April 7, 2013

CHOCOLATE EVOLUTION

Even old-fashioned candy makers are changing strategies to meet economic realities that are no longer so sweet.

By TIFFANY HSU / Los Angeles Times

(Continued from page 1)

Chocolate makers adjusting recipes for success
click image to enlarge

Bertha Ramos sorts freshly coated chocolate marshmallow eggs at a See’s Candies factory in Los Angeles.

Los Angeles Times photos

Chocolate makers adjusting recipes for success
click image to enlarge

Arturo Barboza tosses house-made honey marshmallows, the start of See’s Candies’ Rocky Road Eggs.

Brands are adjusting their marketing efforts, especially during holidays.

This year, companies launched more seasonal products instead of holiday-specific candies, which usually head straight to discount racks once celebrations are over. Hershey introduced an array of candies in spring colors, rather than wrapped kisses emblazoned with the word "Easter."

"The move is to stretch the occasion beyond a day," Mogelonsky said. "Companies have to extend the salability of the product, or they'll lose money."

For 41 years, See's has been a tiny but reliable part of investment guru Warren Buffett's Berkshire Hathaway Inc. The candy maker, which Buffett bought for $25 million in 1972, belongs to the Oracle of Omaha's wide-ranging retail stable, which includes home furnishings, jewelry, cooking equipment and party supplies.Buffett has said that See's has been such a steady performer that it has helped finance some of his other purchases over the years.

" 'Buy commodities, sell brands' has long been a formula for business success," Buffett wrote in 2011. "It has produced enormous and sustained profits for Coca-Cola since 1886 and Wrigley since 1891. On a smaller scale, we have enjoyed good fortune with this approach at See's Candy since we purchased it."

But even at a stalwart such as See's, efforts are apparent to adapt to the less-than-sweet changes facing the industry -- although not on public display because the candy maker rarely offers tours.

As with the company's Bay Area kitchen, which rivals the L.A. factory in size, some tasks that once were performed manually are now delegated to machines to improve efficiency and cut costs. Managers said the new technologies have caused a gradual reduction over the years in the Los Angeles facility's work force, which currently numbers about 150 people -- a tally that doubles around Christmas.

Plenty remains to be done by hand, such as the painstaking decoration of tender chocolates and the removal of imperfect candies from the production lines. The company still uses matriarch Mary See's original recipes but has raised prices in recent years to offset soaring ingredient costs.

There's also a rebranding effort under way at See's. Internally, the effort is dubbed Polishing Our Gem.

The website underwent a face-lift to draw more online shoppers. A new catalog, with less clutter and new fonts and images, debuted around Valentine's Day.

And See's, which had focused on grandmothers and great-grandmothers, is now targeting mothers in their 30s. The company says it needs the broader demographic to beat out intense competition.

"We just know that for growth, we need to onboard a new fan base," said Tracy Cioffi, See's vice president of marketing and advertising. "It's a difficult dance, but it's one we have to do."

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