Jelly Belly Candy Company Business Information, Profile, and History

Company Perspectives:

The Jelly Belly Candy Co. makes more than 100 mouthwatering candies, including such delights as chocolates, gummies, sour candies, and con fections for all the major seasons, and of course, the world's #1 gou rmet jelly bean.

History of Jelly Belly Candy Company

Jelly Belly Candy Company is a privately-owned candy company based in Fairfield, California, best known for its gourmet Jelly Belly jelly beans available in 50 official flavors, including such exotic flavors as chocolate pudding, pina colada, buttered popcorn, toasted marshma llow, and café latte. Other jelly bean products include sugar- free Jelly Belly candies; Sports Beans, which contain carbohydrates a nd electrolytes to aid athletes; and Bertie Bott's Every Flavor Beans , a Harry Potter-licensed line of jelly beans with such flavors as bo oger, dirt, ear wax, and vomit. The company has also created its vers ion of the M & M candy-coated chocolates called JBz, which are av ailable in a dozen flavors, including chocolate banana, chocolate mar shmallow, chocolate cherry, and chocolate cappuccino, Other Jelly Bel ly confections include candy corn, which the company has been produci ng for more than 100 years, chocolate Dutch mints, gummi bears and wi ggle worms, licorice pastels, chocolate cherry pectin drops, and Jord an Almonds. Jelly Belly also offers the JB line of gumballs. In addit ion to its Fairfield plant, Jelly Belly maintains a North Chicago pla nt and a state-of-the art distribution center in Pleasant Prairie, Wi sconsin. It also operates three retail stores in California as well a s stores in the visitor centers at the Fairfield and Pleasant Prairie facilities.

Company Origins in the Mid-1800s

While the Jelly Belly was not invented until the 1970s, the company t hat bears the candy's name traces its roots to a pair of brothers, 22 -year-old Gustav and 19-year-old Albert Goelitz, who immigrated to th e United States in 1867 from Germany, joining an uncle who had come 3 0 years earlier and settled in Illinois. It was here that Albert lear ned the candy making trade, and in 1869 he bought an ice cream and ca ndy shop in Belleville, Illinois, and began producing his own handmad e candy. He was soon joined by his younger brother who would pack the confections in a horse-drawn wagon and sell them to surrounding comm unities. The business prospered, the two brothers both married and be gan raising families, and eventually their sons learned the candy bus iness and became involved with the Goelitz Brothers Candy Company.

Goelitz Brothers survived the depression of 1873 but were not as fort unate 20 years later when the United States experienced another round of the periodic economic upheavals that struck the country in the 18 00s. The Panic of 1893 that ushered in a deep four-year depression ru ined the brothers, who were forced to sell their candy business. Gust av was emotionally devastated by the turn of events and died at the a ge of 55 in 1901. Albert, on the other hand, went to work for another company selling candy on the road until he died at the age of 80.

The sons of Gustav Goelitz carried on the candy making tradition. In 1898 Adolph Gustav and his friend William Kelley established Goelitz Confectionery Company in Cincinnati. They were soon joined by Gustav, Jr., and Herman Goelitz. The Goelitz Confectionery Company specializ ed in the new "butter cream" candies, which included candy corn, the invention of which was attributed to George Runninger of the Wunderle Candy Company. It was a difficult confection to produce because at t he time the three different colors--white, orange, and yellow--had to be produced by hand. This meant that workers, known as "stringers," had to carry buckets with 45 pounds of hot candy and while walking ba ckwards pour it into long, steaming trays of kernel-shaped molds. Thr ee colors meant three grueling passes. Goelitz stuck with candy corn longer than anyone in the industry, becoming the oldest manufacturer of the treat. Although Goelitz would also produce chocolates, pepperm ints, and licorice, it would be the butter creams, especially candy c orn, that sustained the company over the next few decades.

In 1901 William Kelley's cousin, Edward Kelley became the bookkeeper and eventually married one of the Goelitz sisters, thus creating a bl ood tie between the family partners. The company thrived and after a decade had outgrown its Cincinnati plant. A new operation was now est ablished in North Chicago, which enjoyed the benefit of good rail ser vice. Several years later the harmony of the family business was disr upted. After each of the family members had a chance to head the comp any, there was a split. Gustav, Jr., quit the candy business entirely , while Herman relocated to the San Francisco area to start his own c ompany, The Herman Goelitz Candy Company, which also began to produce candy corn. Because candy was very much a regional business at the t ime, there was no confusion in the public mind about two companies ca lled Goelitz.

