Jimmy Spradly's candy bar has already charmed the South. Can it sweet-talk its way into the national market as well?
James W. Spradlry Jr., 28-year-old president of Standard Candy Co., walks in his factory amid brimming hoppers of peanuts and huge vats of caramel, watching a 7,000-gallon tank pour warm chocolate onto clumps of peanuts riding a conveyor belt. The floor is sticky and the atmosphere frenetic as each day the production line churns out more than 150,000 pieces of the company's main product -- a round, caloric amalgam of chocolate, peanuts, caramel, and marshmallow with the whimsical name of Goo GooCluster.
"When I first got here, this plant was making fewer than 50,000 Goo Goos a day," shouts Spradley, straining to be heard over the din of gurgling chocolate and clanking machinery "We're still operating at less than 40% capacity' meaning we can meet demand once business really starts to take off."
Take off is precisely what Standard Candy, located in Nashville, plans to do. Despite scant cash for advertising and only limited test marketing, Spradley wants to take his southern-based Goo Goo Cluster and sell it all over the country. One day, he dreams the Goo Goo will be battling with national top-selling brands like Snickers, a rival synthesis of peanuts and chocolate that is America's No. 1 candy bar.
For Standard Candy, with only $7 milion in annual sales -- and for Spradley, who has been in the candy business only two years -- it is a heady aspiration. Nationally, candy sales are growing at less than 80% a year, a pace that isn't expected to pick up anytime soon. And although there are hundreds of candy companies in the United States, only two of them account for nearly 70% of the entire candy bar market -- M&M/Mars, the candy division of Mars Inc., and Hershey Chocolate Co., the candy subsidiary of Hershey Foods Corp. The twin behemoths -- each of which did more than $1 billion worth of business in 1983 -- manufacture all of the nation's 10 best-selling candy bars and most of the top 20. Yearly sales of Mars's Snickers alone, estimated at more than $300 million, approach the revenues of some Fortune 500 companies.
What seems like a quixotic quest, however, must be measured against Standard Candy's two indisputable assets. One is the Goo Goo itself, which enjoys a clientele that is almost cultlike in its devotion. The other is Jimmy Spradley, who is considerably drier behind the ears than either his age or his ambitions might suggest. Put together, they make a combination that may yet follow one or another of the giants' bars off the retailer's shelf.
Back in 1912, Standard Candy founder Howell H. Campbell invented a candy bar -- naming it, so the story runs, after the sounds uttered by his baby son. Since then the Goo Goo cluster has been as intertwined with the region of its birth as twanging guitars and misty-blue mountains: Ask a Tennessee good ol' boy to recall his childhood, and Goo Goos are apt to be right up there with hunting and hoe-downs in the fond-memory department. Standard has always cultivated this downhome image, mostly by advertising heavily on Nashville's famous Grand Ole Opry Show, a country-music spectacle that is heard in about 35 states. "The South's Favorite Candy," the boxes of Goo Goos are labeled.
Until recently, you couldn't buy a Goo Goo more than 200 miles or so from downtown Nashville. But that didn't stop word of the bar or samples of it from trickling into the outside world. Candy aficionado and author Ray Broekel, who consumed two years and over 1,000 candy bars to write The Great American Candy Bar Book, announced that the Goo Goo was his all-time favorite. Tourists visiting the Opry -- and there are busloads of them every week -- tasted the Tenneseeans' delight and brought word of it to the folks back home. All told, some $100,000 in annual mail-order business around the world reflects the Goo Goo's mystique. Singers Dinah Shore and Pat Boone, both former Tennessee residents, regularly receive shipments of the bars, as does Hollywood tough-guy James Garner. The company gets as many as 100 letters a week either pleading for Goo Goos or singing their praises.
The Goo Goo has turned up in some other unlikely places as well. In 1982, Bloomingdale's ordered some for its Americana exhibit, as an example of a product indigenous to the South. The exhibit is long gone, but the Goo Goos remain So far, the store has sold more than $15,000 worth. Recently, too, the bars have become a minor fad in Washington, D. C., endearing themselves to prominent lawmakers like Senate Majority Leader Howard Baker (R-Tenn.), and even, reportedly, to Ronald Reagan himself. Whether the candy has supplanted jelly beans as the favorite snack of the powerful can't be determined for sure. But if its growing trendiness is any indication, Goo Goos could be the hottest Tennessee product to invade the North since Jack Daniel's whiskey
This possibility is not lost on Jimmy Spradley. Since his candy has already shown such appeal to the jaded palates of New York shoppers, Washington pols, and L.A. glitterati, Spradley reasons it ought to find acceptance throughout the land. "In the next two or three years, it's possible for us to be selling about $5 million worth of Goo Goos in the New York market," he says, "and from there, spread to Boston."
Spardley's informal tiemtable for this coast-to-coast market expansion is five to eight years tops. But although such ambitions are easy to write off as the impossible dreams of youth, Spradley is not your typical 28-year-old CEO. When he began working at Standard Candy in May 1982, the company was coming off a long history of mediocre sales and marketing, and in fact was facing bankruptcy. He has since not only turned the company around, but has also strengthened its distribution channels and tapped additional markets. "Once the company was on the upswing, things got easier," he says with a chuckle. "Turning it around was the tough part."
Spradley wasn't the first to attempt a turnaround. In the early '70s, Howell Campbell III, the founder's son, was getting bored with the candy business, and his own son had no desire to pick up the reins. So Campbell unloaded Standard Candy for $1 million to two Nashville entrepreneurs, James Miller and James Fischer. The company's sales, at roughly $2.5 million, were steady but moribund, and Campbell's lack of enthusiasm was obvious to the new owners. While other candy companies of similar size had shifted at least a decade earlier from direct salespeople to food brokers, for example, Standard Candy still employed a force of about 21 salaried salesmen. Like a tired army of Willy Lomans, they sold the company's products out of the trunks of their cars. Although many had been with the company for more than 40 years, in 1975 then-CEO Miller took the traumatic step of letting them all go. With a new broker-based distribution system in place, sales grew by about 5% a year from 1974 to 1979.
