Palmer Candy Company

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Palmer Candy Company

311 Bluff Street
Box 326
Sioux City, Iowa 51103
U.S.A.
Telephone: (712) 258-5543
Toll Free: (800) 831-0828
Fax: (712) 258-3224
Web site: http://www.palmercandy.com

Private Company
Incorporated: 1914
Employees: 130
Sales: $31 million (2004 est.)
NAIC: 311330 Confectionery Manufacturing from Purchased Chocolate; 311911 Roasted Nuts and Peanut Butter Manufacturing

Most Iowans know niche-market chocolatier Palmer Candy Company as the maker of Twin Bing, a candy bar made with cherry-flavored nougat and fondant fillings coated with crushed peanuts and milk chocolate. The bumpy Twin Bing has been a top seller in Iowa and a few surrounding states since the 1920s while remaining relatively unknown across the greater United States. Palmer Candy is a small player compared to the three candy-making giants—Mars, Inc., The Hershey Company, and Nestlé S.A.—that control 90 percent of America's candy industry. Nonetheless, Marty Palmer, the fifth generation of Palmers serving as president for Palmer Candy, is content with his company's standing.

The Twin Bing fit into a cherry-flavored niche that the larger companies avoid. Twin Bings are one of the last candy bars still assembled by hand, and Palmer Candy claims the longest family ownership in the United States for a candy maker of its size. Despite the down-home reputation, Palmer Candy generates most of its money by mechanically rebagging other company's candies and producing its own bulk candies ranging from chocolate-covered peanuts and malted milk balls to caramel corn and hot tamales. In the early 2000s, Palmer Candy was the nation's second-largest producer of coated pretzel products after Nestlé. Its bulk candies are sold to such supermarket chains as Iowa-based Hy-Vee Food Stores and St. Louis-based Schnuck's Markets.

EARLY YEARS: 1871–1923

Before people were eating chocolate, they were drinking chocolate. The first European to discover the cacao-sweetened nectar was the Spanish conquistador Her-nando Cortez, who took the drink's recipe from the Aztec Indians and brought it back to Spain in 1529. From Spain the chocolate drink's popularity spread throughout Europe. Chocolate would not be available in a non-liquid form until the 1800s.

Edward Palmer's first product was not chocolate, it was fruit. In 1871 a fire in St. Joseph, Michigan, destroyed the businessman's home and fruit store. Instead of rebuilding in Michigan, he transplanted to the burgeoning frontier town of Sioux City and purchased a wholesale grocery operation. In 1878 Edward Palmer expanded his business with a candy and fresh fruit section and renamed his company Palmer and Company. He sold bulk candy in the back of his store from wooden containers. In 1892 Edward Palmer's oldest son, William, opened a second wholesale fruit company. Soon after, Edward, his son William, and a younger son named Charles united their businesses. Candy remained a sideline product for the family-owned operation with the mainstay being fresh fruit.

In 1900 the three Palmers moved their Sioux City business into a four-story, red brick factory on Douglas Street. The new facility came equipped with cold storage lockers, an electric generator, and candy-making equipment that included steam boilers. In the new facility Palmer and Company began hand-dipping chocolate and making gumdrops, marshmallows, and low-cost candies to be sold in bulk. A fifth floor was added to the factory in 1908. Products made by Palmer and Company were delivered daily by the company's fleet of horse-drawn wagons. Each wagon would ride as far as it could in one day to deliver products to towns outside of Sioux City. Wanting to diversify its business in 1914, Palmer and Company incorporated the candy business as Palmer Candy Company and the fruit business as Palmer Fruit Company. Candy was produced in the Douglas Street factory, but the fruit enterprise was moved to a warehouse on Pearl Street.

CHOCOLATE BAR BOOM: 1923–1973

Milton S. Hershey, a Pennsylvanian businessman who made his fortune selling caramels, began mass-producing chocolate bars in 1884. Candy bars from other confectionaries soon followed, but the candy bar industry was not catalyzed until World War I. Several American candy makers were commissioned by the U.S. Army Quartermaster Corps to make chocolate for American soldiers fighting in Europe. At first blocks of chocolate were shipped overseas. Once in Europe, the 20- to 40-pound blocks were broken into smaller pieces for each soldier. By the war's conclusion, factories were shipping chocolate in single-serving sizes. After the ceasefire on the Western Front, American soldiers returned home with a newfound craving for chocolate. Throughout the 1920s an estimated 40,000 American candy bar brands were created. Many were spawned by regional confectionaries, with each candy bar reflecting the personality of its town. Consumers began buying candy in single servings from drug stores and grocery stores instead of from bulk containers. When the demand for candy bars reached Sioux City, Palmer Candy responded with the Bing Bar.

