Impact Confections: Making a sweet n’ sour Impact
A strategic shift, successful product launches and a new manufacturing facility have set the stage for double-digit growth for this midsized candy company.
There are plenty of companies — large and small — still trying to figure out how best to integrate social media into their strategic growth plans. And many of the multinationals have and are spending millions of dollars building up their Facebook presence.
But there’s one midsized candy manufacturer — Candy Industry estimates revenues within the $50-55 million range — that seems to have built an enormous following one “like” at a time from grassroots followers that are loyal to the WARHEADS brand. Littleton, Colo.-based Impact Confections has 2.2 million Facebook followers, sixth among global non-chocolate brands and a top-150 brand globally.
How does the company do it?
“It’s important to post the right kind of stuff and not to sound like an advertisement for your products,” explains Andy Telatnik, director of marketing. “You don’t want to inundate them with noise; for us, it’s all about having fun and sharing the WARHEADS experience, such as posting funny videos, memes, and shareable content.”
That easy? Well, it does help to have a brand that Facebook users can identify with, such as WARHEADS, adds Telatnik. Moreover, tweens and teens are natural Facebook users. They’re also the exact demographic that the WARHEADS line of sour candies appeals to.
So yea, there’s a bit of karma there.
But as Telatnik points out, Impact Confections was one of the first to take advantage of having a Facebook page back in 2006. It didn’t take long before the company picked up 40,000 fans.
“We were adding 5,000 fans per day,” he says.
The company continues to provide its Facebook fan base with fun stuff, such as the recently launched The Mouthing Off with Sweet and Sour Tooth campaign, which ties in directly with its new product success story, WARHEADS Sour Chewy Cubes. And true to Telatnik’s word, the videos are funny.
But does having such a presence boost sales? Admitting it’s hard to measure, Telatnik does offer up one number: the company’s store locator function on its website gets 75,000 hits a year. That certainly speaks well about followers looking to purchase the product.
More importantly, given Impact Confection’s growth numbers —double-digit sales gains (15-20 percent) for the past few years and more of the same is expected for 2014 — the social media success ties into the company’s dogged focus and key initiatives to expand sales and distribution.
And yet, as with every “overnight success,” the road to become the fastest growing sour brand in America took a few years. Founded by Brad Baker in 1981 in Roswell, N.M., Impact Confections literally was born in the kitchen. There, Baker made lollipops and sold them to local retailers. The company grew with the introduction of Lollipop Paint Shop and other popular novelty candy items, but realizing the fickleness of novelty products, Impact Confections began searching for more branded, everyday candies they could acquire. In 2004, Impact made its first major move, purchasing the WARHEADS brand from Foreign Candy Co.
At the time, the brand, which had been a powerhouse in the 1990s, had slid considerably. Many believed that the brand had bottomed out, Telatnik says. Those individuals, however, didn’t count on the power of sour.
Later that year, the company also acquired the Melster Candies brands from the Warrell Corp., a myriad portfolio containing Circus Peanuts, chocolate- and compound-covered moulded marshmallows, taffies and miscellaneous items. It was then that the process of brand building began.
Telatnik, who joined the company in 2004, was brought in specifically to do that. As he explains, by acquiring WARHEADS, Impact Confections had entered into a bold world of brands, a new experience.
The slow but steady process of resurrecting the recognizable but distinct brand proved challenging. Fortunately, the appetite for sour candies didn’t disappear from the confectionery landscape. In fact, it appears that the next generation of youngsters enjoyed the intensity of sour even more.
“The sour category has grown year over year, in fact twice as fast as non-chocolate candy,” says Telatnik. “Today, sour comprises 20 percent of the chewy candy segment.”
In 2008, the company was sold to an equity firm, Brazos Partners based in Dallas. Shortly after the sale, Brazos brought in Jeff Rome as ceo, a 25-year Mars veteran, whose experience in brand development and understanding of channels and categories proved critical to accelerating Impact Confections growth.
Rome, whose experience at Mars ranged from confectionery to pet foods, had been solicited by a friend regarding Impact Confections’ search for a new chief executive. Upon doing a bit of research, Rome realized the opportunity inherent in the WARHEADS brand.
One of his first tasks was to refocus the company’s resources on branding, which meant shifting it from a novelty concern into a branded confections entity. Culling SKUs was part of that process.
“We eliminated 200 SKUs,” he says. “That always hurts a little bit at first.”
The next focus involved extending the WARHEADS line with a new product, one that would expand the demographic with 13-17-year-olds. WARHEADS Sour Chewy Cubes were born.
Launched in 2009 after nine months of development, the sugar-coated, slightly less sour Cubes opened the door for expanding the WARHEADS consumer base. It’s a playful candy that quickly gained traction.
Sampling at the X-Games, a perfect venue for WARHEADS products, confirmed the appeal of the item; it didn’t take long before the Impact Confections team realized it had a bona fide winner on its hands. Sour Chewy Cubes are now the No. 1 item in the WARHEADS stable of products, says Telatnik.
Moreover, it reinforced the company’s positioning as an everyday candy provider. As a bonus, it’s also attracted a new demographic; girls are bigger purchasers of Sour Chewy Cubes than boys are.
