Monday, December 12, 2016

The History of Brach’s Confections. Brach's Palace of Sweets, Chicago, Illinois.

Founded in 1904 by Emil J. Brach, he invested his life savings, $1,000, in a storefront candy store. He named it "Brach's Palace of Sweets" and it was located at the corner of North Avenue and Towne Street (Town Street changed names to Frontier Avenue in 1909) in Chicago, Illinois. With his sons Edwin and Frank, he started with one kettle. 
Investing in additional equipment he was able to lower his production costs and sell his candy for 20 cents per pound, well below the more typical 50 cents per pound his competitors were charging. By 1911 his production had reached 50,000 pounds per week.

By 1923, Brach had 4 factories operating at capacity. Brach then invested $5 million (Today $68,600,298 dollars) in a new factory, beginning construction in 1921. It was built at 4656 West Kinzie Street, and consolidated production into one building. 

At the time, they were producing 127 different varieties of candy and had a capacity of 2,225,000 pounds per week. Over the years, this new plant was expanded and investments in new processes and equipment were made, including its own chocolate grinding plant and a large panning operation. 

In 1948, after an electrical spark ignited corn starch, a massive explosion on the plant's third floor killed 11 employees and injured 18. Much of the factory's north side was destroyed. Reconstruction brought the plant's capacity up to more than 4 million pounds of product per year, and it employed 2,400 workers, in 2,200,000 square feet.

It was recognized as the largest candy manufacturing plant in the world at the time. At its peak, 4,500 employees worked there. The plant was eventually abandoned in 2003 when new owners took over operations and production was moved primarily to Mexico. An administrative building was blown up for a special effects scene in The Dark Knight Batman movie in August, 2007, the rest of the complex is in ruins awaiting its eventual demolition.

Prior to World War II, Brach's produced several candy bars, including a chocolate-covered, honeycombed, peanut butter Swing Bar as well as a mint and almond nougat bar. After the war Brach's concentrated on bulk and bagged candies. It was in the period after the war that Halloween Trick or Treating became a popular activity. Brach's promoted its candy corn and other fall-themed candies, available in single-serve, pre-packaged packets.

In 1958 Brach's introduced the Pick-A-Mix concept. Customers could choose from a wide selection of products, scooping items of their choosing, and paying one price per pound. This was adapted from the barrels seen in general stores at the time. This concept brought the dying experience of buying candy at the local corner store into the new merchants, the supermarkets.
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 on sales of $640 million.

In 1987 Jacobs Suchard Limited, a Swiss chocolate and coffee conglomerate, purchased the company for $730 million and by the end of 1989, it 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 were reduced somewhat to $26 million. All this occurred 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 CEOs, moved its headquarters from the plant property to a penthouse office in one of Chicago's wealthiest suburbs, saw a loss of nearly 900 jobs (42% of the workforce at that time), and suffered a loss of key customers and market share.

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). Former executives cited Jacobs Suchard's autocratic management style and inability to recognize the difference between American and European candy consumption habits. The name of the company was changed to Jacobs Suchard Inc., a name few retailers or consumers recognized and product lines were trimmed from 1,700 to 400 in an attempt to cut costs. 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.

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 continued to experience a high rate of turnover and dismissals within the sales and marketing departments. Many of Brach's sales personnel left to work for its competitors.
In September 1994, E.J. Brach's purchased the Brock Candy Company of Chattanooga for $140 million, a year in which Brock Candy 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 E.J. Brach's was under American Home Products ownership. The merger attempt at that time was canceled due to concerns of an antitrust suit.
For a time the new company operated as the Brach and Brock Candy Company. This was later changed to Brach's Confections.

In 2003, Barry Callebaut AG purchased the new company. The principal owner of Brach's, 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.
In 2007, the company was sold to the Farley's & Sathers Candy Company, which in turn merged with the Ferrara Pan Candy Company in 2012 to form the Ferrara Candy Company.

1 comment:

  1. My Dad shipped Brach's candy in the 50's and early 60's. He was with the Chicago,Milwaukee, St. Paul Railroad. The Brach Factory had their own rail track right behind the factory. My Dad loved the people at Brach and we were raised on Brach candy.

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