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Back to the Future 211
generation runs it into the ground. In this case, the third generation
invested heavily in plant and equipment to modernize the chocolate
factory, while the fourth generation and current management
has continued to modernize while branching out into retail and
lucrative private labeling ventures. As Michael Schmid, managing
partner of Wolfgang Candy, explains, private label brands were all
the rage among retailers, but the trend had barely touched the confection
market. Wolfgang’s management seized the opportunity,
and soon the company was making candy for Walgreens and Giant
Eagle, a major regional chain. The company also developed its own
brands, including Jungle Jacks chocolate- covered animal crackers
and the Eve’s line of chocolate- dipped cookies. Today, Wolfgang
confections are featured in 140 grocery stores from Pennsylvania to
West Virginia, as well as in several national chains. Sales increased
30 percent in 2009 and about 18 percent in 2010, to $12 million,
even as the effects of the recession wore on.
Wolfgang’s future looks sweet, indeed. The company has an
opportunity to develop seven candy products for one of the country’s
largest drugstore chains. “It takes a lot of investment to make
these things happen,” says Schmid. And that can temporarily eat
into cash fl ow. On the bright side, the company can use an existing
$1 million manufacturing line, paid for with an SBA- backed loan,
to produce the new candies. The high- tech line, Schmid points out,
replaced low- skill, repetitious labor with highly skilled workers who
can program the robots. In 2009, when it installed the line, which
features robots named Lucy and Ethel, the company hired 40 new
workers. Still, the development costs are substantial. Each new
product requires new molds, which can cost $15,000 apiece, as well
as new packaging and printing plates.
The company had a $3 million credit line but reduced it
when it wasn’t being used. Now the bank is reluctant to reinstate
it. As for other options, he says, the company is too small to
attract venture capital, and it is not plugged into angel investor
networks.
“I don’t think the solution is to stop sales growth and slow
the business,” says Schmid, who earned an MBA after serving
in the Navy. “So local is the way to go. The local community knows
and understands the brand.”