Wolfgang Candy uses the old to chart new pathConfectioner, acquired in bankruptcy court last year, plans to grow retail
There's a lot of talk about “new” at the 92-year-old Wolfgang Candy Co. after its sale last fall in federal bankruptcy court.
New strategic plan. New products. New people. New market focus. New intellectual capital. And infusion of new capital itself.
Then again, they talk a lot about the old, too.
The company's heritage as an Old World-style chocolate maker. Wolfgang's early sales at farmers' markets around the midstate. The longtime fundraising business that will continue to be an integral part of the firm's strategy for success.
All of it has a role to play in the York County-based company's plan to grow the business in four key channels: fundraising, private label manufacturing for retailers, contract manufacturing for other food makers and branded retail sales.
"That is the hardest part of our strategic initiative, is building the brand in retail, but we are confident that we can do it," said Andy Jacobs, Wolfgang's president who formerly worked at Dauphin County-based The Hershey Co.
The company, which continues to operate in three buildings in North York borough, has hired 12 sales brokers primarily focused east of the Mississippi River to help introduce the new Wolfgang product range, Jacobs said.
Wolfgang is a great turnaround opportunity, Jacobs said. It's great to have a family legacy, ownership and management in place, as well as have the business in a niche for continued growth potential.
But this isn't a firm that will be going up against the likes of Hershey or Mars, Jacobs said. It is well positioned to grow as a premium, specialty candy company, including in retail.
"And we have support from our majority owners to go do that," he said.
From a company's perspective, being in Wolfgang's position after where it was last year creates confidence going forward, said Michael Smeltzer, executive director of the York-based Manufacturers' Association of South Central Pennsylvania.
"Having financial resources behind them, having support behind them, gives them the confidence to go out and develop new markets and develop new products," he said.
It's also great to have a success story for the area's manufacturing community after two firms with operations not that far away in York decided to shutter their facilities, Smeltzer said.
Wolfgang's brand is also an ambassador for the York area, so if someone knows the product and has a business somewhere else, they might think of York the next time they think about making a move, he said.
Jacobs was named to the position in January, while the company's CEO remains Wolfgang family member Benjamin McGlaughlin.
McGlaughlin was among family members who came in as part owners when Michael Stillman, president of Lancaster County-based Food Management Systems Inc., led the acquisition of Wolfgang's assets and operations in October.
The company filed for bankruptcy protection in March 2012 and drew strong interest from an Alabama businessman, Wayne Sellers, whose deal never came through. The successful Stillman effort emerged late in the process.
"The company is today very sound, our year is off to a great start and we haven't lost one customer over the bankruptcy process," Jacobs said. "Not only have we not lost any, (but) with our new product lines, we are adding customers."
Wolfgang this week has had new retail offerings — which are promised to be just the first of more to come — on display in Chicago at the National Confectioners Association Sweets & Snacks Expo.
The first is a line called Wolfgang Naturals, which are 100 percent natural Belgian chocolate products for the premium candy areas within retailers.
Specifically, Wolfgang is going after the niche of adult buyers with an emphasis on women, he said.
Two of the three kinds of Wolfgang Naturals in the line today are dark chocolate and have a cacao content of 53 percent stamped prominently on the bag.
It's over the 50-percent cacao threshold for getting the stamp of approval from the popular Mediterranean diet for people to eat as much as they want, Jacobs said. However, it is below the 75 or 80 percent cacao content that competing products might have but that some people can find to have a harsh flavor, he said.
None of the emphasis on premium and specialty is anything entirely new to Wolfgang, McGlaughlin said. The niche is where they've always been, based on feedback from customers over the years who have seen the firm's products as hand-crafted, upscale and premium.
"Maybe it's coming in a different package and maybe we've put some components in the product that premiumize that specific product or product line," McGlaughlin said. "But what the consumer always received from Wolfgang is a high-quality, premium product."
The second new line goes back to Wolfgang's roots of selling products at farmers' markets across Central Pennsylvania. The Farmer's Fair offering is a creation to be "distinctly different" from other confectioners, Jacobs said.
It is made in small batches with local and fresh ingredients, packaged in craft-style bags that are resealable and seek placement in the deli, bakery and produce areas of grocery stores, he said.
The foot traffic in these areas is far greater than in the center-of-store aisles where chocolate and candy is traditionally placed, Jacobs said.
"So you have a much better opportunity if you can design products to be in produce," he said.
Premium or gourmet has in the past grown at a faster rate than the general chocolate category, but it does depend on the economy, said Susan Smith, spokeswoman for the National Confectioners Association.
It was growing faster a couple of years ago, but then was down a bit when the economy wasn't doing well, and lately it's picking up again, she said.
"It's the one category that depends a lot on the state of the economy," Smith said.
Also, the idea of targeting the produce, bakery or deli areas of stores makes sense, she said.
There are customers who go there who wouldn't also go down the candy aisle, but they still might be interested in certain chocolate offerings, Smith said.
The artisan approach also extends into the firm's contract manufacturing, which is focused on the Northeast and closer to the company, Jacobs said.
There are a number of firms for which chocolate is not a huge part of what they do, he said. That's where Wolfgang can help, whether something is complicated to make, produced in smaller runs or is a customized product, Jacobs said.
The bigger companies don't like small runs, he said.
"At Wolfgang, we love the small runs," Jacobs said. "We know who we are. We are going to be a specialty, premium chocolate company."
Wolfgang and fundraising
For many in Central Pennsylvania, York County-based Wolfgang Candy Co.’s products are best known as something schools and other groups running fundraisers sell.
Fundraising remains a prong of the firm’s strategy going forward.
Although it will likely fall as a percentage of sales relative to planned growth in retail and other channels, fundraising business is a solid foundation for Wolfgang, has high margins, is not expected to decline in volume and is targeted for some growth, President Andy Jacobs said.
“Is it going to be our fastest-growing business? Probably not, but we are investing in the fundraising business,” he said.
For example, the company has launched and is continuing to build out a Web presence for the fundraising business, including a new Web version of the fundraising catalogue, Jacobs said.
“It makes it very easy if we have a school that is raising funds in York, Pennsylvania, and somebody wants their grandparents to help in Pittsburgh, Pennsylvania; Grandmother can go on the website and see the catalogue herself,” he said.
The site also will include how-to materials and information to help support people who are selling Wolfgang products for fundraising, Jacobs said.
Other investments include new products for the sales channel, he said.
Over time, fundraising’s percentage share of Wolfgang sales likely will fall from a majority before the firm’s bankruptcy filing last year to less than 50 percent by around the end of this year, Jacobs said.
Further down the line, he said, it could fall to about 20 percent of total sales as other channels are anticipated to grow at faster rates and achieve larger volumes.