For almost 60 years the two Goelitz candy concerns pursued parallel e xistences. They both survived the Great Depression of the 1930s, a ti me that saw nearly 900 candy manufacturers go out of business in a si ngle year. Candy corn was the salvation of both companies, despite th e price dropping from 16 cents a pound in the 1920s to less than nine cents a decade later. It was during the 1930s that another family be came involved in the business when Herman's daughter Aloyse married E rnest Rowland, who became the head of Herman Goelitz Confectionery. A s was the case with most industries in America, World War II revived the business of both Goelitz candy companies. Consumption of candy sk yrocketed, especially among servicemen, and candy companies, whose pr oduction was curtailed by sugar rationing, sold everything they could make. After the war, Americans continued to satisfy their sweet toot h, as demand increased by 60 percent.

Third Generation Takes Over in 1960s

A third generation took over the California and Illinois Goelitz cand y concerns in the 1960s, with cousins Herman Rowland in charge in the former and William Kelley in the latter. Both heavily dependent on t he sale of candy corn and other butter creams (mellocremes), they wer e equally threatened by an increase in competition in candy corn, whi ch led to an erosion in prices. Matters grew so bad, Rowland told Rac hel Barron of East Bay Business Times, "We would go downtown t o the post office a couple times a day looking for checks to be able to cover payroll." Rowland was advised by a banker to sell out. Inste ad, he chose to expand and looked to diversify the product lines. In 1972 he was driving with his parents to Las Vegas trade show, and wer e inspired by the desert landscape to create a candy that featured a cool mint crème center, covered in dark chocolate and encased in a candy shell. The result was Chocolate Dutch Mints, the first cho colate candy produced by the California company.

The introduction of Chocolate Dutch Mints was a good first step, but the existence of both the California and Illinois companies were soon threatened by the surge in sugar prices in 1975. Many candy companie s tried to hold off buying sugar until prices fell but couldn't hang on long enough and went out of business. Kelley shuttered the North C hicago plant for several weeks and managed to wait out the crisis, wh ile Rowland took on debt to buy sugar and stay afloat. Both managed t o survive the biggest threat faced by the family candy business since the Panic of 1893. Little did either of the cousins know that their darkest hour would soon be followed by the dawning of a new and even more prosperous era.

In 1975 in California Rowland was approached by David Klein, a driver for a candy distributor who had harbored a lifelong dream of making a "Rolls Royce" version of the lowly jelly bean, which in fact enjoye d a long history. A jelly center formula of sorts reportedly dated ba ck to Biblical times, a descendent of the Middle Eastern confection, Turkish Delight. The shell coating came from the panning process deve loped in France in the 17th century to produce Jordan Almonds. In Ame rica the two processes came together in the 1800s resulting in the cr eation of the modern day jelly bean, which became a staple of the gla ss jars of penny candy found in every general store. It would not be until the 1930s that the jelly bean began its close association with the Easter holiday. When Klein approached Rowland, Herman Goelitz Can dy Company was already producing jelly beans and in the 1960s had mad e miniature jelly beans favored by then-California Governor Ronald Re agan, who consumed the candy as a way to quit smoking cigarettes.

Klein's idea was to make jelly beans with natural ingredients, such a s fruit purees and citrus oils. Rowland agreed to take on the project , and in the summer of 1976 the company developed the first eight fla vors of what became known as Jelly Belly jelly beans, including root beer and cream soda, flavors never before found in jelly beans. To en hance the sensation, the flavors were mixed into both the center of t he bean and the shell. Another change was the way they were packaged: bags of individual flavors rather than mixed together. It was a winn ing combination with the public, and consumption of the gourmet jelly beans began to grow. Because it was a premium product, Jelly Belly c ould command a higher price and distance itself from the rest of comp etition, which was selling jelly beans as a low-margin commodity prod uct. Moreover, the company began getting requests for Jelly Belly fro m overseas customers in 1977, which set the stage for export developm ent.

