Melanie Stern is Section Editor of Families in Business magazine.
Just Born's Peeps outnumber humans by four to one in their homeland. Now the company is to expand that reach internationally with a bold migration strategy
Most people agree that a well-known brand is priceless, but making an impression in the marketing-saturated minds of today's consumer can be tough. Not a problem for Just Born; their chief mascot, a squishy, luminous yellow, 50-year old chick with a Sphinx-like stance has cult status across America. The Pennsylvania company churns out over one billion 'Peeps' annually, making this nostalgic treat America's biggest community, and is also famed for manufacturing the popular candies Mike & Ike, Hot Tamales, Zours, Teenee Beanee and most recently, Peanut Chews.
But far from counting their chick(en)s, respective 2nd and 3rd generation family co-Presidents David Shaffer and Ross Born are currently embarking on expanding the reach of Peeps and other much-loved products beyond America for the first time.
David and Ross spent 2003 celebrating; not only was it their company's 80th birthday, and the 50th birthday of their flagship product Peeps, but also a full decade since they took over running the company from their fathers Bob Born and Jack Shaffer. The pair also turned 50 years old within months of one another. Looking back, the past eight decades illustrate steady growth through a raft of acquisitions – Goldenberg Candy, completed last April – a strategy Just Born continues to use. As popular as their other brands are, Peeps remain centre stage. "We had an interesting experience last Thanksgiving when Macy's asked us to contribute a Peeps float to its 77th annual Thanksgiving Parade," Ross says, proudly. "[Some] 44 million people saw that on national TV."
In the beginning
Just Born was founded in 1923 by Sam Born, a multilingual immigrant who landed in New York from Russia via Paris and Prague. Having worked and trained in confectionery while in Paris, Sam made and sold his own 'French chocolates', marketing them with a sign in his shop window on 8 East 12th Street declaring his wares so fresh as to be 'Just Born'. Sam then opened a manufacturing company, calling it Just Born and enlisting his brothers-in-law Irv and Jack Shaffer as marketing and sales managers, respectively. In the midst of the Depression, the family company moved its operations to Bethlehem, Pennsylvania in 1932, where it remains today,
Sam made his mark as an ingenious and creative mind, acknowledged for his candy creations and machines to make their manufacture easier, including a machine that put sticks in lollipops, and chocolate sprinkles (the former of which earned him the 'keys' to San Francisco in 1916). Meanwhile, Just Born grew despite the backdrop of a perilous economic climate, principally through making a series of small but strategic brand and product acquisitions from local rivals.
In 1935 Just Born bought Maillard Corporation, a manufacturer of very high quality candies that were intricate and time-consuming to produce, but were incredibly popular with New Yorkers. In 1949 the company bought a fudge line from Goldenberg Candy Company – the company it now owns outright – and in 1953, Just Born's future arrived in the shape of a curious marshmallow blob emulating a chick. The chick was part of the package when Just Born acquired another local rival Rodda Candy Company, for its jelly-bean business. Sam's son Bob became president that same year, joining Jack and Irv Shaffer.
These 'Peeps' – dubbed so after the chirrupy noise chicks make when they're born – were laboriously made by hand-squeezing marshmallow from a pastry tube, each one taking 27 hours. Seeing potential, Sam and Bob worked on mechanising the Peeps production process, aiming to make them a commercially viable product. A Peep now only endures a 6-minute labour. Additionally, the advent of national transportation links and cooling technology facilitated exporting for the first time, and demand for its products ballooned. The Born/Shaffer clan never looked back and today, with the 2nd/3rd generation cousin partnership at the helm, the company is in the early stages of creating an international brand.
The cousins are refreshingly vocal about the fact that they take an aggressive approach to growth, not missing an opportunity in 2003's company anniversaries for a nationwide, year-long campaign trail in honour of their day-glo chicks. As well as launching a new TV and print advertising campaign, the company had two Peeps branded 'Fun Buses' concurrently tour the US east and west coasts, delivering truckloads of candies to nearly 200,000 very happy kids. This was backed up by a 12-month diary of branded community parties and shows across America, just in case anyone missed it. "I would say that we are similar to many family companies in the sense that we are not interested in promoting ourselves and the company, but the brands themselves deserve promotion because they've been around so long," Ross states. However, this was a recent policy change.
"Our belief was that we don't do a lot of promotion because we have been fortunate to see a lot of good public relations come our way; perhaps someone saw a yellow Peep and maybe they've known it all their lives, and maybe they're members of the press – then the next thing you know we're suddenly profiled in the New York Post or something, which is what happened in the 1990s," Ross tells Families in Business. "We never spent a penny because things like that – camera crews turning up to broadcast live from the production floor for instance – happened so much that brand competition was not an issue. But then we realised that while PR is a great tool to establish a brand, we needed to advertise to sustain it in the minds of the consumer." One unexpected avenue of free press is the throngs of dedicated Peeps Internet fan-sites – both serious and satirical, only achieved by something so well-loved that it ascends even the nostalgic and resides in legend. Millions show their appreciation with everything from sonnets about them to blowing them up, making art out of them and even creating 'Peep Lovin'. "Some of those sites are a little risqué, but overall we're flattered," the pair agree.
Just Born also promotes its Hot Tamales to their target market through a promotional partnership with the super-cool National Association for Stock Car Auto Racing (NASCAR). NASCAR is America's hugely popular car racing organisation and its biggest spectator sport so, along with Coca-Cola and Kraft Foods, Just Born can take advantage of free TV coverage by FOX, NBC and Turner Broadcasting, all exclusively licensed to show the national races until 2008.
