August Storck Kg Business Information, Profile, and History

Company Perspectives:

FOCUS IS ON PEOPLE. This principle is consistently followed by Storck throughout all levels of the company. It is the basis for everything that makes Storck different, special and successful. And its concrete results can be seen in our closeness to the consumer, our responsibility to our employees, our understanding for our trading partners, our trust in our suppliers, and most of all, the high level of credibility of our brands. Storck produces and sells confectionery products that are treasured by people in all corners of the world. Through their quality and uniqueness, our brands give people the good feelings of security, warmth and comfort.

History of August Storck Kg

August Storck KG is the German-speaking region's leading manufacturer of candy and confectionery and is also one of the world's major candy companies. The company's flagship product is Werther's Original, produced by the company since the turn of the 20th century and one of the best-selling and globally recognized candy brands. While August Storck itself accounts for a major proportion of the production of the popular candy, it is also produced or marketed, and sometimes both, under license in a large number of foreign markets--for example, by Alexander Stuart in Australia and by Morinaga in Japan. August Storck has a number of other strong candy brands as well, including the popular Storck Chocolate Riesen, a revival of the company's first branded candy; nimm2, launched in the 1960s as one of the first "vitamin-enriched" candies; Campino gummi bears; Mamba fruit chews; merci gift chocolates; and Chocolate Pavot, launched in 2003 to mark the company's 100th anniversary. Headquartered in Berlin, Storck operates production facilities in Halle, Berlin, and Ohrdruf in Germany as well as in Winchester in England and Skanderborg in Denmark. The company has sales subsidiaries in 20 countries, with distribution partnerships in 63 countries. In 2002, the company's total production topped 250,000 tons. August Storck remains privately held and controlled by the founding Oberwelland family. Axel Oberwelland took over as company president--and majority owner--in 2003.

Beginnings and Early Growth: 1903-40s

August Storck was founded in 1903 as the Werther's Sugar Confectionery Factory in the small village of Werther, in Germany's Westfalia region. The company's founder, August Storck (the family's name later became Oberwelland), started the business in a little workshop with just a cooking kettle and panning kettle and three employees in a space not larger than 200 square meters.

The group at first produced a variety of hard candies, which quickly became popular in the local region, and soon reached a respectable production level of 2500 kilos per year. In 1909, company employee Gustav Nebel developed a recipe for a new treat based on a mixture of caramel and cream. Branding of candies had not yet become common practice in Germany at this time. Instead, candies were generally known by the names of their manufacturer or the company's village. The Storck company's new treat became known as Werther's.

The popularity of Werther's helped the business grow strongly in the years leading up to World War I. The company stepped up production, and by the outbreak of the war employed 12 people, with sales throughout most of Westfalia. Yet the devastation of the war put the company's growth on hold. Recovery was slow, hampered by August Storck's ill health. Nonetheless, by the early 1920s the company had once again reached full production, making some 200 different--and unbranded--candy types.

In 1921, Storck-Oberwelland retired and turned over the business to his son, Hugo Oberwelland; nonetheless, the company became known as August Storck KG. Storck continued as a small-scale producer of unbranded candies, although its sales increasingly extended beyond its Westfalia home base. The company's transition to the national level came in the early 1930s with its development of a new, chewy caramel candy.

Storck recognized the potential of the new candy type, and in 1934 the company took the bold move of ending production of all other candy varieties--including the Werther's hard caramel cream--in order to concentrate on its new caramel. The company went a step further, giving one of its candies a name for the first time and becoming the first in Germany to present a wrapped branded candy. Called the "Storck 1 Pfennig Riesen," the new candy was individually wrapped and cost just one pfennig. The low price and recognizable wrapping made the candy a national success. By the late 1930s, the company's production had jumped to more than 1,150 kilos and Riesen became Germany's most popular candy. In 1938, in order to keep up with rising demand, the company opened a new production plant in Schotmar, and by the end of that year Storck had produced more than 1,600 tons of Riesen candies.

Yet Storck's good fortune ended with World War II, as shortages of ingredients forced it to shut down production. The company was forced to rebuild at the end of war, and in 1945 inaugurated construction of a new factory, now in the town of Halle. The new plant was designed with an eye on future growth as the company began testing new candy formulas. Nonetheless, the Riesen--produced on the company's 100-meter-long caramel belt--remained the company's core product for some time to come.

