HARIBO GmbH & Co. KG

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HARIBO GmbH & Co. KG

Hans-Riegel-Str. 1
D-53129 Bonn
Germany
Telephone: (49) (228) 537-0
Fax: (49) (228) 537-289
Web site: http://www.haribo.com

Private Company
Incorporated: 1920 as HARIBO OHG
Employees: 5,000
Sales: not available
NAIC: 31134 Non-chocolate Confectionery Manufacturing

HARIBO GmbH & Co. KG, a family firm based in Bonn, Germany, is the market leader for fruit gum and licorice products in Europe with a market share of about 60 percent in Germany. The company’s main product is the fruit gum “Gold Bears.” In addition, the company makes over 200 other chewy sweets, including fruit gum products, licorice, marshmallow candies, chewing gum, and so-called Kaubonbons —chewy candy with the texture of gum that dissolves in the mouth. Besides HARIBO, the company markets the brands “MAOAM,” “VADEMECUM,” “Bären-Schmidt,” and “DULCIA.” Manufactured at five factories in Germany and 13 production facilities all over Europe, HARIBO products are sold in about 105 countries. Sales outside Germany account for about 55 percent of the company’s total revenues. The firm is owned by the two managing directors Hans and Paul Riegel.

Success for the “Dancing Bear” in the 1920s

Hans Riegel, the son of Peter and Agnes Riegel, was born in Friesdorf near Bonn, Germany, in 1893. Following school he learned how to make hard candies as an apprentice and worked five years for candy maker Kleutgen & Meier in Bonn’s suburb Bad Godesberg. After World War I, the candy company Heinen in Kessenich, located in a Bonn suburb, was looking for a qualified hard candy maker. Hans Riegel became a partner and the business changed its name to Heinen & Riegel. However, only two years later, in 1920, Riegel started his own business which he called HARIBO—short for Hans Riegel Bonn. He set up shop in a courtyard kitchen in Kessenich’s Bergstrasse where Riegel established the company’s first production facility. With start up “capital“ that included a sack of sugar, a marble slab, a stove and a copper pot, Riegel started making hard candies.

In 1921, Riegel got married and his wife Gertrud became HARIBO’s first employee, distributing the candy on her bike to their first customers around town. It was in the following year when Hans Riegel came up with the idea that would become HARIBO’s flagship product: the “Dancing Bear.” Made of fruit gum, the “Dancing Bear” soon became extremely popular. So popular that the couple had to buy a car in the following year to deliver them to HARIBO’s rapidly growing customer base. After moving into a small factory in Bonn-Kessenich, HARIBO started making licorice products in addition to hard candy and fruit gums. By 1930, the company already employed 160 people and HARIBO products were distributed throughout Germany. The company invested in a brand new production plant which was built between 1930 and 1933. In the early 1930s, the company founder hired a traveling advertising copy writer to create a memorable slogan. He came up with ”HARIBO macht Kinder froh” a rhyme meaning “HARIBO makes children happy,” which was soon printed on posters for shopping windows, delivery trucks, cartons, and packages.

Based on business contacts between Riegel and the Hansen brothers, the owners of the Danish candy manufacturer Sukkervarenfabrikker Danmark, in the late 1920s, HARIBO’s first joint venture abroad was set up in Denmark in 1935. By 1939, HARIBO had grown into a middle sized firm, employing about 400 people producing about ten tons of candy a day. However, that year World War II broke out. Since candy products were not essential for the German war economy, it became more and more difficult for the company to get the raw materials needed. Consequently, HARIBO’s output shrunk significantly as did its workforce over time. The number of employees dropped to about 130 in 1943 and less than 20 workers remained on the company’s payroll by the end of the war. On March 31, 1945, just a few days before the war ended, company founder Hans Riegel died at age 52, and his wife managed the company in the first months after the war had ended.

Founder’s Sons Take Over the Business in 1946

HARIBO was luckier than other companies—its main production facility was almost left untouched by the war. The company started out again with 30 employees and the main challenge of the time was to find sugar, raw licorice, gum arabic, and aromas—the main ingredients for HARIBO’s products. In 1946, the sons of Hans Riegel, Hans Riegel, Jr., and Paul Riegel, took over the company’s management. Hans Riegel, at the time 23 years old, would have preferred to study medicine. However, he had promised his father to carry on the family business. After rebuilding HARIBO after the war, Hans Riegel wrote his doctoral dissertation on the role of sugar in world trade and got a Ph.D. in business science at Bonn University. He had a great instinct for business opportunities and took over responsibility for HARIBO’s product development and marketing. His brother Paul, three years his junior and a skilled engineer, took over the production and engineering part of the business. Paul’s technical expertise was in demand when the two brothers evaluated Hans Riegel’s ideas for new products and he developed many of the machines used to make them. One example was a machine for HARIBO’s famous “Licorice Wheels,” a string of licorice that was curled up like a snail. The “Wheels” were made by hand until Paul invented a machine that curled them automatically. Besides keeping production up and running and technological standards up to date, Paul Riegel was especially concerned with high quality standards. To keep his staff aware of the this aim, walls in production facilities were plastered with posters containing the slogan “Quality Above All.”

