New England Confectionery Co. History

Address:

254 Massachusetts Avenue
Cambridge, Massachusetts 012139-4285
U.S.A.

Telephone: (617) 876-4700
Fax: (617) 876-2356

Wholly Owned Subsidiary of UIS Co.
Incorporated: 1847 as Chase and Company
Employees: 475
Sales: $60 million (1994 est.)
SICs: 2064 Candy & Other Confectionery Products

Company History:

New England Confectionery Co. is the oldest candy company in the United States. The company manufacturers such time-tested delights as Mary Janes, Canada Mints, Sky Bars, and its core product the venerable NECCO Wafer. Necco (as the company became popularly known for the word formed by its initials) expanded during the early and mid-1990s by acquiring confectioners Stark and Haviland, which more than tripled the organization's revenue base.

American Oliver B. Chase, with help from his brother, founded New England Confectionery Co. in 1847. Chase immigrated from England to the United States, where, among other pursuits, he invented a lozenge-cutting machine. Chase discovered that he could use the device to cut wafers of crunchy candy made with a relatively simple recipe of sugar, gelatin, and flavorings. His machine is now distinguished as the first American candy machine. Chase used his machine to set up a small factory in South Boston. He began manufacturing 'Chase Lozenges,' which were the forerunner to the renowned NECCO Wafers and other of Chase's lozenge-like candies. Two other local candy companies launched at the time were Daniel Fobes' Hayward and Company, founded in 1848, and Bird, Wright and Company (later called Wright and Moody), which was started in 1856. The three companies would join forces in 1901 under the New England Confectionery Company (Necco) banner.

The Chase brothers' first big hit was Necco Wafers, which were about the size of a quarter and came in rolls wrapped in glassine paper that resembled stiff wax paper. The wafers, the first candies ever to be sold in multipiece rolls, became hugely popular. Not only did they taste good, but they were surprisingly durable and had a long shelf life, which gave them an advantage over many other treats of the period. Even in warm weather the wafers could be manufactured and then transported over long distances without negatively affecting their flavor or texture.

Chase managed to build a successful company around his NECCO Wafers. Indeed, throughout the late 1800s and early 1900s Necco manufactured and shipped millions of wafers and the candies assumed their place in American history. The wafers, in fact, widely predated such other American candy icons as Hershey bars (1880s) and Tootsie Rolls (1890s). "[NECCO Wafers] were probably at least 30 years before any other American product that's still sold today in essentially unchanged form," noted Susan Strasser in the February 21, 1995 Wall Street Journal.

Fat-free and offered in eight flavors--the coveted chocolate NECCOs developed something of a cult following in the 1900s--NECCO Wafers held their own for 150 years in an often hyper-competitive candy industry. The treats were a favorite during economic depressions, for example, because a few pennies bought a roll of wafers that a frugal person could savor for days or dole out to children one or two at a time. In the 1930s Admiral Richard Byrd took two tons of NECCO wafers on a 1930s polar expedition, and, during World War II, the U.S. Government requisitioned Necco's entire output of the rugged NECCO Wafers for its soldiers. Still a favorite with many sweet tooths, the wafers proved versatile into the 1990s as well. Necco was selling wafers accidentally dropped on the floor for hog feed, for example, while another buyer used the discs on rifle range targets. Moreover, homemaking guru Martha Stewart trailblazed the use of wafers to build roofs for gingerbread houses. Other uses included poker chips, checkers, and toll-booth tokens.

NECCO Wafers remained the centerpiece of Necco's offerings throughout its long history and into the mid-1990s. Since the late 1800s, however, the company introduced a number of different candies, many of which achieved notable success. Necco is credited with the invention of Boston Baked Beans candy in 1875, for example, as well as with the introduction of the first rolled lozenges in 1866. Other successful inventions included Canada Mints, Mary Jane peanut-butter chew candies, and Sky Bars. Unveiled in 1938, the Sky Bar was the first multicenter candy bar. Necco introduced the candy with a sky-writing campaign to capitalize on the aviation craze of the time. Necco entries that didn't stand the test of time included Hoarhound Ovals, Jujube Monoplanes, Whangbees, Chocolate Need-Ums, Montevideos, and Climax Mint Patties.

