Seventieth anniversary coincides with third generation tackling opportunities and challenges head on.

Peter Blommer, president and coo, Blommer Chocolate Co.

When the announcement was made last month that Peter Blommer had been promoted to president of Blommer Chocolate Co., the youngish looking 46-year-old welcomed the responsibility. But, as he points out, it’s “not exactly a new role.” In fact, Peter took on the role of chief operating officer six years ago. And, along with his G3 (third-generation) family members, he has been preparing for this transition at the 70-year-old cocoa and chocolate processing company for nearly two decades.

“When I started at Blommer 18 years ago, Hank and Joe [Blommer] wanted to ensure that the third generation had its hands in running the company,” Peter says. “They loosened the reins very deliberately over that period of time and have mentored the third generation well.”

As the point man for the G3 Blommer team, which includes Rick Blommer, v.p. of operations – Chicago and Canada; Steve Blommer, v.p. of operations, East Greenville, Pa.; Tori Blommer-O’Malley, v.p. of operations – Union City, Calif.; and Peter Drake, v.p. of sales for the company, Peter recognizes that it’s his responsibility to craft and execute a strategic growth plan while continuing ongoing development of the organization.

“But it’s a family business, so there are other family members involved,” he explains. “We’re all equal business partners. So I work closely with Rick, who sits on the board with me and collaborates with me on setting strategic direction, as well as my sister Tori and brother Steve and my cousin Peter Drake. We’re a very close group, with a very collaborative family dynamic. There’s no dictatorship.”

This family dynamic evolved, in part, from a less-than-pleasant family dispute that almost derailed the third generation’s ability to take the reins. As Peter explains, a group of disgruntled family members sold their shares to Cargill in 1992, which nearly ended the company’s status as a family-owned entity.

“It was one of those family situations which occurred after founder Henry Blommer passed away,” he says. “It was a pivotal moment for the family. That’s when we all came together and declared our unity. Fortunately, we were able to buy those shares back. At that point, the third generation got together with Hank and Joe and said we need to invest in our family dynamic. Family ownership needs to be a competitive advantage and not a liability.”

Thanks to the G3, as well as an extremely loyal and dedicated employee base, those advantages certainly have come to the forefront. First, the size of the company has tripled during the past 15 years. As the largest cocoa processor and ingredient supplier in North America, Blommer Chocolate Co. accounts for nearly 50% of the beans processed in the United States.

From left to right: Rick Blommer, v.p. - operations, chicago and Canada; Peter Drake, v.p. - sales; and Peter Blommer, president and coo, Blommer Chocolate Co.

“When I look back at what we’ve accomplished as a company, as a family, it’s really amazing,” Peter says. He quickly checks off the milestones that have helped stimulate such growth: creating the first domestic liquid cocoa butter market, providing domestic production of high-end alkalized cocoa powders, expanding its high-end signature line chocolates and enabling an outsourcing trend by major chocolate manufacturers.

“You have to remember that 20 years ago, there wasn’t a significant amount of cocoa pressing in North America going on,” he points out. “Today, we are the largest presser in North America, with strong supply partnerships with the major branded chocolate companies in North America. We also have the largest array of cocoa powders on the continent.

“We invested heavily in our business,” Peter continues. “Consider that 15 years ago, most of the alkalized cocoa powder consumed was imported into the country. We realized that we needed to supply our customers with powders and create a domestic supply chain. Again, today, we’re the largest domestic supplier of red, brown, black and specialty alkalized cocoa powders.”

That capability has served Blommer Chocolate Co. well, as alkalized cocoa powder volume last year rose 21%, Peter explains. And the company expects this growth trend to continue next year.

“We’ve seen tremendous growth in that segment, coming from not only confectionery, but also the baking and dairy industries,” he notes. Being able to capitalize on such demand stems from having the foresight to invest in the company’s infrastructure, Peter adds. During the last 10 years, Blommer Chocolate Co. has invested $300 million into five processing plants.

“We’ve increased our capacities, our flexibility, as well as added unique technologies,” he says.

Those investments have allowed Blommer Chocolate Co. to quickly supply products in a timely fashion to customers. With facilities that are conveniently located throughout the country, the company can accommodate customer demands for volume and speed.

Other product lines that were expanded as part of the recent capital investment include the company’s high-endSignature Linechocolates as well as the specialty compound products made in its Union City, Calif., and Campbellford, Ontario, facilities.

This growth strategy proved invaluable during the recession. The most recent IRI (Information Resources, Inc.) data for the last 52 weeks indicates a 9% unit volume drop in chocolate confectionery sales, but the company still posted a 4% sales increase.

“Last year, we saw softer demand for cocoa butter,” Peter acknowledges. “But the benefit of our business stems from what I call our portfolio effect, which means serving the confectionery, baking and dairy businesses with a diverse portfolio of chocolate, compound and cocoa commodity products. And an increasing percentage of the products we sell are what I call value-added products.”

“What we’re seeing now is a different growth phenomenon, a combination of a return to some level of consumption growth and a restocking of inventory levels,’’ he says. “Right now, we’re running a high level of capacity utilization, much of it coming from unforecasted demand. I guess that is one of the green shoots in the economy experts are talking about.”

In typical Blommer fashion, the company has simultaneously continued to re-invest in its capabilities, particularly in the services sector. While many companies have slashed personnel during a period of belt-tightening, Blommer Chocolate Co. has added staff in key areas such as R&D, quality assurance, sales and finance.

