Pez Candy, Inc. Business Information, Profile, and History

Company Perspectives:

An integral part of the American scene for approximately 50 years, PEZ Candy continues to be enjoyed by generations of Americans. PEZ was first marketed as a compressed peppermint candy over 70 years ago in Vienna, Austria. The name PEZ was derived from the German word for peppermint ... PfeffErminZ. Today, over 3 billion Pez Candies are consumed annually in the U.S.A. alone. With great tasting flavors and collectable dispensers, PEZ is more than just a candy ... it's the pioneer of 'interactive candy' that is both enjoyable to eat and fun to play with.

History of Pez Candy, Inc.

Pez Candy, Inc. is the United States manufacturer and marketer of Pez candy. Pez is unique among candies because it is a combination candy and toy. The candy itself is fruit flavored and brick-shaped, designed to be inserted into a dispenser. The dispenser is a plastic rectangle topped with a head shaped like any of various fanciful characters. Some dispensers tie in with holidays, such as a witch for Halloween and Santa Claus for Christmas. The company often designs dispensers to tie in with blockbuster movies, as it did when it featured a series of character heads from Star Wars. The company has designed many Pez dispenser heads based on licensed Disney characters, as well as cartoon characters such as Porky Pig, Popeye, and the Teenage Mutant Ninja Turtles. Since the company began marketing the dispensers in 1955, it has produced hundreds of models. In the 1990s, the dispensers became the object of avid collectors. Pez Candy, Inc. manufactures the candy at its facility in Orange, Connecticut, while the dispensers are made in Hungary, China, and Slovenia. Pez candy enjoyed a heyday in the 1960s and 1970s. The company was more or less dormant in the 1980s, doing no advertising. The candy was rediscovered in the 1990s, and a mania for collecting the old dispensers fueled interest in the product.

Antecedents in Europe

The unusual candy named Pez was invented around 1927 by Eduard Haas III, the scion of a distinguished Austrian family of baking powder manufacturers. Eduard Haas I was a physician who seemed to have invented or at least pioneered baking powder, advocating it as a superior leavening that made pastries and cakes light enough even for patients suffering from stomach complaints. Haas's baking powder was one of many of the doctor's obsessions. Not all were so benign. He died suddenly as a result of medical experiments he performed on himself. His son, Eduard Haas II, had just begun his own medical career when his father died. Forced to support his family, the son left medicine and became a grocer, marketing his grandfather's baking powder as well as pre-measured cake mixes. It was his son, Eduard Haas III, who propelled the baking powder business to greater heights, and along the way developed Pez. Eduard Haas III used newspaper ads to market the cake mixes and baking powder he made by his grandfather's recipe. When he was just 18, in 1915, Haas III was granted a trademark for Hasin cake mix and a slogan proclaiming its health benefits. The Haas products, invented by a doctor, had a reputation for wholesomeness, and before World War I, Haas had distributed millions of recipe booklets and baking tips throughout Austria. The family business had become a thriving concern. The company faced difficulties following World War I, but was eventually operating three branch factories, and producing baking powder, cake mix, vanilla, blancmange powder, and Quittin, a substance that helped jams set.

Eduard Haas III was described by contemporaries as a health fanatic. He enjoyed sucking peppermints, finding them calming and refreshing. He considered sucking mints a vastly superior habit to smoking tobacco. Peppermints at the time were made by adding peppermint oil to boiled sugar, and they were sold through apothecaries. Haas had the idea of using his company's equipment to manufacture peppermints through a cold-press process, so that the costly peppermint flavoring oil would not evaporate. Haas set his company's chemists to experimenting some time in the early 1920s, and soon had a product that allegedly impressed friends and factory visitors so much that they begged to know where they could purchase it. Haas then set about finding a way to make the mints so that they would not have to be packed by hand. Using existing equipment that was designed to make effervescent drink cubes, Haas came up with the classic brick-shaped tablet. He named it Pez, based on the German word for peppermint, Pfefferminz.

Pez soon spread across Europe, advertised by attractive 'Pez Girls.' It was touted as an alternative to smoking, or at least a breath freshener for use after smoking. It was not a children's candy, but an adult product. One early slogan translates as 'Smoking prohibited. PEZing allowed.' Pez was first sold in pocket-sized tins.

