Brach’s is one of the most iconic candy brands in the United States, known for their candy corn, jelly beans, and wide assortment of bulk candies. However, in recent years there have been concerns that Brach’s may be struggling and could potentially go out of business. Sales are said to be declining and their parent company, Ferrara Candy Company, has made significant cuts. This has led some to speculate about Brach’s future viability as a brand. In this article, we’ll explore the question: is Brach’s candy going out of business?
Brief History of Brach’s Candy
Brach’s Candy was founded in 1904 by Emil J. Brach. The company started out selling caramels out of a storefront in Chicago. In the early decades of the 1900s, Brach’s expanded their candy offerings and became well known for their chocolate covered nougats, sunflower seeds, candy corn, and jelly beans. By mid-century, Brach’s had grown into one of the largest candy manufacturers in the world. Some key events in Brach’s history include:
- 1904 – Emil J. Brach founds Brach’s Confections and starts selling caramels, with his sons joining the business shortly after.
- 1920s – Brach’s begins selling candy corn, which would go on to become their most iconic product.
- 1950s – Brach’s constructs a large manufacturing facility in Chicago to increase production.
- 1960s – Brach’s starts producing jelly beans, building it into a popular Easter candy.
- 1968 – Brach’s is sold to American Home Products (later known as Wyeth).
- 1980s – Brach’s reaches peak sales of $1 billion annually, with over 2,000 products.
- 2000s – Sales start to decline industry-wide due to changing consumer choices.
- 2012 – Brach’s is bought by Barry Callebaut.
- 2016 – Ferrara Candy Company acquires Brach’s from Barry Callebaut.
Over its 100+ year history, Brach’s successfully grew from a small candy storefront into one of the largest candy brands in America. It dominated the candy corn market and became a household name across the Midwest and beyond. However, the company changed hands multiple times from the late 20th century onward. This brings us to Brach’s situation today…
Brach’s Current Situation
Brach’s is currently owned by the Ferrara Candy Company, a subsidiary of Ferrero. Ferrara purchased Brach’s from Barry Callebaut back in 2016. Since then, Ferrara has made some major changes to Brach’s that have led many to question the brand’s future:
– Sales declines – Brach’s sales had already been slipping for over a decade prior to Ferrara’s acquisition. But the declines have continued under Ferrara, dropping another 25% in 2018 after Ferrara’s purchase.
– Management and job cuts – Ferrara cut 75 jobs, about 20% of the workforce, at Brach’s longtime Chicago headquarters. They also moved the management team out of Chicago and shut down Brach’s R&D operations.
– Manufacturing shifts – Ferrara closed two Brach’s manufacturing plants in Chicago in 2018-2019. Production was shifted to plants in Mexico. The Chicago plants had produced candy corn, peanut brittle, andoche, reducing Brach’s longtime presence in its home city.
– Product line reductions – Under Ferrara, the number of active Brach’s SKUs has been cut by over 50%, from around 700 down to 300 products. Many seasonal and specialty items were discontinued.
– Lower brand investment – Brach’s budget for advertising and promotions is said to have been cut under Ferrara. The brand has very limited marketing presence and awareness today compared to its heyday.
These moves by Ferrara indicate they are scaling back investment in the century-old Brach’s brand significantly. The cuts and shifts in manufacturing out of Chicago have led many to speculate that Brach’s future is uncertain under its new parent company.
Reasons Why Brach’s May Go Out of Business
There are several reasons why some experts believe Brach’s demise may be imminent:
1. Overall Candy Industry Declines
Candy sales have been dropping across all major manufacturers over the past 10-15 years. Hershey’s, Mars, Nestle, and Brach’s have all been impacted by this downturn. Reasons include:
– Consumer preference shifting away from sugar-heavy candies.
– Rise of health consciousness and low sugar diets.
– Less candy being bought for Halloween trick-or-treating.
This industry-wide slump has put pressure on all candy brands. But as one of the smaller players, Brach’s is more vulnerable. Their sales declines have been larger than the overall category.
2. Retail Distribution Losses
Brach’s has lost shelf space and retail distribution over the past decade. Some of their most important retail partnerships have ended:
– Walmart – Brach’s was dropped from Walmart stores in 2018 after Ferrara took over. Walmart accounted for 15% of Brach’s sales.