By 1950, HARIBO’s business had grown immensely. Only five years after the war had ended the company employed about 1,000 people. Beginning in the late 1950s, the company started expanding nationally as well as internationally. In 1957, HARIBO acquired the Godesberg-based candy maker Kleutgen & Meier, the company where HARIBO-founder Hans Riegel once learned how to cook hard candy. Under the brand name “Monarch,” Kleutgen & Meier sold fruit gums by the piece. In 1961, HARIBO took over the Dutch firm Bonera Industrie en Handelsmaatschappij N.V. which was renamed HARIBO Nederland B.V. Six years later HARIBO acquired a majority in Marseilles-based French candy company Lorette, which was transformed into HARIBO-France S.A. One year later the company bought shares in German sweets manufacturer Dr. Hillers AG based in Solingen.

During the 1950s, HARIBO’s “Dancing Bears” underwent a metamorphosis. Their name was changed to “Teddy Bears” and their shape became more compact and round. By the mid-1960s, HARIBO realized that not only children enjoyed the company’s chewy sweets. HARIBO’s slogan was supplemented by a second line: “HARIBO macht Kinder froh—und Erwachsene ebenso,” meaning “HARIBO makes children happy—and adults as well.” In 1962, when television was still in its early stages in Germany, a HARIBO commercial aired for the first time. Sung to a simple melody much like a nursery rhyme, the company’s slogan was very easily recognizable and soon became immensely popular.

Massive Expansion Into Western Europe in the 1970s-80s

In the 1970s and 1980s, HARIBO kept expanding its market and product range in Germany as well as abroad. National expansion went on in 1971 when the company acquired a majority in the German manufacturer of sweet baked goods and fruit gum products Bären-Schmidt. The company’s flagship product were the popular Lebkuchenherzen —large, heart-shaped spice cookies. In 1979, HARIBO took over the remaining shares of Dr. Hillers AG and expanded the existing production facilities in Solingen, which were equipped with state-of-the-art machines for making fruit gums, licorice, and chewing gum. In 1986, HARIBO took over Edmund Münster GmbH & Co. KG in Neuss, a company with a long tradition. It’s predecessor, the Düsseldorfer Lakritzenwerk, was founded in 1898 and was taken over by entrepreneur Edmund Münster in 1900. At first the company made mostly licorice products, until Münster acquired a license to make the fruity Kaubonbon ”MAOAM” in 1930. Production started in 1931 and the new product became very popular in Germany in the 1950s. In 1982, the company moved from Düsseldorf to Neuss. The chewy sweet novelty that was not a chewing gum came in fruity flavors such as lemon, pineapple, orange or raspberry and ideally complemented HARIBO’s product range.

The company’s main focus during the 1970s and 1980s, though, was its massive expansion into Western Europe. In 1972, HARIBO acquired a share in traditional English licorice maker Dunhills. Four years after the Dunhills transaction, HARIBO established a foothold in Sweden by setting up a sales organization in Helsingborg. One year later the company started doing the same in Austria. In 1988, HARIBO took over the Austrian pastries and candy maker Panuli Bonbon Ges.m.b.H. located in Linz on the Danube River and started producing its own product range in Austria. In 1982, HARIBO started selling fruit gums in the United States from its sales offices in Baltimore, Maryland. Starting in 1983, HARIBO intensified its activities in France. In that year the company acquired the French firm Stella based in Wattrelos near Lille. Two years later, HARIBO bought the southern French company Ricqles Zan which was merged with HARIBO France in 1987, resulting in the new company HARIBO RICQLES—ZAN. The company’s three production facilities in France supplied the French market as well as other southern European countries with HARIBO products. In 1989, Paul Riegel’s oldest son, Hans-Jürgen, became CEO of HARIBO RICQLES—ZAN. The same year HARIBO established a sales office in Oslo, Norway.