Demand for Jelly Belly became so high that the California plant could not keep up. It was at this point that Rowland turned to his cousin in Illinois and the two family companies began working together to pr oduce the Jelly Belly, although they retained their independent statu s. The extra production capacity would be sorely needed after Reagan began his run for the presidency in 1980. During the campaign Reagan was photographed eating Jelly Belly jelly beans, and he told how he m aintained a fondness for jelly beans even after he quit smoking. Some 7,000 pounds of Jelly Belly jelly beans, which had become closely as sociated with Reagan's persona, were report- edly sold and consumed d uring his 1981 inaugural ceremonies. The candy was then made availabl e at cabinet meetings and offered to visiting foreign dignitaries, en suring ongoing publicity for the brand. In 1983 President Reagan even sent Jelly Belly jelly beans as a surprise gift for the astronauts o n the Challenger space shuttle mission that included the first Americ an female astronaut, Sally Ride. The Jelly Belly fad became so intens e that the California and Illinois plants had to operate around the c lock, and retailers had to place their orders two years in advance.

Mid-1980s' Plant Expansion

Even as the media attention waned, Jelly Belly jelly beans remained p opular, so much so that in 1986 Herman Goelitz Candy Company built a new factory and headquarters. Not only was the extra capacity needed to produce more jelly beans, the company by now had also become the f irst American candy maker to produce gummi bears and gummi worm candi es, and a number of other gummy items would follow.

From the mid-1980s until the mid-1990s, the sister Goelitz companies enjoyed an annual growth rate of 15 percent compounded. To keep up, i n 1992 the Fairfield facility was doubled in size. It also became a p opular tourist destination, as some 175,000 people a year would tour the plant by 1995. Most of them bought a lot of the products at the v isitor center store, the popularity of which prompted the California company to expand into retail, opening the first Jelly Belly factory outlet store in 1996 at the Factory Stores at Nut Tree in Vacaville, California. The North Chicago plant also maintained a store, but the operation was not as sophisticated as the Fairfield operation. In 199 6 22 acres of land was acquired in Pleasant Prairie, Wisconsin, a 25- minute drive from North Chicago, where a new plant and visitors cente r was to be built. The site would eventually increase to 50 acres.

Combined sales for the sister companies cracked the $100 million mark in the late 1990s, 70 percent of which came from Jelly Belly. To further exploit the brand name and differentiate itself from the com petition, the Goelitz companies began printing Jelly Belly on every b ean in 1997, using white food coloring and a special tray and printin g machine capable of labeling 20,700 beans each minute. Sales finally fell off somewhat in 1999 and competition increased, prompting a dec ision to postpone the building of the Wisconsin plant. Instead, $ 10 million was invested in a much-needed distribution center, which o pened in Pleasant Prairie in August 2001, while extra production capa city was found at the two existing plants.

In April 2001 the Goelitz sister companies merged into a single corpo ration, the Jelly Belly Candy Company. It was a move that made sense on several levels. Two independent companies sharing the Goelitz name confused both consumers and the industry, and by taking the Jelly Be lly name the families were building on a very recognizable brand. Jel ly Belly would gain even more exposure later in 2001 when for the fir st time it received a TV brand campaign.

Jelly Belly continued to develop new flavors and new confections. In 2002 it introduced Bertie Bott's Every Flavor Beans, a product based on a candy featured in J.K. Rowling's Harry Potter book series . A year later the company unveiled the candy-coated chocolate line c alled JBz. With sales reaching $125 million in 2004, Jelly Belly appeared poised to enjoy ongoing growth, eventually requiring the con struction of a new plant on its Wisconsin property.

Principal Competitors: Brach's Confection, Inc.; The Hershey C ompany; Mars Inc.

Chronology

• Key Dates:
• 1869: Goelitz Brothers Candy Company is founded by Gustav and Albert Goelitz.
• 1893: Goelitz Brothers are forced out of business.
• 1898: A second generation founds Goelitz Confectionery Company .
• 1922: Herman Goelitz breaks away to start The Herman Goelitz C andy Company in California.
• 1976: Jelly Belly jelly beans are introduced to the public.
• 2001: Goelitz Confectionery Company and The Herman Goelitz Can dy Company merge to form the Jelly Belly Candy Company.