Goetze’s Candy Company,Inc.

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Goetze’s Candy Company,Inc.

INVENTION OF A NEW KIND OF CARAMEL

FOCUSING ON CARAMEL SALES

NEW FLAVORS, NEW PRODUCTS, NEW SIZES

PRINCIPAL COMPETITORS

INVENTION OF A NEW KIND OF CARAMEL

In 1895, August L. Goetze left his work as a printer and an engraver in Baltimore, Maryland. Joined by his son, William A. Goetze, he began manufacturing a variety of confections, including peanut chews, taffy, and chewing gum, in a basement kitchen at McDonogh and Madison Streets in the heart of the city. The company, which Goetze and his son named The Baltimore Chewing Gum Company, was located around the corner from Johns Hopkins Hospital. In February 1897, the business relocated to Ashland Avenue and Bond Street where it remained until 1928.

R. Melvin Goetze, Sr., son of William A. Goetze, joined the company in 1909. In 1917, he invented “chu-ees,” a soft, chewy caramel and the precursor of what was to become the company’s core product. Goetze and his father began experimenting with adding wheat flour to their caramel base and the result was a confection with some pastry-like qualities. “It doesn’t stick to your teeth and it’s not super-sweet, which is why adults seem to like it more than children,” explained the company’s fifth generation vice-president Mitchell Goetze of this confection, in a 2004 Style magazine. The Caramel Cream, which in some regions of the country came to be sold as a Bulls-Eye, had a sugar cream center, to enhance its sweetness.

Throughout the 1920s, the company’s business grew steadily. August Goetze died in 1924 and, by 1928, The Baltimore Chewing Gum Company had to move to a new, 24,000-square-foot facility on Monument Street in order to handle production. Goetze, Sr., planned and designed the entire plant and its equipment. He even designed and built the new machinery, which allowed for three times the company’s output prior to the move.

According to the company’s web site, The Baltimore Chewing Gum Company survived the stock market crash of 1929 due to its private, family-based ownership. Throughout the 1930s and the 1940s, the Goetzes owned and operated the company, which continued to thrive and to produce its small line of candies, which then still included chewing gum. In 1935, the third generation of Goetzes joined the family business. The company, which initially had sold its goods regionally, began to ship its candies throughout the United States. Its gum traveled as far as Hawaii and Puerto Rico. Still, the company followed a strict practice of “cook today and package tomorrow,” producing only to-fill orders; it never stockpiled its items, making only as much as it could sell.

Then in 1942, sugar rationing began, and the company cut back on its candy production. The chicle used to produce its chewing gum also became expensive. The Goetzes decided to stop buying chicle and to produce only one candy, the Caramel Cream, by then the candy company’s best-selling item.

FOCUSING ON CARAMEL SALES

The 1950s were a decade of change and focus for the small company, which, in 1951, changed its name to Goetze’s Candy Company and, in 1958, incorporated under that name. Beginning in the 1950s, under the influence of R. Melvin Goetze, Jr., a third-generation family member, Goetze’s Candy invested in automation as its primary means of improving the business. The company had the distinction of being the first to receive a delivery of corn syrup by tank truck in Baltimore in October 1951. Also that year, Goetze’s Candy Company switched from wax paper to cellophane for twist-wrapping its Caramel Creams. By the end of the decade, the fourth generation of the Goetze family was entering the business.

Throughout the next four decades, Goetze’s Candies created and tried marketing new flavors of its original caramel cream formula. Some, such as banana, peanut butter, cherry, licorice, and butter rum, came and went quickly. The company remained strictly family-owned and operated, honoring a commitment that the Goetzes made to their business and to future generations.

In a 1996 issue of Candy Industry, Spaulding Goetze, a fourth-generation member of the Goetze family, former commodity broker, and then president of the 101-year-old Goetze’s Candy Company, explained the family’s methods for keeping ownership of the company in the family. Only family members who worked for Goetze could become stockholders. However, the company did not guarantee a job for all Goetzes; only those truly interested were welcomed aboard. In fact, management expressly encouraged family members to work outside of the company for a while in order to maintain a smoothly run business.

In addition, the Goetze family developed a unique practice for transferring ownership of Goetze’s Candy from one generation to the next. The up and coming generation had the responsibility for writing their parents’ will. Spaulding Goetze stressed that this practice “[brought] everything out in the open so people aren’t worrying about what they’re going to get” and left family members free to concentrate on the business of running the company. What this meant, additionally, was that at no point did those in management feel free to sell the company.