Although Peter admits the company also has scrutinized its costs during this downturn, “we continue to invest in our capabilities. Customers are looking for innovation, a buzzword everyone’s using these days. But it’s not just innovation, it’s execution and speed to market. We have the operational capabilities to take an idea and quickly bring it to market.”

Tori Blommer-O'Malley, v.p. - operations, Union City, Calif.

He cites the company’s track record in sugar-free chocolate, which propelled Blommer  Chocolate Co. to become the leading supplier within that niche, and points to similar responses to premium chocolate, high-cocoa content, organic, single-origin and nutraceutical segments.

“In the end, we can facilitate new product introductions by our customers at all levels, from the R&D level through operational execution, on the capacities they require,” Peter says. “We really excel there.”

The company also excels in customer relationships and industry involvement.

When asked how running the company today differs from the time Hank and Joe were at the helm, Peter points out that the basics still apply amidst a technologically changing environment.

“What’s stayed the same from the first and second generation is our focus on maintaining close relationships with the customer, solving their problems with comprehensive solutions,” he says.

Because 80% of the costs involved in cocoa and chocolate come from underlying commodity costs - namely, the cost of the cocoa bean, sugar and dairy ingredients - it’s Blommer Chocolate Co.’s responsibility to “work with our customers with the tools and expertise available to effectively manage their commodity risk,” Peter says, adding “we have a great team of commodity experts in Jeff Rasinski, Karl ‘Kip’ Walk and Sheila Fortune.”

That’s part of the relationship-building process. As he emphasizes, there are customers that have had a relationship going back to his grandfather. It’s one of those competitive advantages that come with having a family business: lasting, long-term relationships based on trust and transparency.

At the same time, it’s clear to all G3 family members that the company must continue to develop.

“We’ve had an absolutely relentless effort on all our parts to professionalize the business, to build on our capabilities, but still keeping what’s special in a family business, particularly the entrepreneurial aspects,” Peter asserts.

Industry involvement is another trait that’s often found in family businesses. That’s clearly another characteristic the G3 at Blommer Chocolate remain deeply committed to.

“As we continue to grow, it’s our responsibility to play an active role in the industry,” Peter says.

Steve Blommer, v.p. - operations, East Greenville, Pa.; and Peter Blommer, president and coo, Blommer Chocolate Co.

Not only is the G3 active in the National Confectioners Association and the NCA Chocolate Council, PMCA, the American Association of Candy Technologists, the World Cocoa Foundation (WCF) and the Western Candy Conference, but their employees are encouraged to participate, as well.

It’s a tradition that goes back to Henry Blommer, who helped found the American Cocoa Research Institute in the 1950s. It continues today with the company’s involvement in the previously mentioned organizations - for example, Kip Walk, Blommer Chocolate Co.’s director of cocoa procurement, is the current chairman of the WCF - as well as in private programs aimed at helping cocoa farmers worldwide.

Helping cocoa farmers throughout the world improve cocoa quality and yields while simultaneously bettering their livelihoods is “one of the biggest challenges we face as an industry going forward,” Peter says. By participating fully in industry and private programs that address those issues, the company intends to continue the legacy from the previous generations.

It also plans on continuing a strong growth pattern. For the last decade, Blommer Chocolate Co. has enjoyed 8-9% annual growth. The most recent downturn tempered that rate to about 4% during the last fiscal year. Nevertheless, Peter sees tremendous opportunities down the road.

“According toCandy Industry’srecent survey, 54% of all new product introductions in 2010 will include chocolate,” he points out. “Our category is appealing and resilient.  There’s an emotional connection between the consumer and chocolate, which leads to new product opportunities.”

Consequently, he sees Blommer Chocolate Co. continuing a growth surge during the next decade, not only in North America, but beyond. (When asked where, specifically, Peter coyly demurs.)

“All of us comprising the third generation are very committed to that goal,” he says. “We’re young, hard-working and committed to growth. All of us recognize that we’re care-takers for the next generation.”

And what about Blommer’s next generation, the G4? Peter has some advice for those looking to get involved in the family business: Be ready to get your hands dirty.

“The next generation is currently in college,” he says. “We have a clear family involvement policy. If they’re interested, they’ll have to work summers, Christmas vacations, and be prepared to do the dirtiest and toughest jobs in the plant. Once they complete college, they need to work three years outside the industry. Then, if they possess skills necessary to do the job that’s open, they’re welcome to apply. We encourage the next generation, but we don’t entitle them.”

And he would know.

At a Glance

Blommer Chocolate Co.

Headquarters: Chicago
Employees: 525
Plant locations: Chicago; East Greenville, Pa.; Union City, Calif.; Campbellford, Ontario; Chatham, Ontario (Batory Ind.)
Products:Specialty cocoa powders, chocolate and compound coatings, chocolatte chips, chocolate chunks, cocoa butter, chocolate liquor, organic, natural and specialty cocoas and chocolates.
Capacity: 230,000 metric tons of cocoa beans
Annual Production:750 million lbs.
Management Team:Peter Blommer, president and coo; Rick Blommer, v.p. - operations, Chicago and Canada; Steve Blommer, v.p. - operations, East Greenville, Pa.; Peter Drake, v.p. - sales; Tori Blommer-O'Malley, v.p. - operations, Union City, Calif.