Bing Bars originally came in four different flavors: cherry, pineapple, maple, and vanilla. The distinguishing flavors were inserted in the middle of the candy bar as a nougat and fondant mixture. Nougat was a sugary paste with nuts. Fondant was a mixture of water, sugar, and corn syrup. The nougat and fondant were mixed into a cream, scooped into balls, and coated with a thin layer of chocolate to keep the cream from hardening. A layer of crushed peanuts and chocolate referred to as hash was added last. It was the hash's unruly texture that made Bing Bars difficult to make by machine. The hash could not be extruded or processed with an enrober, the two methods of mass-producing food products. The first Bing Bar was sold in 1923, the same year that Milky Way, Butterfinger, and Reese's Peanut Butter Cups were introduced. The same style of printed wrapper that was used on the first Bing Bar would be used on future Bing products.

In 1941 Palmer Candy purchased Sioux City's Soo Candy Company and its peanut-roasting facility. This marked the company's first venture into nutmeats, which would continue for more than sixty years. In 1956 the expanded Palmer Candy was able to purchase the candy division of the Johnson Biscuit Company, which included the La Fama chocolate bar brand. Acquiring other candy companies helped Palmer Candy drift into the rebagging business. First it purchased candy in bulk from other companies, then Palmer Candy used its machinery to bag the candy for in-store rack displays.

COMPANY PERSPECTIVES

Palmer Candy has enjoyed sweet success since 1878 because we continue to provide quality service, fresh products, incredible variety and high customer satisfaction. We think we've got the best candy around … we love making it, eating it and sharing it with you! In addition to an exceptionally long tradition of providing high quality confections, the company prides itself on a unique history that is highlighted by five generations of family-ownership and management. In an era of mergers, buyouts and consolidation, the Palmer Candy Company operates today as one of the country's oldest candy companies and the only candy company of its size with the longest span of family ownership in the United States!

AGE OF THE TWIN BING: 1973–1998

As Palmer Candy gradually outperformed the family's Palmer Fruit Company, the latter was closed in 1969. Palmer Candy had also discontinued its three less popular flavors of Bing Bars to focus on its best-selling cherry flavor. In 1973, after the rising costs for sugar and coca forced the Bing Bar to increase from ten to 15 cents a bar, Palmer Candy introduced the Twin Bing, a double hump version of the original. Palmer Candy hoped that the larger bar justified the price increase. Palmer Candy's business was doing so well that in 1979 it moved to a larger factory on Bluff Street. The new building was designed solely for candy making and facilitated the business's peanut roasting, rebagging department, candy making, business offices, and candy storage. The bottom floor of the company's original building was converted to Palmer's Old Time Candy Shoppe, which sold Palmer Candy products and displayed Palmer Candy memorabilia. The shop was scheduled to operate seasonally; but after being more profitable than originally expected, it stayed open year round.

In the 1980s Marty Palmer led Palmer Candy as the company's fifth-generation Palmer president. According to an interview he gave in Steve Almond's award-winning book Candyfreak: A Journey through the Chocolate Underbelly of America, Marty Palmer did not plan on joining the family business after he graduated from the University of Colorado. He considered Palmer Candy an "overgrown candy shop." When relatives asked him to return home and help them sell the company or preside over it, Marty became president and expanded its products. "I realized there was huge growth possible and there was going to be risk to it, but it could work, if we were willing to work hard," Palmer said. As other candy bar manufacturers introduced their king-size candy bars in the 1980s, Palmer Candy responded with a triple hump bar called a King Bing. Larger companies tried purchasing Palmer Candy, but Marty Palmer always responded with a sales price that was what he thought the business would be worth in ten years. The tactic thwarted acquisitions. By the late 1990s Palmer Candy was manufacturing an average of 50,000 Twin Bings every day. Pumps were installed in the factory's basement to move the melted chocolate from a 60,000 pound container in the basement to the upstairs production line. Before the pump was installed, the chocolate was hand broken, melted down, and transported via buckets to the upper floors.

PRODUCT LINE EXPANSION: 1998–2003

In 1998 Palmer Candy celebrated 75 years of making its Bing candy bars with a public celebration in Sioux City. "We've had a lot of successful products in and out, but for 75 years the Bing has done the job," Marty Palmer was quoted by the Associated Press Newswires. "It's made the difference in us surviving." A special 150-pound Twin Bing was put on display at Palmer's Olde Time Candy Shoppe. Employees made the colossal candy bar's outer coating with a three-foot-deep bowl. The two cherry cream centers were molded with a basketball-sized stainless steel mold. The huge treat was later divided amongst three local charitable organizations: Boys and Girls Family Services, Girls Inc., and the Boys Club.

