Monday, November 15, 2004
Moving production to Mexico helped Brach's return to profitability.
DALLAS MORNING NEWS
DALLAS -- An AC/DC song, "Back in Black," served as the soundtrack to a recent company gathering for Dallas-based Brach's Confections Inc.
"Forget the hearse 'cause I never die, I got nine lives ... Cause I'm back ... Yes, I'm back in black ..."
Brach's, an icon that has been in the candy business since 1904, was celebrating its exit from years in the red -- and even a flirtation with bankruptcy.
"It was losing money, and now it's significantly and solidly profitable," said Terry O'Brien, the company's chief executive, whose idea it was to play the song.
From its heyday in the 1930s as the nation's No. 1 maker of nonchocolate candy, Brach's fortunes soured in recent years as it failed to control costs and allowed competitors to develop more innovative products.
Brach's also had found itself ill equipped to attract health-conscious consumers to its syrupy-sweet concoctions. Brach's, the No. 1 maker of candy corn, is also known for Gummi Bears.
"Over the past 15 years, the concept has been allowed to go a bit stale," said O'Brien, who became CEO in August 2003, shortly before the privately held company was bought by Barry Callebaut AG, a Swiss firm.
New products
To boost sales, Brach's is pushing a plan to bring gourmet chocolate to the masses and to launch more new treats, including some with a healthier sheen.
The company will soon begin selling sugar-free versions of its signature Star Brites peppermints under the Sweet Right label, along with sugar-free peanut and caramel clusters, hard candies and Milk Maid caramels.
Now accounting for less than 1 percent of sales, the healthier and sugar-free products may eventually grow to represent 25 percent of the business, O'Brien said.
Also, Brach's hopes next fall to begin selling premium chocolates from distant lands, including Java and Malaysia. It will use the Sarotti brand, taking advantage of a sister company's European cachet.
O'Brien said Brach's plans to launch more than 75 items in the next six to nine months.
Cutting costs
Though he declined to release net income figures, he said the swing into profitability represents a $10 million improvement.
It began with some severe cost cutting. In 2003, the company sliced 44 management positions and shuttered its aging Chicago plant, shifting production to a new facility in Linares, Mexico, south of Monterrey.
That reduced plant work force from an estimated 600 workers (the company declined to give official figures) to about 200. And most of them are employed at wages significantly south of the pay scale in Chicago.
The company, which relocated its headquarters to Dallas in January, now has fewer than 1,100 employees, O'Brien said, down from 1,600 before the reductions.