After World War II, the Haas Austrian factories had to be rebuilt, and some Haas products, including baking powder and blancmange mix, were temporarily prohibited. Pez though, survived. In 1948, Haas applied for a patent for a new kind of Pez container. This was a little rectangular box with a hinged lid, meant to mimic a cigarette lighter. This Pez box made its debut in Austria in 1949, and a U.S. patent for the device was granted in 1952.

U.S. Company Launched

Pez was known throughout Europe, and the name Pez was allegedly English, a claim that allowed Haas to sidestep rigorous Austrian packaging requirements. But the sweet was not sold in the United States. While economies across Europe were in ruins, the U.S. was booming. Consequently, in 1953 Eduard Haas III recruited an Austrian man of Czech heritage, Curt Allina, who had been raised in the United States, to head up an American marketing arm for Pez. Pez-Haas, Inc. was incorporated in 1953, with offices in New York. The company sold Pez candy through East Coast distributors, marketing it as a sophisticated adult treat. The early flavors were peppermint, lemon, and chlorophyll mint. The candy began its U.S. push with vigorous claims to its healthfulness. Pez was supposed to be good for your nerves, to restore confidence and self-esteem lost to bad breath, to stave off hunger pangs and so allow consumers to lose weight, and to stimulate the circulatory and respiratory systems and fight infections. The cigarette lighter-shaped dispenser was not only a trick to play on smokers asking for a light, but it was hygienic, allowing Pez users to give the candy to friends without touching it. As an item for adults, Pez was marketed at a much higher price than other candies. Candy bars in 1953 cost five cents, and Pez sold for 25 cents for a dispenser and two refills. But Pez did not catch on in the United States like Haas had hoped. By 1955, plans were underway to convert Pez to a genuine children's product. Instead of the strong peppermint and other adult flavors such as coffee and eucalpytus, Pez-Haas, Inc. began selling fruit flavors including orange and wild cherry. That same year saw the first toy-like dispensers. These were unlike the later headed dispensers, in that the whole body of the figure was molded. By 1957, the design was simplified to the head-only format. The first licensed character was the sailor cartoon character Popeye, who headed a Pez dispenser in 1958.

By 1960, all marketing of Pez in the United States was directed at children, and the old adult flavors and cigarette lighter-style dispenser were no longer available. The company ran television commercials on children's shows and offered children special premiums, such as a toy gun that shot Pez pellets, if they mailed in Pez wrappers and a small amount of cash. Pez was a success in the United States, soon selling beyond the East Coast and reaching the entire country. The company contracted with Disney to license its popular movie characters for Pez dispenser heads, and came up with a succession of original designs as well. The company moved its headquarters four times in the New York City area in the 1950s and 1960s, until it built a new facility in Orange, Connecticut, in 1974. The new headquarters also included a manufacturing facility. The dispensers continued to be manufactured abroad, in Austria, Yugoslavia, Portugal, and Hong Kong, but after the Connecticut plant was finished, the candy was made in the United States. Haas Foods continued to make and sell Pez candy and many other products in Europe, and Pez-Haas Inc. had exclusive rights to the U.S. market. By the start of the 1970s, the American company accounted for about 25 percent of Haas Foods' total worldwide sales and more than 50 percent of worldwide Pez sales.

Quiet Times in the 1970s and 1980s

Pez had taken off in the United States soon after it changed from an adult product to a candy aimed at children. It reached a nationwide market by the 1960s, and was associated with scores of popular movie and cartoon characters, from Peter Pan to Frankenstein. By the time the company moved to Connecticut in 1974, advertising had been pared down. The company mostly ran print ads in candy industry journals and did not try to appeal directly to children, as it had earlier. The company investigated working with McDonald's in the 1970s, to make Pez dispensers as a give-away item with the restaurant's children's meals, but the scale of the production was too large for Pez to handle. The company persisted as a relatively small player in the candy market. In 1979, Curt Allina, who had built Pez-Haas up from its beginning in 1953, was abruptly terminated. In the 1980s, the company released fewer new dispenser designs than it had previously, though it continued to find tie-ins to licensed characters. The 1980s saw a series of Warner Brothers cartoon character Pez dispensers, the cartoon cat Garfield, and the Smurfs, among others. But the company kept a low profile. In the late 1980s, the company name changed from Pez-Haas Inc. to Pez Candy, Inc., to indicate that it sold only Pez, and not other Haas products.