Diversifying Brands: 1950s-60s

The booming German economy of the postwar era stimulated pent-up demand for sweets, and by the early 1950s Storck became the country's largest candy manufacturer, producing more than 15,000 tons per year. The company also hired a dedicated sales force, supporting its expansion throughout Germany. In 1953, Storck began exporting its candies for the first time, finding eager markets internationally that included the United States and Hong Kong. The company also began signing on the first of a legion of local licensing partners, enabling it to introduce its brand name into the French, Italian, Austrian, and other markets.

By then, Storck had developed a new branded candy, the Mamba, a fruit chew. Packaging for the Mamba revealed the company's astute sense for marketing--the candy's package featured six pieces, making it easy to share. Introduced in 1953, the Mamba found a ready market and remained a company best-seller into the next century.

Storck continued diversifying its operations in the 1950s. A significant new operation was launched in 1954, when Storck began producing chocolates for the first time. In order to ensure the quality of its milk--and especially cream--supply, Storck entered dairy production as well. The company quickly earned a reputation for the quality of its chocolates. By the end of the 1950s, production had reached 150 tons per day.

Hugo Oberwelland's son Klaus joined the company in the early 1960s, taking charge of its marketing operations. The younger Oberwelland quickly had his first project--that of promoting a new and innovative candy. Launched in 1962, the "nimm2" became one of the world's first vitamin-enriched candies, providing an assortment of essential vitamins and launching a wider trend toward new health food types of products. The nimm2 became the most popular children's candy in Germany and later became a best-seller in more than 40 countries worldwide.

The 1960s proved an era of innovation for the Storck company, as it developed and launched a number of its perennial best-sellers. In 1964, the company released a new specialty "gift" chocolate, the "merci," featuring a selection of individually wrapped chocolates. Merci would later find markets in more than 70 countries. The boost in chocolate sales led the company to open a new chocolate factory in Berlin in 1967.

The company also began developing its own production technologies, and by the mid-1960s had developed a method of molding a smooth, clear, chewable candy, which became known as "gummi" candy. In 1966, the company launched its first gummi brand, Campino, featuring fruit-flavored bear shapes. That product became one of the company's most successful brands, and by the end of the decade Campino alone accounted for some 3,600 tons of the company's total production.

Yet the success of the company's previous brands paled in comparison to its next success. In 1969, Storck relaunched its original caramel cream. Called "Werther's Echte" ("genuine"), the product immediately attracted candy shoppers. Backed by a highly successful marketing campaign featuring a grandfather and his grandson, Werther's Echte quickly imposed itself as one of the world's best-selling candy brands. The candy's success propelled Storck itself into the major leagues among world candy producers. By the turn of the 21st century, production of Werther's alone topped 25,000 tons per year and was sold in some 80 countries.

International Operations: 1970s-90s

Klaus Oberwelland took over as head of the company in 1971, overseeing a company that now manufactured nearly 45,000 tons of confectionery per year. Storck continued developing new brands and candy varieties and in 1973 had a new hit with the launch of Toffifee, which combined caramel, hazelnuts, and chocolate.

By then, the company's operations had begun to expand internationally, with its first sales subsidiary in Austria dating back to 1962. In 1974, the company added a sales subsidiary in the Netherlands, and then opened a subsidiary in the United States, Storck USA LP, established in Chicago in 1977. Other international operations followed--in Belgium in 1979, Switzerland in 1985, and Spain in 1989. The company continued adding new subsidiaries through the 1990s, including Denmark in 1991, Russia in 1996, Poland in 1997, Sweden in 1999, Canada and Hungary in 2000, the Czech Republic in 2001, and Slovenia and Slovakia in 2002.

In the meantime, Storck had also grown by acquisition. The company's first purchase came in 1981 when it bought up German rival Dickmann. The company then relaunched its popular candy brand as the Super Dickmann. That success was joined by another hit product launch, the Knopper, in 1983.

Storck's next acquisition allowed it to strengthen its foothold in the United Kingdom, where it had begun importing Werther's Echte in 1986. In 1988, the company acquired Bendick's of Mayfair, a popular producer of mint chocolates with a production facility in Winchester, England. Bendick's had been founded in 1930 and held the honor as an official chocolate producer for the British royal family. A later acquisition came in 1999, when Storck bought up a share in Elvirasminde, a Danish candy maker.

