Perfetti Van Melle S.p.A.

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Perfetti Van Melle S.p.A.

Via XXV Aprile 7
Lainate I-20020 MI
Italy
Telephone: ( + 39) 02 935351
Fax: ( + 39) 02 9374465
Web site: http://www.perfetti.it

Private Company
Incorporated: 1900 as Van Melle; 1946 as Dolcifico Lombardo; 2001 as Perfetti Van Melle
Employees: 700
Sales: EUR 1.3 billion ($1.6 billion) (2004 est.)
NAIC: 311330 Confectionery Manufacturing from Purchased Chocolate; 311340 Non-Chocolate Confectionery Manufacturing

Perfetti Van Melle S.p.A. is the world's sixth-largest candy and confectionery producer and number two in Europe. Representing the combination of Italy's Perfetti with the Netherlands' Van Melle, Perfetti Van Melle produces and markets a host of top-selling candy brands, including Mentos, Fruittella, Brooklyn, Alpenlieve, Golia, and Frisk. Perfetti Van Melle has a worldwide presence, with factories in Italy, the Netherlands, Germany, Spain, and elsewhere in Europe, as well as manufacturing sites in the United States, Brazil, Turkey, India, China, Indonesia, and Vietnam. The company has also announced its intention to begin manufacturing in Russia in 2005. Sales of the privately held company's products reach more than 130 countries. Perfetti Van Melle operates dual headquarters in Lainate, Italy, and Breda, the Netherlands. The company's sales were estimated to top EUR 1.3 billion ($1.6 billion) in the mid-2000s.

Van Melle's Origins in the 19th Century

The merger between Italy's Perfetti and Van Melle of the Netherlands in 2001 created one of the world's top confectionery companies, with a rank of number two in Europe and a global ranking of number six. The merger cemented the friendly relationship that existed between the companies for some two decades and had led Perfetti to become a major shareholder in Van Melle by the early 1990s.

Van Melle was the older of the two companies, tracing its origins to a bakery founded by Izaak van Melle in Breskens, the Netherlands, in 1841. The bakery was taken over by one of van Melle's sons, Abraham van Melle, in 1882. It was under this generation that the family made its first entry into the confectionery business. One of the bakeries employees came from Belgium and knew how to prepare sugar in order to make candy. Van Melle decided to begin cooking up candies besides its usual bakery goods. The shop's "suikerballetjes" (sugar balls) quickly became a popular local favorite. Production remained on a small, homemade scale, however.

Abraham van Melle's son Izaak joined the family business by the turn of the 20th century. Recognizing the popularity of the bakery's candies, the younger Van Melle decided to launch large-scale production of the confectionery and invested in machinery and equipment to establish a full-fledged candy factory in 1900. Izaak van Melle also continued to seek to improve the company's products, establishing high-quality standards and expanding and modernizing its production facilities.

The company also rapidly turned to the international market for sales. By the 1920s, the company's products had found their way across the world, reaching the Dutch Indies, South Africa, Morocco, Tunisia, and Algeria, many Asian markets, and, closer to home, markets in Europe, such as Greece. Izaak van Melle himself traveled extensively, seeking out new clients and markets.

Van Melle's many travels had led him to discover many new candy and confectionery varieties, which he brought back to the company. In this way, in 1926, the company launched production of toffee candies, an English favorite. Van Melle soon made the recipe its own, and, working in its own test kitchen, extended its range of toffee to include a variety of flavors, including licorice. The company's recipe proved so successful that Van Melle toffees became popular even in the United Kingdom.

A trip to Poland in the early 1930s gave the company two new recipes. The first was for a soft caramel-like candy containing real fruit flavors. The second was a candy-coated peppermint-flavored caramel. These candies later became known as Fruittella and Mentos, respectively, and helped launch Van Melle into the ranks of the world's leading confectionery companies.

By the 1930s, however, Van Melle was already a prominent confectioner, and by 1935 the company had even purchased its own airplane, a rarity at the time. However, the German occupation of the Netherlands during World War II brought hard times to the company. Wartime restrictions on sugar consumption severely cut into production. By the end of the war, bombing raids had destroyed the Van Melle factory.

Expansion and Innovation: Mid-1940s to the 1970s

Instead of rebuilding in Breskens, Van Melle decided to relaunch the company with a new purpose-built facility in Rotterdam in 1946. The new facility therefore gained access to Rotterdam's busy port, facilitating its international sales. By 1950, Van Melle had reached full production capacity at the new site. During this period, however, the company decided to narrow its range of confectionery in order to target its efforts on a smaller group of core candy brands. The period also marked the beginning of Van Melle's true internationalization.

The company launched initiatives in a number of new markets through the 1950s and into the 1960s and 1970s. Among these was the introduction of a new packaging form for its Fruittella and Mentos candies, which were quickly becoming company flagships. Both candy types had previously been packaged as loose, bagged candies. In the 1950s, however, Van Melle developed a new roll-type packaging, easier to stock for grocers and easier to carry for consumers. The new packaging helped turn both candies into top-selling international brands.