Company Perspectives:

“I love children, I love watching them. They are my customers. I need to know what kind of sweets they like, what they think, what language they speak” —Dr. Hans Riegel

Dynamic Growth in the 1990s

After the reunification of Germany, HARIBO took a chance by acquiring East German sweets maker WESA. The company’s history reached back to 1898 when entrepreneur Oswald Stengel established a factory for candy, chocolate, and Lebkuchen spice cookies in the south-eastern German town Wilkau-Hasslau, near Chemnitz. The son of the founder sold the company to the state of Saxony in 1949 and it was transformed into a government-owned operation.

In 1991, HARIBO began a successful cooperation with German star TV-entertainer Thomas Gottschalk which pushed the level of consumer recognition of HARIBO products up even higher. The sympathetic moderator of several TV shows enjoyed a high popularity among a broad segment of German TV viewers that ideally complemented HARIBO’s principal target group from age four to 94. In the early 1990s, a new competitor in HARIBO’s core market arose in former East Germany when Peter Kettel, for many years CEO of the firm Petzold und Aulhorn, sold his company to the Van Houten group and founded the Gummi Bear Factory in Boizenburg. The company gained a strong market share of over 25 percent, mainly because of its “no-name” production for food retail chains. However, the company was not able to shake HARIBO’s leading position which at the end of the 1990s moved closer towards the 60 percent mark in the fruit gum segment. HARIBO’s “Gold Bears” alone reached a market share of 20 percent for all fruit gum sales in Germany, partly due to a distribution rate of 99 percent, meaning that they were available in almost any store that carried candy. By the mid-1990s, the fruit gum segment accounted for about four-fifths of the company’s total sales.

During the 1990s, HARIBO continued to expand into Europe. In 1990, the company took over the Italian firm SIDAS DOLCIARIA, based in Milan, and founded HARIBO Italy. In the following year HARIBO established a sales organization in Finland based in Helsinki. When German chemicals concern Henkel KGaA acquired the Swedish Barnaengen group, HARIBO took the chance and bought its candy business division, in which Henkel was not interested, in 1993. The deal included the rights to Barnaengen’s VADEMECUM brand of chewing gum. As early as 1973 the sugar-free VADEMECUM GUM had been introduced to the European market. By the 1990s, the VADEMECUM GUM line was advertised as a means to keep teeth healthy since the sugar replacement XYLIT had cavity-fighting qualities. In 1994, HARIBO took over the remaining shares of English licorice maker Dunhills, producer of the traditional “Pontefract Cakes.” One year later a subsidiary was founded in Spain and a production facility set up. In 1996, HARIBO took over Belgian sweets manufacturer Dulcia Sweet Lines based in Kontich near Antwerp, which specialized in marshmallow sugar products. Two years later, a new production facility was set up in Dublin, Ireland, and a sales office was founded in the Czech Republic in Brno. Also in 1998, HARIBO took over Spanish sweets maker Geldul S.L. in Alicante and the Irish candy company Clara Candy. In 2001, the company acquired the majority of Turkish sweets maker Pamir Gida Sanayi A.S. based in Istanbul, which also specialized in fruit gum and marshmallow sugar products. As a result of HARIBO’s growing international activities, the company’s sales abroad grew by two-digit figures throughout the 1990s, reaching more than 55 percent of total sales by 2000.

Key Dates:

1920:: HARIBO OHG is set up in Bonn, Germany.
1922:: Company founder Hans Riegel invents the “Dancing Bear” figure.
Mid-1930s:: The slogan “HARIBO macht Kinder froh” is created.
1935:: HARIBO’s first joint venture is set up in Denmark.
1946:: Hans and Paul Riegel take over the company’s management.
1960:: HARIBO’s slogan is expanded to include adults.
1972:: HARIBO acquires a share in English licorice maker Dunhills.
1982:: The company sets up a distribution subsidiary in the United States.
1986:: HARIBO takes over Edmund Münster GmbH & Co. KG and the “MAOAM” brand.
1990:: HARIBO acquires Italian firm SIDAS DOLCIARIA.
1991:: German star entertainer Thomas Gottschalk starts promoting HARIBO products.
1995:: HARIBO sets up a production facility in Spain.
1998:: A production facility is set up in Ireland and a sales office is founded in the Czech Republic.
2001:: The company acquires the majority of Turkish sweets maker Pamir Gida Sanayi A.S.