Among the most successful and endearing Necco products during the 20th century was the renowned candy Valentines Day 'conversation hearts' that Oliver Chase's brother invented in the 1860s. It's probable that almost every American living in the mid-1990s had at least seen the tiny candy hearts. Inscribed with such short messages as 'Kiss Me,' 'Will You,' 'Buzz Off,' or 'Be Mine,' the hearts were a crunchy, chalky candy similar to NECCO Wafers and offered in an assortment of pastels. Necco introduced the hugely successful conversation hearts in 1902 and proceeded to sell billions of them. In the early 1990s, in fact, the company estimated that it was churning out a whopping eight billion hearts (including larger 'motto hearts') annually, accounting for roughly one-quarter of total sales. In the mid-1990s Necco was printing 32 different heart messages, many of which had been used since the early 1900s.

Necco profited for about 100 years with its mainstay wafers and variety of candy innovations. But by the mid-1900s the confectionery industry was beginning to change, and Necco was failing to keep pace. One trend was increasing consolidation in the industry. Necco itself had merged with two other Boston confectioners in 1901, as described above, and in 1933 the company had acquired Lovell & Covel Co., a small manufacturer of packaged chocolate goods. In 1961, moreover, Necco bought out Daggett Chocolate Company, a well-known candy maker that was started in 1888. But major candy companies in the mid-1900s were gobbling up their competitors and amassing huge manufacturing and distribution operations that allowed them to benefit from economies of scale. At the same time, the Necco organization had become somewhat stagnant, relying on existing products and paying little attention to the need to improve or update its aging production facilities. Necco even phased out production of its candy hearts during the 1950s and 1960s.

By the early 1960s Necco was losing money and careening toward bankruptcy. Recognizing the potential of some of Necco's brands was UIS Co., a New York holding company. UIS was founded by Harry Lebensfeld, who liked to purchase poorly performing companies and turn them around. He had started in 1945 by acquiring a desk manufacturer and had purchased some other companies--UIS would eventually become focused on the auto parts industry--before snagging Necco in 1963. Immediately after purchasing Necco, Lebensfeld eliminated unprofitable brands and raised prices. Then, in 1968 he installed a new management team headed by former auto industry engineer Domenic Antonellis. Antonellis spearheaded a turnaround that had Necco generating profits by the early 1970s and would keep the company healthy for the next three decades.

Antonellis achieved the renewal at Necco by upgrading production and investing heavily in what he viewed as high-potential brands and divisions. At the same time, he initiated an aggressive drive to control costs. Toward that end, Antonellis upgraded Necco's operations by spending as little money as necessary to maximize profits. Indeed, much of the company's equipment had been built early in the century and some furnishings even dated back to the 1800s. Antonellis jettisoned antique leather conveyor systems and old wooden troughs in favor of more current gear. But he kept much of the equipment that had been installed after the turn of the century, such as the giant cooking kettles and cast iron wafer-stamping equipment. Necco updated those old machines with electronic controls and other modern accessories.

Necco's old-fashioned offices and production operations make for an interesting sidebar to the Necco story. Its facilities in 1995 were somewhat of a candy-making museum. To make its wafers, Necco used four giant wafer-cutting machines estimated to have been made around the turn of the century, although nobody really knew for sure. The wafers were wrapped by hand and placed on old, dependable conveyor belts. Other Necco candies were made similarly, with decades-old equipment that the company updated with electronic controls under Antonellis' direction. Some of the company's historic fixtures were employees, such as 55-year Necco veteran Joe Wicks, also known as 'Mr. Candy Cupboard.' "We built this building in 1927, and it's a mausoleum. Look at those century-old walnut filing cabinets. Look at that doorknob," said Walter J. Marshall, Necco manager, in the Fall 1995 Invention & Technology. "We make four and a half billion Necco Wafers a year, and we make them on the equipment we brought with us when we moved here in 1927," Wicks observed.

