In 1979, the company moved from its antiquated, deteriorating, and grossly inefficient plant in Nashville to a 65,000-square-foot facility on the outskirts of the city. Right about then, however, things began to go wrong. Adapting the new building and moving the operations cost far more than the company had expected, plunging Standard Candy into debt just when interest rates were shooting as high as 21%. In the summer of 1980, a drought blazed across the Sunbelt, devastating the peanut crop and sending the price of peanuts, Goo Goo's second most plentiful ingredient, from 30 cents a pound to $1.50. Then the company foolishly moved to its new facility during the back-to-school season in late summer and early fall, thereby closing down production during the busiest candy-buying months of the year. Standard Candy lost $400,000 in 1980, the biggest loss in its history. It kept losing money in 1981 and 1982.
Enter Jimmy Spradley. In I982, as the company's nosedive gathered speed, Miller and Fischer came under a great deal of pressure from their bankers to make drastic changes in the company or turn it over to new management. Spradley, with the ink on his 1980 University of Chicago MBA degree scarcely dry, was a manager for a real estate syndicator in Nashville at the time, and learned through the grapevine that Standard Candy might be up for sale. Bored with the work he was doing, and nurturing a long-standing ambition to run a company, he sought help from his father, James Spradley, the former president of Stuckeys Inc., an Atlanta-based roadside-store franchise and large manufacturer of candy.
"I kept hearing how Standard Candy was getting into more and more trouble," remembers Jimmy Spradley. "It seemed like a perfect script had been written for me. I went to my father and said, 'Dad, there's a little company in Nashville that's having problems, and I'd like to get involved. Please come down and talk to the owners. Do it for me."
Spradley Sr. obligingly played the role of sugar daddy. After several months of negotiations, he bought a 50% interest in the company and ran the business for a few months, with Fischer remaining as a silent partner and Spradley Jr. learning the ropes. About six months later, he gave his son a 10% interest, crowned him president, and went into semiretirement.
Jimmy Spradley immediately focused his energies on marketing. He racked up sales with almost never-ending promotional campaigns. He motivated brokers with incentives such as bonus trips, and he enticed retailers with discounts. He took particular pains to fill distribution gaps in the company's original central Tennessee market, notably by contacting and bringing aboard important regional retailers that had been overlooked. In his first full week of work for the company, for example, Spradley called Wal-Mart Stores Inc., a major chain of discount department stores in the Sunbelt and the Midwest, and convinced its candy buyer that the Goo Goo Cluster was an indispensable item for any store that sold candy and professed to be Southern. Wal-Mart stocked the candy on a trial basis in 31 Nashville-area stores; when it sold well, Spradley discounted the Goo Goos for about three months, prompting Wal-Mart to put it in 123 stores. Wal-Mart now stocks Goo Goo Clusters in all of its 680 stores, encompassing an area from Oklahoma to Georgia.
By the summer of 1983, sales were strong, the price of peanuts had stabilized at about 50 cents a pound, and debt left by Miller and Fischer was being paid off Then, with recovery apparently assured, Spradley made his first -- and so far his only -- major blunder. In an impatient desire to boost sales further, he doubled his usual discounts for some customers over a five-week period. Sales soared, but profits plummeted, and the company lost money for about a month before it put an end to the practice. "I had become hung up on sales growth," confesses Spradley, who has since discovered the virtues of moderation in price-cutting. "I've learned there's more to my company's health than fast growth."
Now, with an impressive turnaround under his belt, the young confectioner is preparing to play ball in the national arena. It is, as they say, the big leagues.
Candy bars, which account for about one-half of the U.S. candy industry, reaped over $5 billion in retail sales in 1983. That is enough to provide every man, woman, and child in America with one bar every week. Yet the business may be one of the hardest markets in the world to break into. "Most consumers of candy are guided by tastes they had when they were children," says Kenneth Rosen, president of American Candy and Tobacco Wholesalers Inc. in Landover, Md. "That creates fierce competition for limited shelf space It's hard to get someone, especially an adult, to pick up a bar unless he recognizes the brand. A company has to throw massive amounts of advertising and promotional resources behind a product before it even gets noticed, and there's still no guarantee. Remember Nabisco's Reggie bar, and what a flop it was?"
Reggie wasn't the only one. Mar's Forever Yours bar, reintroduced with great fanfare in 1978 was a resounding failure. Hershey's Rally and Toffo bars struck out, too. All told, at least 38 bars have disappeared from the market since 1977. One of the few to have made a hit is the Twix bar, a cookie-and-chocolate treat made by Mars; introduced in 1977, Twix has already muscled its way into the top-10 listing. Another is Hershey's Whatchamacallit, brought out in 1979 and now a $50-million brand, in 17th place.
What makes the difference between success and failure? If the giants have any theories, they aren't talking. "We conduct test marketing, hope we've landed on a good formula, and use lots of advertising," explains Bill Deeter, spokesperson for Mars. Hershey's Susan Graham echoes the theme. "Consumer tastes are fickle. If a product looks promising after a market test, we lack it up with lots of money and take an educated leap."
Lots of money in this context means lots of money. Hershey7s advetising budget is Standard Candy's annual sales. Spradley's ad budget is $125,000 "To make advertising effective, we'd have to buy a lot of it, and we can only afford a little," says Spradley. "Some day, if our plans work, we'll be forced into using media like television. But that's down the road a bit. For our present purposes, the visibility we have is quite good."
A lot of the Goo Goo's current visibility can be traced to Spradley's shrewd and unconventional promotional tactics. In May 1983, for example, he made a deal with Delta Air Lines to supply Goo Goos as a snack with in-flight meals, bringing the candy bar to the attention of 200,000 travelers every month. Following up on the Bloomingdale's experience, he secured a berth for Goo Goos three months ago in Chicago's Marshall Field & Co. "Stores like Marshall Field and Bloomingdale's were the first to offer once-unknown things like cordless phones and hand-held calculators," says Spradley. "Being on their shelves gets attention, and people start talking about us."
