“The consolidation of the Beta facilities will streamline our business,” said President/CEO Gary Musick. “This move allows Beta Brands to better manage costs and improve production efficiencies.”
Beta Brands produces and distributes a full line of jellies, jubes, marshmallows, panned chocolates, hard candies and crackers.
ECRM Unveils
New Technology
ECRM, Cleveland, Ohio, has introduced technology and software designed to improve the execution of its programs at the Efficient Program Planning Sessions it sponsors for vendors and buyers. According to ECRM, the new technology, which is powered by Gateway’s M275 tablet PC now being used at the ECRM sessions, can have a significant impact on productivity, particularly if brokers/sales representatives are given access to ECRM’s web tools on
At the start of an EPPS event, manufacturers are given tablet PCs, which house daily schedules and contact information, as well as their entire product listing. Sales and marketing executives meeting retail buyers at EPPS can flag items, displays or even entire plan-o-grams selected by the buyer during their meetings and then indicate follow-up action and timing needed on the tablet computers.