Necco Moving Beyond Traditional Candy Hearts

Maker of Sweethearts, Mary Janes, and Clark Bars says now is the perfect time to broaden its offerings, despite the recession and saturated candy market.

REVERE, Mass. (AP) -- After 162 years, the New England Confectionery Co. wants to be more than your Valentine.

The maker of Sweethearts -- the tiny heart-shaped candies inscribed with messages like "I Love You" and "Kiss Me" β€” and other sugary nostalgia such as Mary Janes, Necco Wafers and Clark Bars says now is the perfect time to broaden its offerings, despite the recession and saturated candy market.

Next month, Necco plans to unveil a new line of Sweethearts connected to "Twilight" -- the young-adult vampire-romance book series. They'll be released at the same time as the DVD of the movie and feature such sayings as "Bite Me," ''Bedazzle" and "Live 4 Ever." Around Memorial Day, Necco will introduce a "Red, White and You" series aimed at veterans returning from Iraq with messages like "Proud" and "Love the USA."

"We're going outside of just the seasons," said Jackie Hague, the company's new vice president of marketing. "And during the seasons we want to expand at the right time. And these brands are perfect for that."

When Necco first opened in 1847, there were only 29 states in the Union, the Civil War had yet to start and Abraham Lincoln was in Congress. It began making its signature Sweetheart Conversation Hearts in 1866, spreading G-rated messages of affection.

It has since introduced many different themes, with hearts in Spanish or more modern messages such as "Text Me." It also offers Sky Bars, Double Dipped Peanuts and Thin Mints, but the tiny hearts -- billions a year -- are still Necco's best sellers.

Necco isn't the first confectionery company to try expanding a seasonal product's appeal. Brach's Confections, now owned by Farley's & Sathers Candy Co., began seven years ago to expand its Candy Corn brand beyond Halloween, said company spokeswoman Michelle Graber. The conical sweets can now be found year-round in a variety of flavors and colors, including a pink and white version at Valentine's Day.

The push beyond Necco's traditional seasonal markets could work, if the company doesn't try to redefine itself too fast, said Pat Conroy, a consumer products expert at accounting and consulting firm Deloitte & Touche USA.

"They've got a kind of brand image that's recognized so they must have a clear basis for differentiating any new brands they are taking on," Conroy said.

The changes under way at Necco build on a transformation begun when the company moved in 2003 out of a looming 1926 red brick factory next to a water tower with painted images of Necco Wafers, near the Massachusetts Institute of Technology in Cambridge, Mass. The new 820,000-square-foot factory in Revere is 60 percent larger and will better accommodate planned consolidation, company officials said.

Last year, privately held Necco was sold to a group of investors led by private-equity fund American Capital Strategies Ltd in Bethesda, Md., that includes former CEO Dominic Antonellis and Dallas-based private investment firm Clear Creek Capital LLC. A few months later, Necco closed a plant in Pewaukee, Wis., to cope with increased competition from abroad.

Also part of Necco's transformation are new CEO Richard Krause, a former Procter & Gamble Co. executive who arrived in August, and other new managers, including Hague.

Krause said Necco β€” which he called the nation's "oldest multiline candy business" -- needs to expand its brand now in the U.S. so it can expand globally later. He is aiming for 30 percent growth within two years for Necco, whose annual revenue has hovered around $100 million since 2005.

"There are some iconic brands here that are just marvelous," Krause said. "We thought it was an excellent opportunity to take this company to the next level."

Myung Yi, managing director of American Capital's special situations group, said the private-equity fund sees growth for Necco in product-line extensions and new products.

Toward the goal of streamlining, Necco is replacing some of its machinery.

"Some of this equipment ... we've been using since the 1930s," said facility manager Manny Da Costa.

Joe Marotti, who worked with Krause, 47, when both were executives at Newell Rubbermaid 10 years ago, said Necco is in good hands with Krause.

"He is quick to put a team together and gives clear direction," said Marotti. "He listens to all input and holds people accountable."

As for releasing new products during a recession, Conroy said candy is inexpensive.

"People still like to reward themselves," said Conroy. "At the end of the day, a little candy won't tilt their budgets."

That's what Krause is banking on.

"Sometimes maybe they can't do their $30 bottle of wine but they can still do their Necco Wafers," Krause said. "And their Sweethearts."

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