Conscious of the need to further expand the WARHEADS brand into the everyday candy segment, the company last year launched Sour Twists, an extruded licorice twist product that has three colors/flavors interwoven. The trio of twists can easily be separated for additional play value. Although still early in its debut, expectations are high for Sour Twists.
Interestingly, another area that the WARHEADS brand is finding success involves seasonal sales. Here, items such as sour candy canes — WARHEADS is the leading brand in this niche — and jelly beans are finding a receptive audience.
“We see plenty of opportunities within the non-chocolate seasonal category,” adds Rome. By using its sour heritage, the company can offer new seasonal items in familiar forms like candy canes and jelly beans that retailers are looking for.
Of course, there’s another side to Impact Confections, and that’s the Melster Candies brand side. Although Rome realized immediately what opportunities WARHEADS offered, Melster Candies revealed some hidden gems, such as Circus Peanuts.
“We are the leading manufacturer of Circus Peanuts,” Rome says. The century-old, banana-flavored, orange-colored marshmallow product continues to have a special place among candy lovers throughout the United States. And Impact Confections produces 80 percent of all Circus Peanuts in the United States.
“It’s a steady business,” Impact Confections’ ceo says. “Although the category’s flat, our share of that business has grown. The product has a wide demographic; it appeals to young and old.”
In addition to Circus Peanuts, Melster Candies’ seasonal products, such as the chocolate- and compound-covered moulded marshmallows, peanut butter kisses and taffies remain steadfast favorites among retailers and consumers.
“These are great value products that do tremendous within the value channels,” Telatnik explains. The taffy items, in fact, have provided the company another seasonal candy opportunity.
“We’re expanding taffy beyond Peanut Butter Kisses with our fruit cream taffy at Easter and our caramel apple taffy at Halloween, which features real caramel,” he says.
None of the success that Impact Confections has enjoyed would be possible without its experienced and energetic sales force. Bean Kingsbury, v.p. of sales, was hired in 2010 to bring a new energy and excitement to the sales organization. Kingsbury has completely revamped the sales team since arriving.
The new hires have paid dividends. “We refocused the Impact Confections internal sales team and broker network, and have strengthened our brand positioning. Our sales teams are excited about where we are going as a company,” states Kingsbury.
But driving short-term sales success was not the only goal. Strengthening retailer relationships was a key task for Impact Confections. By improving relationships with key retailers, Impact Confections has set itself up for long-term success. Kingsbury adds, “We work hard to develop programs that meet the specific needs of a retailer. Our buyers have responded well to this, and they are consistently looking to us to come up with new formats to address consumer desires for sour.”
Of course, sales success typically brings operational challenges. The continued growth of the WARHEADS and Melster Candies brands forced the company to review its manufacturing operations. In Roswell, the company had a 100,000-sq.-ft. facility, one whereby 80 percent was devoted to warehousing and 20 percent to manufacturing.
In Cambridge, Wis., the company operated out of a 120-year-old, multi-storied, 70,000-sq.-ft. facility, where it produced all the Melster Candies brands. An experienced work force anchored the aging production site, particularly when it came to pumping out Circus Peanuts.
As Telatnik points out, although the company had modernized the process of making Circus Peanuts, production remains more of an art than a science.
After several evaluations, the decision was made to move operations to Wisconsin.
“Roswell posed challenges regarding raw materials and distribution,” points out Rome. “We also wanted to retain the skilled work force from Cambridge.”
An extensive search led to an existing 190,000-sq.-ft. structure in Janesville, Wis., just 20 miles from the Cambridge facility. Acquired in September 2010, the building was converted into a food-grade manufacturing plant by July 2011. The following spring, the new plant was SQF-certified.
Currently, the plant runs two nine-hour shifts, six days a week. It features a starch-moulding machine, two enrobing lines for chocolate and compound-covered moulded marshmallows, a hard candy line for WARHEADS, and a WARHEADS Spray line.
As Leo Halpin, v.p. – operations explains, prior to rehabbing the vacant facility, the company worked with consultants in ensuring structural compliance with SQF certification standards. Thus, in addition to ripping up all the floors to ensure appropriate drainage for a food-grade manufacturing plant, the first 12 feet of all walls are covered with plastic boards, which allow sanitation crews to hose down the areas for a complete cleaning. In addition, all ceiling panels are plastic.
When it came to moving production equipment from Roswell, Halpin was also able to make several improvements to streamline processing. For example, in the WARHEADS production process at Roswell, a continuous cooker was used to produce the candy. In Janesville, batch cookers are used, which improves flexibility and increased output by 50 percent.
There were also several additional improvements made, ranging from new kitchen and dosing equipment to computerized drying rooms and high-speed baggers, all part and parcel in improving efficiencies and reducing operating costs. Upon completion, total investment for the Janesville plant reached $6 million.
It’s money that’s already realizing a payback, says Rome, given the company’s expansion into contract and private-label manufacturing. Currently, half of all revenues come from Impact Confections’ lineup of everyday candies, 30 percent from niche novelty items and the remaining 20 percent from contract and private-label business.
SQF certification is what had allowed the company to grow its contract and private-label business, says Halpin. Moreover, it reflects Rome’s current strategy for Impact Confections, whereby all three components reflect growth areas for the company.
“There are a lot more opportunities for co-manufacturing,” he adds.
And many more possibilities for the company to make a greater impact.
At a Glance: Impact Confections
Headquarters: Littleton, Colo.