Resurgence in the 1990s

By the early 1990s, Pez Candy, Inc. had done virtually no advertising for about ten years. Although the company continued not to advertise, its namesake product still got talked about. The 1986 film Stand By Me mentioned Pez, when one character claimed the candy as his favorite food. Similar placements in movies and television multiplied in the 1990s, as Pez was rediscovered as a nostalgia item. Pez was mentioned on the popular television show 'Murphy Brown' and on Jay Leno's 'Tonight Show' in the early 1990s. A 1992 episode of 'Seinfeld,' one of the most popular television shows of the 1990s, featured a sub-plot dedicated to a Tweety Bird Pez dispenser. All the media attention sparked sales for Pez. The company expanded its Connecticut plant in the early 1990s to handle the mounting demand. Sales for 1992 were $18 million.

By the mid-1990s, collecting old Pez dispensers had become a noticeable nationwide mania. By 1996, Pez collectors held several conventions, each drawing hundreds of people. Rare dispensers were sold for hundreds, sometimes thousands, of dollars. Collectors launched newsletters and web sites, and compiled detailed timelines and product lists of the dispensers. Pez was even indirectly responsible for the birth of one of the most successful Internet companies, eBay Inc. The girlfriend of eBay founder Pierre Omidyar was a Pez collector, and she had the idea of an online source for trading Pez dispensers. Thus eBay was born, and it soon became one of the Web's most trafficked spots. Pez Candy, Inc. was not directly involved in any of the fervor surrounding its products, but without doing any advertising, Pez claimed tremendous name recognition.

By the end of the 1990s, Pez Candy, Inc. seemed to be moving to take fuller advantage of its popularity. In 1999, the company made an arrangement with the fast-food chain Jack-In-The-Box to sell 'Jack'-head Pez dispensers at its restaurants for $1.99 each. This was Pez Candy's first successful foray into the children's meal premium market. Jack-In-The-Box was a relatively small chain, with 1,450 units compared to over 12,000 for McDonald's in the United States. Competition between McDonald's, Burger King, Taco Bell and other fast-food chains for enticing toys was intense, and Jack-In-The-Box hoped to win some attention by offering Pez. Pez Candy's president Scott McWhinnie noted in an April 12, 1999 article in Nation's Restaurant News that Pez was indeed designed for children three and up, but the candy currently had an immense adult following.

The Jack-In-The-Box promotion was followed in 2000 by a deal with Parlux Fragrances Inc. of Fort Lauderdale, Florida, to market Pez-brand perfumes and bath products. Parlux made fragrances for adults, such as a Perry Ellis brand scent, and it did not anticipate putting out grape Pez perfume. It licensed some of Pez's generic dispensers, such as a clown, policeman, and bride and groom, and hoped to put out its new scents in 'Pez-inspired' containers, according to the Wall Street Journal of January 7, 2000. The agreement with Parlux, which was to run for five years, was clearly trading on the Pez brand's popularity and high name recognition with adults. Sales for Pez Candy, Inc. stood at an estimated $21 million by the end of the 1990s, not a huge increase since the beginning of the decade. But the company seemed ready to take its popularity a step farther, forging innovative marketing agreements. The product seemed to be going back toward its original marketing in a way--not as a hygienic breath mint but as something adults clearly craved.

Principal Competitors: Ferrara Pan Candy Co.; Nestlé USA, Inc.

Chronology

• Key Dates:

• 1927: Eduard Haas III's Austrian food company begins marketing Pez in Europe.
• 1953: American company Pez-Haas, Inc. markets Pez in the United States.
• 1955: Pez is recast as a children's candy instead of adult mint.
• 1974: Pez Candy moves to Orange, Connecticut, begins U.S. candy production.
• 1992: Episode of the popular television series 'Seinfeld' involving Tweety Pez highlights craze for Pez among adults.