Also in 1988, Storck decided the time was right to relaunch the Riesen brand. In order to do so, the company decided to adapt its recipe to meet the taste of modern consumers. Wrapping the original Riesen caramel in dark chocolate, the company created its newest successful brand, Storck Chocolate Riesen.

The fall of the Berlin wall led the company to transfer its headquarters to Berlin in 1989. The company also began looking for a site for a new production facility. In 1993, Storck settled on the town of Ohrdruf, in the former East Germany, which became its largest and most modern factory. The Ohrdruf site particularly emphasized chocolate production and backed up the launch of two new chocolate types, merci Crocant, in 1994, and merci Pur, in 1995.

International Candy Leader in the 21st Century

Storck had increasingly been targeting the overseas market, especially the Middle East and Asian Pacific regions. In order to bring its brands into these areas, the company began licensing its products to local producers and distributors, such as Stuart Alexander in Australia and Morinaga in Japan, among many others. Storck itself added operations in these regions in the 1990s, starting with the opening of Storck Asia Pacific in Singapore in 1995. The company also opened production facilities in the Philippines in the later part of the decade.

Back at home, the company launched a new generation of its vitamin candy in 1996. The nimm2 Lachgummi presented the popular vitamin-boosted candy in chewy form and proved a hit with German children, who propelled the treat to the company's top position among candy brands. The company's winning streak continued into the 2000s with the launch of a new variety of the Campino brand, combining fruit and cream flavors. By 2003, sales of the new Campino had expanded to more than 50 countries. By then, the company's total production had reached more than 250,000 tons per year. Yet the company's Werther's brand had by then become its clear flagship. In 1998, in order to support the candy's international development, Storck decided to rename the candy "Werther's Original."

In 2003, Storck celebrated its 100th anniversary. As part of the celebration, the company launched another new confectionery brand, the Chocolate Pavot, which combined poppy flavors with whipped Marc de Champagne cream. At the same time, Klaus Oberwelland, who had led the company for more than 30 years, turned over the business--as well as majority ownership--to his son Axel Oberwelland. With the fourth generation of the Oberwelland family at the helm, Storck prepared for candy-coated success in the future.

Principal Subsidiaries: Bendick's of Mayfair (U.K.); Elvirasminde A/S (Denmark); OOO Storck (Russia); Storck (Schweiz) GmbH (Switzerland); Storck Asia Pacific Pte Ltd (Singapore); Storck BV (Netherlands); Storck BVBA; Storck Canada ; Storck Ceska Republika sro; Storck Danmark A/S; Storck doo (Slovakia); Storck Hungaria Kft; Storck Iberia Slu (Spain); Storck Mitarbeiter Beteiligungsgeschellschaft; Storck Slovensko; Storck Sverige AB (Sweden); Storck USA LP (United States).

Principal Competitors: Nestlé S.A.; Mars Inc.; Cadbury Schweppes PLC; Wilbur Chocolate Company Inc.; Taiwan Sugar Corporation; Parmalat S.p.A.; Orkla ASA; CSM N.V.

Chronology

• Key Dates:
• 1903: August Storck-Oberwelland opens a small candy workshop in the town of Werther, Westfalia, Germany, called Werther's Sugar Confectionery Factory.
• 1909: The company begins producing caramel cream candy, later known as Werther's Original.
• 1934: The company's launches its first branded candy, Storck 1 Pfennig Riesen, which remains its sole product for nearly 20 years.
• 1949: The company opens a new factory in Halle, Westfalia, Germany.
• 1953: Mamba candy brand is launched; the company begins exporting its candies.
• 1954: The company begins producing chocolate and operating its own dairy production.
• 1962: Vitamin-enriched nimm2 is introduced; the company opens its first foreign sales subsidiary in Austria.
• 1967: A Berlin production facility is opened.
• 1969: Caramel cream, called Werther's Echte, is relaunched.
• 1977: A sales subsidiary in the United States is established.
• 1981: The company acquires Germany's Dickmann and its brands.
• 1988: The company acquires U.K.-based Bendick's of Mayfair and its Winchester, England, factory.
• 1995: The company opens its first Asian Pacific subsidiary in Singapore.
• 1998: The company globally rebrands Werther's as Werther's Original.
• 2003: The company celebrates its 100th anniversary with the launch of Chocolate Pavot brand.