KEY DATES

1871:: Fire destroys E. C. Palmer's original store in Michigan so he moves to Sioux City, Iowa, and purchases wholesale grocery operation.
1878:: Palmer adds a candy and fruit section to his grocery store called Palmer & Company.
1900:: Palmer & Company moves its candy and fruit business into a four-story factory building.
1914:: Palmer & Company splits the candy business from fruit wholesaling and incorporates as the Palmer Candy Company.
1923:: Bing candy bars, including the Cherry Bing, are introduced.
1940:: Palmer Candy purchases Soo Candy Company and its peanut-roasting department.
1956:: Palmer Candy purchases the Johnson Biscuit Candy division, claiming the rights to the La Fama candy brand.
1969:: With the end of its fruit business, Palmer Candy concentrates on its candy business.
1973:: Palmer Candy releases the Twin Bing to justify a price increase.
1979:: Palmer family moves to a new headquarters and enjoys success with improved production, warehousing, peanut roasting, rebagging and shipping systems.
1986:: Palmer offers a triple bump Bing, The King Bing.

According to Marty Palmer, the celebration sparked new product ideas among the company's upper management. Marty Palmer told the Omaha World-Herald that when the original Bing Bar was created in 1923, peanut butter wasn't as popular as it had become in the late 1990s. The observation resulted in the Peanut Butter Bing. A broad selection of employees taste-tested the new candy bar through its development. "We struggled for about a year to perfect this," Marty Palmer was quoted by the Associated Press Newswires in 1999. "We ended up with a formulation that is not just a hunk of peanut butter. It's actually a peanut butter creme. It includes a lot of peanut butter. It also has peanut flour, and even a little flavoring."

Sales for the Peanut Butter Bing pushed Palmer Candy to full production capacity after its May 1999 launch. Even with increased weekend shifts, Palmer Candy couldn't keep up with new orders. Marty Palmer hoped that the early success was a signifier that the Peanut Butter Bing would be distributed nationally. "[Distributors] know peanut butter, chopped peanuts and chocolate are going to be a winner," he was quoted, when the Peanut Butter Bing debuted, by Associated Press Newswires. "They are really excited about it. We're really hoping this might be what takes the Twin Bing to a much larger area." In 2001 executives at Palmer Candy agreed that the Peanut Butter Bing had too much peanut flavor; so the company released an altered version of the Peanut Butter Bing. The new candy bar, shipped in a new gold wrapper, featured crisped rice instead of chopped nuts. The caramel added to the center scored higher with the Palmer Candy taste testers than the peanut center of the Peanut Butter Bing.

In 2003 the various Bing bars still hadn't expanded far outside of Palmer Candy's original distribution footprint. "Despite our best efforts, we have been unable to make that go nationally," Palmer told the Sioux City Journal. "It just takes so many advertising dollars." While the improved Peanut Butter Bing, which was later renamed the Crispy Peanut Butter Caramel Bing, sold well, it never outsold its cherry-flavored predecessor.

EXPANDING BEYOND CANDY BARS

Undaunted, Marty Palmer beefed up his company's resources and in 2003 consolidated the company into a colossal 220,000-square-foot warehouse. Besides adding more space, the warehouse solved a logistical problem of having the company's supplies stored in five smaller warehouses throughout Sioux City. The new warehouse became the new center for Palmer Candy storage and production. The space allowed Palmer Candy to increase its rebagging and bulk candy production for super markets, food clubs, and other retailers. The bags of candy would then be sold on racks typically for 50 cents or $1 each. Palmer Candy was also making niche candies like holiday divinity and fudge peanut brittle. The company was flexible enough to make candy exactly to a customer's specifications, unlike larger candy makers.

In 2003 a Minnesota-based competitor, Shair Candy, which was also a family-run business, closed. Palmer Candy was able to collect some of Shair Candy's rebagging customers. Shair Candy's fate reflected a growing trend in the candy industry. In the 1980s there were about 300 family-run candy makers in America. In 2004 only about 30 remained.

Early in the new millennium Palmer Candy was still growing and employed about 100 full-time people. The seasonal candy business increased so much during the fall, with Halloween being the largest candy-consuming holiday, Palmer Candy hired an extra 100 part-time employees and operated its candy factory for 24 hours a day. "Everybody digs in and just gives it their all," Marty Palmer said in the Sioux City Journal, adding "Then Christmas comes and we just breathe a sigh of relief and have a little time with our families."

After 125 years of successful candy making, Palmer Candy and its fifth-generation president were content with their candy-making role in America. In 2004 the company operated four successful ventures: the bulk sales of candies to grocery and specialty stores, custom candy manufacturing, rebagging other company's candies, and the production of Bing candy bars. The latter didn't have a national presence, but the factory provided jobs for hundreds of Sioux City residents. Amongst self-proclaimed candy fanatics, the Twin Bing had accumulated somewhat of a cult following. In his book Candyfreak, Steve Almond devoted an entire chapter to the Twin Bing. Almond believed that the Twin Bing was one of the last great regional candy bars and something to be cherished.

"There are people who make more candy in a day than we make in a year," Marty Palmer said in a 2004 interview with the Sioux City Journal. "We don't try to compete with Mars and Hershey. We don't try to go head to head against the same products that might be produced by someone who is huge," Palmer continued. "We make some very interesting candy, and we do it really, really well. We provide a selection and variety and level of service that nobody else can match. So, we're growing a lot every year."