Innovative Products and Conservative Management in the 1990s

During the 1990s, HARIBO enjoyed a dynamic growth which CEO Hans Riegel connected with successful brand management and product innovation rather than with the economic cycle of his industry, which was actually slowing down at the end of the 1990s. Although HARIBO’s product range included more than 200 products, new product development had not been delegated to a marketing department. More often than not, Hans Riegel himself generated the constant stream of new ideas needed in an industry in which rapidly shortening product cycles required a high innovation rate. In 1996, an Olympics year, the company launched the “lucky box” with fruit gum sports figures. Inspirations for new products also came from children’s movies like Babe, after which Riegel created the ”Saure Sau” —the sour sow. Other Riegel creations included “red lips” from wine gum with a cherry taste and a tinge of Menthol; “kosher“ fruit gums on a solely vegetarian basis for export to Israel, the Middle East, and Moslem countries in Asia; “Fitness” fruit gum enriched with vitamins and proteins, and sour fruit gum “pickles.” For the younger target groups HARIBO launched the comic figures HARI and BO which shook their clay bodies wildly to the popular Techno music on music TV channels MTV and VIVA. In response to the latest political financial scandals in Germany in the late 1990s Riegel developed a licorice product that looked like coins and that he called ”Schwarzgeld” —illegally earned money—which was to be sold in a suitcase-like package. However, not every one of Riegel’s new product ideas was successful. When HARIBO launched a fruit gum version of the “Holy Family” around Christmas time, the company gave in to protests of the German Catholic church and removed its “innovation“ from the market. Fruit gum versions of German politicians put on the market around election time got HARIBO a lot of free publicity that did not, however, translate into huge product sales. Other not so successful creations included fried eggs, gum pistols, and punk heads.

As frequently as HARIBO introduced new products, its “Gold Bears” enjoyed a stable and even growing popularity during the 1990s. While the bear’s recipe and design didn’t change much over the years, consumer’s health concerns changed some of its ingredients. When European consumers became aware of the potential dangers of some food colors HARIBO started using natural food colors. When European consumers became concerned about the possible effects of BSE on their health, HARIBO stopped using cattle by-products and switched to gelatin produced from raw material derived from pigs for their fruit gum products.

Not only was Hans Riegel in charge of new product development, his management style had not changed much over the fifty years he had steered the HARIBO enterprise, for which he was criticized by some management consultants and journalists as being patriarchal and old-fashioned. As described by Frank Hornig in the German news magazine DER SPIEGEL, Riedel opened every letter addressed to his company to stay on top of things, convinced that otherwise the “bad news” would be hidden from him. Then he would meet one-on-one with each of his directors every day to discuss the issues and tasks of each department based on his findings. Riegel also didn’t see the need of modern controlling—until in the mid-1990s one of his directors was caught embezzling HARIBO funds. Another hallmark of Hans Riegel’s management style was stability, mainly applied to brand development and finances. While there was a constant stream of new products developed, the advertising and design and slogan for the HARIBO brand remained relatively constant. As a result, HARIBO’s brand name and slogan were among the most recognized in Germany in the late 1990s. Due to Hans Riegel’s financial conservatism, HARIBO financed its acquisitions with the company’s own funds rather than borrowing from banks.

Consequently, despite the criticism of HARIBO’s management style, the company was thriving at the beginning of the 21st century. Putting out 70 million “Gold Bears” a year, Hans Riegel was planning HARIBO’s next round of expansion with an eye on the United States, Eastern Europe, and the Middle East. Although the company’s sales and profits were one of the best-kept secrets besides the “Gold Bear” recipe, insiders estimated the company’s sales at roughly DM 2.7 billion in 2000. However, Hans Riegel told Der Spiegel that by the beginning of 2000 he didn’t think that any of his brother’s three sons who all worked at the company were possible successors. His company shares will be inherited by a foundation to promote new talent in the industry.

Principal Subsidiaries

HARIBO of AMERICA Inc.; HARIBO Lakrids OY AB (Finland); HARIBO LAKRITS AB (Sweden); HARIBO LAKRIS

A/S (Norway); HARIBO LAKRIDS A/S (Denmark); VAN HARIBO NEDERLAND B.V. (Netherlands); HARIBO UK; Dunhills (Pontefract) plc (United Kingdom); HARIBO BELGIE B.V.B.A. (Belgium); HARIBO LAKRITZEN Hans Riegel Betriebsgesellschaft mbH (Austria); HARIBO RICQLES-ZAN S.A. (France); HARIBO ESPANA S.A (Spain); HARIBO ITALIA S.p.A. (Italy); Pamir Gida Sanayi A.S (Turkey); HARIBO Hungaria Kft.(Hungary).