NEW FLAVORS, NEW PRODUCTS, NEW SIZES

Shortly before Goetze’s celebrated its 100th anniversary and the fifth generation of Goetzes joined the company in 1995, it introduced another new product, the Cow Tale in 1992. The Cow Tale, a long, thin, soft candy with a cream filling and caramel-like exterior, was produced originally only in one flavor, the same as that of Goetze’s original vanilla Caramel Cream. However, after the Cow Tale became popular among both adults and children and assumed the status of the number one 25-cent candy item in the United States, Goetze’s Candy introduced a second flavor, chocolate, and in 2000, a third, StrawberriCream. The company also began shipping its products worldwide in 1995, sending its Caramel Creams and Cow Tales to Europe, Asia, Japan, and Australia.

COMPANY PERSPECTIVES

Goetze’s Candy Company is a fifth-generation, family-owned company manufacturing confections since 1895 and specializing in the combination of caramel and cream candies made from the finest quality ingredients.

By 1998, the candy manufacturer was cooking and processing more than 60 tons of candy per day in the plant it had occupied since 1928. It still manufactured its original Caramel Cream products, and it continued to explore other flavors, such as old-fashioned caramel apple sticks with an apple-flavored cream center.

The candy industry enjoyed sales of $3.9 billion in 1999. However, the late 1990s introduced sharp increases in sugar prices and sugar shortages. Additionally there were changes afoot in the way in which candy was being marketed. According to Mitchell Goetze in a 2000 National Petroleum News story, “C-stores [had] moved away from their core products and started stocking a lot of novelty candies.” In addition, larger-sized portions were becoming more common. Goetze began to sell its Cow Tales in seasonal tumblers of 25 units and its Caramel Creams in 2.5 pound tubs with snap-on lids and decorative exteriors.

Also by the new millennium, consolidation within the candy retailer and broker communities was providing both challenges and opportunities for small candy companies such as Goetze’s. Many candy manufacturers, Goetze’s Candy among them, began to turn to nontraditional retail opportunities, such as selling their confections to auto-parts or fabric stores. In 2000, it joined with six other candy makers to form the Confectioners Alliance, a group dedicated to increasing the placement and distribution of confectionary products, and cooperative efforts in direct and broker sales management, advertising, and promotion. The company also began to invest more heavily in Internet sales and sales to private label and contract manufacturers.

Spaulding Goetze, a fourth-generation chief executive, focused his family’s attention on research and development of new products, on packaging, and on automating production and sales systems. In 2000, as fruit flavors entered the candy market, Goetze’s Candy Company introduced StrawberriCream Caramel Creams and Cow Tales. After candy sales slipped in 2003 and 2004, candy manufacturers as a group began to focus on niche targets—aging baby boomers, diabetics, empty nesters, young adults, Hispanics and other ethnic groups, and tweens—to drive up sales. In 2004, Goetze’s added a square caramel made with real cream, Goetze’s Gourmet Caramels. In 2006, it introduced its Old-Fashioned Caramel Apple Cow Tales and added larger-size bags and packs of some of its other standards.

According to candy sources, caramel-based candies, less sweet and with more nostalgic appeal than chocolate confections, provided an opportunity for immediate growth in the years leading up to 2010. Still, as the collectively run Goetze’s looked to the future, it still chose to maintain a low profile. “It’s somewhat of a hobby,” professed Mitchell Goetze in a 2004 Style article. “When you run an entity because it’s something you love—it sounds corny, but it’s true—your philosophy on why you show up every day really is different than when you always are wearing the business first.” Despite this laid-back approach to doing business, the company still managed to turn out upwards of ten million pieces of candy during a typical eight-hour shift. The demand for its products might be attributed to the fact that “[c]aramel items continue to be perceived by consumers as ‘higher-end,’ as well as healthy and nutritious,” according to Mitchell Goetze in a January 2002 Confectioner article. “They’re something that parents can offer to children and not feel as bad about … as they would some electric blue sour ball.” It seemed safe to say that Goetze’s candies would continue to make children as well as adults feel good for years to come.

Carrie Rothburd

PRINCIPAL COMPETITORS

Brach’s Confections, Inc.; The Hershey Company; Tootsie Roll Industries, Inc.; Atkinson Candy Company; Cadbury Adams USA; Cadbury Trebor Bassett; Classic Caramel Company; Mars, Incorporated; Spangler Candy Company.

KEY DATES

1895:: August L. Goetze and his son, William A. Goetze, found The Baltimore Chewing Gum Company.
1897:: The company relocates to Ashland Avenue and Bond Street, Baltimore, Maryland.
1928:: The company moves to a new production facility and its permanent home on Monument Street.
1951:: The company changes its name to Goetze’s Candy Company.
1958:: The company incorporates under the name Goetze’s Candy Company, Inc.
1995:: Goetze’s Candy Company, Inc., begins shipping worldwide.