Confectioners Expand Product Lineups, Despite Rising Costs

By Bair, Jessica

REGION

The changes taking place inside the walls ofWolfgang Candy Company Inc. in York County can, in part, be attributed to fresh, dark-chocolate covered cranberries, blueberries and raspberries.

The all-natural chocolatedipped berries launched in September of last year and served as Wolfgang’s ticket to competing on a national level, said Michael Schmid, the firm’s managing partner of marketing. The creation, which has a one-year shelf life and no preservatives or additives, is Wolfgang’s stab at providing the national market with something unique.

The confectionery company shipped a batch of the new treats to Japan earlier this year, marking its first international deal.

“There’s nothing else on the market like it,” Schmid said. “The scale of our company has changed.”

The transition is an intentional one.

In 2003, Schmid, his brother, Steven Schmid, along with their cousins Robert Wolfgang III and Benjamin McGlaughlin, decided to leave their respective jobs and take over as the fourth generation of the family business.

“None of us wanted to come back and operate the business as is. That’s no fun,” Michael Schmid said. “So we charged ourselves with growing the company.”

Until this year, the company’s products were available mostly through holiday fundraisers and Wolfgang’s retail shop at its headquarters in North York, he said. The new leaders divided up the managementpositionsandsetoutto expand sales regionally and nationally.

Locally, the products now can be found in grocery stores including Weis Markets, Giant Food Stores and Karns Foods. Nationally, the company’s chocolate-dippedberriescanbe found across the Northeast, Southeast, Pacific Northwest and California, he said.

Revenue remained flat for Wolfgang from 2006 to 2007, at $10 million. But the company’s online sales have increased from about $12,000 in2004 to roughly $100,000 thisyear, he said.

The private-label manufacturing side of Wolfgang has been growing, too. Prior to 2004, about 3 percent of the firm’s work was dedicated to private-label work. The percentage has grown to about 20 percent, he said.

“We made a conscious commitment and investment into the marketing of the Wolfgang brand. It takes time for some of that to really hit,” Schmid said. “The stars are beginning to align.”

During the past four years, the firm operated without a president and chief executive officer. The company announced July 1 it had promoted Benjamin McGiaughlin, former managing partner of finance and administration, to that Jead position.

“We really need some top-down management … someone who’s bringing it all together,” Schmid said.

The managing partners decided in February to make the change. It made the most sense to make McGiaughlin the firm’s president and chief executive officer because of his background in management, McGiaughlin said.

“I’ve dabbled in everything,” he said. “The others have specific areas of expertise.”

McGiaughlin said he wants Wolfgang’s growth to continue. Based on the company’s growth plans, a plant expansion could take place within the next three to five years, he said.

The economic downturnis affecting Wolfgang in terms of the increased cost of fuel, packaging materials and charges from its suppliers, McGiaughlin said.

But McGiaughlin remains optimistic.

“When times get tough, people still need to give gifts,” he said. “People, quite frankly, still want to treat themselves.”

The slowing economy has been challenging confectioners with in- creased costs for ingredients and shipping, said SusanFussell, spokes- woman for the Virginia-based National Confectioners Association. The costs are ones candymakers will continue to struggle with this year, she said.

“The good news is that candy is an affordable commodity for consumers,” Fussell said. “They can’t buy that new car this year, but they can still afford to indulge themselves with a really nice piece of chocolate.”

On average, national retail sales of confectionery products increase between 1 percent and 3 percent each year. Last year, the industry sales clocked in at about $29 billion – an increase of about 3 percent from the previous year, she said.

The Warrell Corp. last year was able to secure partnerships with some of the top consumer-food companies in the country, said Kevin Silva, the company’s senior vice president. As a result, the Lower Allen Township-based firm experienced a 25 percent increase in revenue lastyear. Silva saidhe couldnot release the names of the new customers who allowed the company to provide more full-time year- round jobs last year than ever before, he said.

“Each year we strive to improve our operation, strengthen our staff, and prepare for business opportunities as they may become available,” he said.

The Cumberland County family business began in 1965 as Pennsylvania Dutch Candies, which now operates as a unit of The Warrell Corp.

This year the candy manufacturer must tackle the increasing costs of gas prices, rawmaterials, energy and health care, Silva said.

“(We’re doing) our best to offset this year’s enormous cost increases with improved efficiencies and greater plant throughput,” he said. “Balancing hiring with business ebb and flow is always difficult, and we strive always to grow carefully and profitably.”

Candy maker Mark Sands oversees the chocolate-enrobing line at Wolfgang Candy Company Inc. in North York. In 2003, the fourth generation took over the family business, which is adding products and expanding sales regionally and nationally.

More than 15,000 visitors pass through this lobby of Wolfgang Candy Company Inc.’s museum and store in North York. Mike Schmid, left, is managing partner of marketing, and Ben McGiaughlin is president and chief executive officer of candy company. In the background is a 1927 Model-T Ford that resembles the company’s first motorized delivery truck.

“The good news is that candy is an affordable commodity for consumers. They can’t buy that new car this year, but they can still afford to indulge themselves with a really nice piece of chocolate.”

Susan Fussell, National Confectioners Association

BY JESSICA BAIR

jessicab@journalpub.com

Copyright Journal Publications Inc. Aug 1, 2008

(c) 2008 Central Penn Business Journal. Provided by ProQuest LLC. All rights Reserved.