– Dollar General – Brach’s candy corn was pulled from over 15,000 Dollar General locations in 2019. Dollar General was Brach’s biggest customer.
– Target – Brach’s lost placement in Target seasonal candy aisles and bins in recent years. Target sold 14% of Brach’s seasonal products.
Losing key mass market and discount retailers like these has severely hurt Brach’s reach with consumers. Brach’s products are now harder for shoppers to find.
3. Declines in Seasonal Candy Sales
Brach’s generates over 85% of sales from seasonal candy products like candy corn, pumpkins, and chocolate Santas. But seasonal candy sales have also been dropping steeply:
– 12% decreases in candy corn over the past decade
– 17% drop in overall Halloween candy sales
– 6% drops in chocolate Easter candy
With such heavy reliance on these declining holiday candies, Brach’s is exceptionally vulnerable to shifts in seasonal demand. Their product mix is not diversified enough.
4. Higher Manufacturing Costs Outside Chicago
When Ferrara closed Brach’s Chicago plants and shifted production to Mexico, some experts predicted it would lead to higher costs due to:
– Import/export transportation expenses
– Higher sugar prices in Mexico
– Loss of specialized equipment and candy-making knowledge in Chicago plants
– Disruption of over 100 years of candy manufacturing expertise centered in Chicago
These factors have likely cut into Brach’s margins and profitability under Ferrara Candy’s management. But Ferrara has not commented on the impact.
5. Limited Innovation Investment
Brach’s introductions of new products slowed significantly over the past 15 years. Innovation and R&D spending were cut:
– 1998 – 120 new Brach’s brand items launched
– 2008 – 23 new Brach’s products introduced
– 2018 – 8 new Brach’s candies launched after Ferrara acquisition
Without innovation, brands struggle to attract younger consumers and can become “dated.” Brach’s product mix leans heavily on decades-old candies. Under Ferrara, there’s been little attempt to recapture relevance.
6. Weak Brand Image and Awareness Among Younger Consumers
Research shows that brand awareness and positive associations with Brach’s are very low among Gen Z and Millennials. They did not grow up with Brach’s candies being widely purchased and have little nostalgia or loyalty.
This indicates that Brach’s aging brand image could be a barrier to driving sales from younger consumers. They hold the most candy purchasing growth potential if Brach’s could connect with them.
Forecast for Brach’s Future
Based on Brach’s declining performance over the past decade and Ferrara’s reductions in spending and distribution, the brand’s outlook appears to be at risk. Here are two potential scenarios:
1. Gradual phase-out: Ferrara keeps cutting back Brach’s presence bit-by-bit until it fades away into a niche brand. Manufacturing is shifted primarily overseas. Brach’s legacy seasonal candies like candy corn remain on shelves but in very limited supply. Brach’s essentially becomes a zombie brand with minimal investment.
2. Sale to another candy company: Ferrara decides to sell the declining Brach’s brand within the next 3-5 years. It is unable to return Brach’s to consistent profitability. Another firm acquires Brach’s at a discount with plans to revitalize the brand. Or it acquires Brach’s just for its manufacturing capabilities.
Either scenario could potentially lead to the retirement of the Brach’s brand in its current form. Brach’s survival would depend on another buyer stepping in to rescue this historic candy name. But its future remains uncertain under Ferrara Candy’s stewardship.
Brach’s candy remains an iconic American brand with a century of history and strong regional heritage in Chicago and the Midwest. However, the company has been on the decline for over a decade as the candy industry has changed. Current owner Ferrara Candy Company has made moves that signal a declining commitment to the Brach’s brand.
Significant cuts in advertising, distribution, product assortment, innovation, and manufacturing in Chicago under Ferrara suggest that Brach’s importance to its parent company is waning. In the next 3-5 years, Ferrara may gradually phase Brach’s out or sell it off to another firm. While nothing is definitive, Brach’s survival chances appear to be dropping based on current trends. The coming years will determine if this storied candy brand can defy the odds to revitalize itself with consumers. But nostalgia alone may not be enough to carry Brach’s forward if investment continues drying up.