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."
Spradley is careful, however, to complement attention-getting techniques with solid marketing and distribution efforts. The Marshall Field's introduction, for example, was timed to coincide with the Goo Goo's entry into the Chicago market And he has capitalized on the candy bar's strength below the Mason-Dixon line by carving out toeholds in chains that are prominent both in Tennessee and in other regions. The most recent addition to the fold is The Kroger Co, the nation's second-largest supermarket chain, with stores in southern, central, and southwestern states. The chain agreed to place Goo Goos in about 500 stores in the Tennessee area, where the candy's risk of failure was low. It proved popular, and last March Kroger placed it in all 1,470 stores. ln the next 12 months, when Spradley tries to conquer such cities as Denver and Philadelphia, a key stratagem will be to plant Goo Goos in the local stores of large chains that reach to those cities
Standard Candy has already appointed brokers in several new cities in addition to Chicago, including Kansas City, Oklahoma City, Houston, Baltimore, Pittsburgh, Cleveland, Detroit, and Washington, D.C. The brokers sell to wholesalers, who in turn peddle the company's products to retail outlets like supermarkets, merchandise stores, and mom-and-pop candy stores.
Candy is known as an "impulse" item. The closer a bar is to a consumer's attention, the more likely that his fingers will get itchy and grab it. Big companies like Mars therefore put a great deal of effort into point-of-sale merchandising techniques, providing retailers with such amenities as freestanding bag display fixtures and vertical candy racks, where candy is next to gum and not beneath it. Spradley's distributors, who can't afford to use such techniques very often, instead emphasize discounting and often use just plain cajolery to get Goo Goos near the cash register.
So far, all of these strategies have worked pretty well. Sales have tripled in the past 18 months, suggesting a high repeat factor among Goo Goo initiates. According to a report put out by Distributor Concepts, a tracking service that measures confectionery sales, Goo Goos jumped during Spradley's brief tenure from #136 on its ranking of the country's favorite candy bars to #79 at the end of 1983. "There's nothing else like it on the market," summarizes Spradley. "Once we get people to try it, they're hooked."
To build up his marketing firepower for future guerilla attacks, Spradley has begun raiding the competition's camp. A year ago, for example, he hired E. David Jarrett, a sales manager at Hershey for the previous 12 years. Jarrett is now Standard Candy's senior sales manager, spending most of his time on the road and in the trenches, rallying the company's 28 brokers
"Introducing a new bar nationally can be very complex, like raising up a child from birth," Jarrett says matter-of-factly. He adds with a hint of disdain that the Goo Goo Cluster's only limitation all these years has been management's lack of vision. "The Goo Goo is not a new bar. It has a history, and it always had the potential to go national. Our brokers have already seen a dramatic difference, from almost no support when Jimmy first got here, to a great deal of it."
Spradley is also reorganizing his sales structure to prepare for the demands of territorial growth. Last January, a second sales manager, Bob Alexander, was hired away from Mars, and a slot for a third manager is in the works. Currently, sales work is shared by Jarrett, Alexander, and, to a lesser extent, Spradley himself. Soon, he hopes, the Goo Goo's territory will be divided into three regions of roughly equal size, each headed by a manager. By delegating most day-to-day tasks, Spradley is preparing to ease out of selling completely
"When we hit $30 million or so in sales, which is about all our present factory can handle, we'll start thinking about things like bringing aboard more sales managers and building factories in other regions," says Jarrett. "In the long run, the sky is the limit."
Spradley has not confined his innovations to marketing alone. One of his first moves was the introduction of a new product, the Goo Goo Cluster Supreme, a cluster loaded with pecans instead of peanuts. He says the Supreme has been "ecstatically received," and already accounts for 20% of the company's chocolate sales. To circulate the Goo Goo name even more, he prompted an ice cream company, Fantasy Flavors Inc. in Wheaton, Ill., to devise a mixture called Goo Goo Cluster Ice Cream. Fantasy Flavors has been selling the ice cream's ingredients since March 1983, in return for a nominal licensing fee to Standard Candy.
"It's the fastest-growing new flavor our company has ever introduced," says Bob Anderson, Fantasy Flavors's marketing director, enthusiastically. The ice cream, already picked up by 47 ice cream manufacturers and dairies throughout the United States, has been such a hit that Standard Candy and Fantasy Flavors came out last February with the Goo Goo Cluster Ice Cream Bar, a gooey combination that some observers think will benefit dentists as much as it will Spradley. "Getting the name out in any manner is what counts," says Spradley. "I mean, let's face it: 'Goo Goo' is a dumb-sounding name, but it sells the candy. No one ever forgets it."
Standing in his office, not far from the ceaseless bustle of his factory, Spradley dramatically sweeps his hand across a wall map of the United States. "Once we consolidate the areas we're already in," he says, "we'll continue to slowly spread sales coverage in overlapping circles." He pauses, then, with cheerful certitude, declares, "We can be a major candy company someday."
Perhaps. But for now, the real issue is whether Spradley's scheme can spark a nationwide mastication of Goo Goos, or whether the clusters rolling off his production line are destined to stay as provincial as grits. "Mars and Hershey spend millions of dollars on promotional work and advertising when introducing a new bar," says Lisbeth Echeandia, executive vice-president of American Consulting Corp. in Orlando. "But making it work Standard Candy's way is possible. I do know that the Goo Goo has a lot of Southern appeal. What I don't know is whether that Grand Ole Opry stuff will wash with New Yorkers."