A solid repertoire then – the only problem being as Just Born looks to move overseas. Repertoire can't be imported.
Just Born first started looking into global markets in 1999 having first achieved the size and operational flexibility it wanted, and is now operational in countries across Europe, New Zealand, Australia, Singapore, Russia, Mexico and the Caribbean. As David and Ross explain, their marketing campaign is currently driven towards mothers, who not only holds the purse strings, but buys Just Born products because of the nostalgia she holds for the marshmallow chicks her own mother bought her as a child.
The company has started selling its wares to South Korea, Kuwait and Turkmenistan, to name a few of the locations where Just Born means very little to most people.
"It came to the time when we had to look to global markets to grow," David explains. "We have some sales of Peeps in Europe and you will see more of that in 2004, but Peeps are a very different product for non-US, non-Canada places. We know also that European tastes are strongly swayed towards chocolate rather than marshmallow candies," the co-President adds.
This year will be all about grabbing supermarket shelf space from powerful domestic and international rivals, all jostling for the same consumers' affections as the confectionery market faces its toughest squeeze yet. To achieve this, the pair realise they must please two groups, the consumer and the point of sale. "We are an impulse item to our customers, not a staple shopping list item, so we need to give people the opportunity to fulfil that impulse," David says. "Whenever there is a dampening of the economy or a political situation such as last year, people spend less on things like candy. On the other hand we are relatively inexpensive and while people might not be able to afford a new washing machine or car, they might be better able to afford a cheap thrill. Our sales customers want a product that is easy to sell and will make them money through consistent profits. Generally, our company needs to supply more new products to market more rapidly, as consumers are always interested in new products."
Family business and duty of care
David and Ross' strategy is underpinned with that staple of family companies, the long-term outlook. It's clear from their rhetoric that they see the past not only as the foundation for their own work, but for the next family generation's, and the generation after that. "It's a wonderful feeling knowing that our fathers left such a great legacy for us to build on, especially when we keep hearing that most family businesses do not make it through the second generation," David explains. "To have made it to the third is pretty special. It's also very exciting to have a brand and products that have been around so long and so beloved in America." When asked what lies ahead for the next five years, the pair say they see it as their duty to look ahead ten years.
They want to identify another big acquisition target. By this summer the company will have completed the 18-month integration of Goldenberg into its operations, and will roll out its Peanut Chews, previously only available within 250 miles of their factory in Bethlehem, as a national Just Born product. The founding family of Goldenberg, in its fifth generation, were already close long-time friends with the Born/Shaffer family. "We felt a responsibility to maintain their existing business relationships and to keep the factory where it was, which we did, and we understood that we were not just buying their company – we were going into partnership. We were not looking to take over and destroy the value they created over 113 years," says David. Turning words to deeds, the cousins appointed David Goldenberg as vice-president of supply chain and procurement for Just Born.
Talking successors, the cousins have already identified strong contenders from their respective families. "While it is too early to know if our kids will join the company, Ross thinks one of his might be interested and I believe one of mine is too," David says. "We've talked about it with them and have made provisions for them to join the company. Referring to our stated company vision, a primary aim is to continue as a family led company. We're lucky our kids are already the kind of people who understand our business philosophies and already espouse the ethics we engender here."
David and Ross are keen for their children to fulfil their education and to gain experience elsewhere before committing to the family concern. They both joined immediately from university when their fathers needed them to, having worked summer jobs and represented the company at trade shows beforehand. An outsider might think that to spend one's entire career in one company, working alongside one's cousin the whole time, must require completely different skill-sets to avoid stepping on one another's toes. Not so – a recent re-training programme that the executive team attended to identify clear roles and skills concluded that the co-presidents' own positions were in fact identical. Some might find this confusing but the rationale is to create a seamless leadership, with both singing from the same hymn sheet, thus providing one strong management front. They make it work. "We are two very different personalities but we share the same values, so we can always find dialogue, a compromise and move ahead on any matter," Ross reveals.
To Just Born, being a family business means it does everything through a set of cardinal ethics based on the importance of family and community. "Our secret is the great deal of responsibility we take for what we do. First and foremost, our employees are our most important asset; and our family business is for the stakeholders as well as the family – by stakeholders we mean all the people who are affected by what we do, including suppliers and contractors. Once you start to see the bigger picture of how many people fit into that structure, it's very sobering to see the effect we have on the community, and what effect it would have on our community if we did not thrive in it any longer," says David. The pair estimate that they receive an average three buy-out offers each week, all very politely shot down. "More often than not, stakeholders are not treated well in a sale," Ross adds, "and how many meals does a person need in a day anyhow? For us, remaining family-owned is not about accumulating assets, it is about that responsibility to our thousands of stakeholders". This commitment has earned the company a long list of state awards – most recently Exporter of the Year. They also won third place for Best Company to Work For in Pennsylvania, environmental awards and even a gong for keeping the company grounds looking attractive. The Bethlehem and surrounding area is also headquarters to many large companies including the family-owned Martin Guitar, Crayola, Lucent Technologies and Volvo's Mack Truck. To cap it off, Just Born is well-known for its various philanthropic deeds and donations and has implemented an employee volunteer programme. "The culture of volunteerism here at Just Born is one which gives us a great deal of pride," the pair conclude.
Just Born's work at home seems about done. The next few years will be crucial for the company as it migrates eastwards to begin the business of global domination.