Although Necco retained its old-fashioned appeal under Antonellis, it also made important changes. Evidencing Necco's new management strategy, for example, was its resurrection of the conversation hearts that Oliver Chase's brother had invented in the 1860s and Necco had discontinued in the 1950s. Necco started making the hearts in the 1970s under Antonellis' direction. When they decided to resume production, managers were able to find the old hand-forged brass cutters used to shape the hearts, but they couldn't locate the printing attachments. Necco managers, including Antonellis himself, worked on weekends for four years to get the line up-and-running. The effort paid off when the little hearts became a major source of revenue for Necco. Managers achieved similar savings by purchasing machines that other companies sold or discarded. A chocolate enrobing machine and metal detectors (to detect metal objects that fell into the candy) used in the 1990s, for instance, were bought from competing candy manufacturers.

Even Necco's corporate offices and facilities reflected the low-cost approach. Necco's offices and plant in Cambridge were still served by an old elevator system that opened out onto several floors filled with old copper and brass candymaking machines. Most of the executive offices sported bare concrete floors, although Antonellis enjoyed vintage linoleum in his suite. The company was also known for discarding very little, a policy that was demonstrated to have value in an amusing incident involving Massachusetts' then-governor Michael Dukakis. Olympia Dukakis, the Governor's cousin, claimed in a speech that she had worked for Necco for six months in 1959 and had been exposed to "awful" working conditions. An outraged Necco manager pulled her work file and sent it to the Governor. The file showed that Olympia had only worked at Necco for two weeks. "The company may not be in the fast lane," the manager wrote, as quoted in a Wall Street Journal article, "but we do provide jobs and benefits.... Please do not belittle [it]."

Necco profited during the 1970s and 1980s with its savvy manufacturing and operating strategy and proven line of traditional candies. By the end of the 1980s the company, which was still operating as a subsidiary of UIS Co., was generating about $25 million annually. After years of relatively stable gains, however, Necco surged during the early and mid-1990s. Importantly, in 1990 Necco acquired the Howard B. Stark Candy Co. for $11 million. Stark was a family-owned candy manufacturer founded in 1939. It produced the well-known Sweetheart Valentine hearts, 'Gummi' candies, caramel goods, and other confectionery products.

Stark was generating sales of about $22 million annually going into the 1990s, but a management switch in 1988 had failed to bring profits. Antonellis had been familiar with the company for years and had watched from the sidelines as it tailspinned into financial decay. Stark brought three factories--in Louisiana, Massachusetts, and Milwaukee&mdashø Necco, as well as about 140 employees. During the early 1990s Necco worked to whip Stark's operations into shape. It updated some of its production facilities and tweaked its product lines. At the same time, Necco invested to modernize some of its own operations. In 1993, for example, Necco installed an advanced new packaging system designed to speed up production and provide faster changeover to meet different packaging demands.

Necco posted sales of about $60 million in 1994. Revenue for 1995, though, was expected to surge toward the $100 million mark. That gain was primarily the result of a second major acquisition that Necco conducted late in 1994. In June of that year, creditors forced the shutdown of the Great American Brands candy factory in East Cambridge, not far from Necco's main plant. Three months later New England Confectionery Co. purchased the plant and reopened it as the Haviland Candy Co., which traced its origins to the 1929 formation of the Deran Confectionery Co. Antonellis rehired about 150 of the original 200-plus employees. "I hired no one outside of the people who were part of that (shut down) organization," he said in the July 10, 1995, Boston Herald. "They were an excellent group of people. It was a case of making them believe that they had a viable candy company and they had jobs," he added. Besides boosting Necco's revenue base, Haviland's boxed chocolates line diversified Necco's offerings.

Going into 1996, Necco was working to consolidate its recent acquisitions and streamline the overall company into an efficient, diversified candy manufacturer. 1997 would mark the 150th anniversary of one of the oldest companies in the United States. As they had been for nearly 150 years, Necco Wafers continued to be the company's centerpiece product.

Principal Subsidiaries: DMA Acquisition Corp.

Principal Operating Units: Necco; Stark Candy Co.; Haviland Candy Co.

New England Confectionery Co. History

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