Van Melle backed up its international expansion with the opening of a series of foreign subsidiaries. In 1956, the company established its first foreign manufacturing plant, opening a facility in Brazil. The company also began opening sales and marketing subsidiaries in order to be closer to local markets, setting up in Belgium in 1950, Germany in 1953, and France in 1960, before expanding elsewhere. The company entered the United States in 1972, establishing a manufacturing and marketing subsidiary in Erlanger, Kentucky, that year. Later in the 1970s, Van Melle expanded into Asia as well, ultimately setting up subsidiaries in India, Singapore, and Vietnam. In addition to producing and promoting Van Melle's core brands, the new subsidiaries also helped the company adapt its recipes and product offering for these local markets.

Building Relationships in the 1980s

Van Melle launched a new expansion phase in the 1980s, seeking to build up its range of brands and expand its production capacity. In 1982, the company made its first acquisition, buying up a small candy producer, PPW, based in Gilda, and acquiring that company's Mintina and Dropmintina brands as well. By then, the company had reached the limits of its production capacity at its Rotterdam site. The company went looking for a new site, buying up a large factory site in Breda. Fueling this expansion, Van Melle listed its shares of the Amsterdam Stock Exchange's Parallelmarkt in 1983.

At the same time, the company retained its interest in new growth opportunities. One of these came in the early 1980s when the company formed a relationship with Italian confectionery company Perfetti, and the two companies began developing joint-marketing efforts. Van Melle also added a number of acquisitions through the 1980s and into the 1990s, including a candy factory from Gebr. Verduijn, which marked the company's return to Breskens as well. The company then purchased Peco Suikerwerken, based in Den Haag, followed by the acquisition of Look-O-Look, a maker of lollipops and bagged candies, based in Ridderkerk, in 1987. Meanwhile, Van Melle also worked on the in-house development of new candy types and brands, leading to the launch of Airheads candies in the United States in 1986.

Merging Market Leaders in the 1990s and 2000s

Van Melle's expansion continued through the 1990s, notably with an entry into the Eastern European markets. After establishing local sales and marketing subsidiaries in these countries, Van Melle sought to acquire production capacity as well, and in 1998 the company acquired VDG, which operated in the Czech Republic, Slovakia, and Hungary. The company opened a production facility in Poland, and a packaging plant in Russia, then established a factory in Indonesia. The company also entered India and China, establishing sales and production subsidiaries in those markets in the late 1990s. The company built its first Chinese factory in Shenzen in 1997, launching production in 2000. At the end of the 1990s, Van Melle's expansion program led it to acquire a number of new businesses, including Klene in the Netherlands, Candy Tech in the United States, and Fundy in Hungary and Romania, all in 1999. Also in that year, Van Melle acquired the Wybert brand of throat lozenges, including a production site in the Netherlands, from GABA International of Switzerland.

Company Perspectives:

OUR VISION—We will enhance our world leadership in confectionery by creating value for people through delightful and imaginative high-quality products. OUR MISSION—We at Perfetti Van Melle: develop, manufacture and market high-quality and innovative products for our consumers through efficient use of our resources and in partnership with our customers; create a fulfilling workplace for our employees built on trust, mutual respect and appreciation of their diversity; value the role we play in our communities, as a socially and environmentally committed organization; generate economic value through superior growth and profitability.

Van Melle moved its stock listing to the Euronext Amsterdam Stock Exchange's Officiële Markt in 2000. By then, Perfetti was already a major shareholder in the company, having bought a 36 percent stake in Van Melle in the early 1990s. Soon after Van Melle's listing, the two companies, which had continued strengthening their marketing partnerships over the last decade, agreed to a full-fledged merger. In 2001, Perfetti acquired 100 percent control of the company and removed its public listing. The newly enlarged company then adopted the name Perfetti Van Melle.

Perfetti: Postwar Beginnings to
Merger with Van Melle

Perfetti had been founded in the town of Lainate, Italy, in 1946, by brothers Ambrogio and Egidio Perfetti. The brothers initially called their company Docificio Lombardo, and the small company began producing candies and confectionery for the nearby market in Milan. The Perfettis grew quickly, expanding their factory into the 1950s.

The product that put the Perfetti name on the international candy map was launched soon after the company's founding. The arrival of the American army in Italy during World War II had introduced Italians to a novel new confectionery—chewing gum. The Perfettis became the first in Italy to begin producing chewing gum, adopting the name "Brooklyn" for their product. The brand became an instant success across the country and was to remain Italy's top-selling chewing gum into the 21st century. The company later changed its name to Perfetti. In the 1960s, the company expanded its production, notably through the founding of Gum Base Company SpA, which specialized in developing bases for Perfetti's and other companies' chewing gum.

By the end of the 1970s, Perfetti boasted a strong portfolio of confectionery brands, including Alpenliebe, Babol, Morositas, Vigorsol, and Happydent. The company backed up its products with innovative advertising campaigns that enabled its brands to become leaders in their categories. Perfetti also expanded into international markets, achieving strength particularly in southern Europe. This position made the company an attractive partner for Van Melle, which focused more strongly on northern Europe, leading the companies to develop their first cross-marketing efforts in the early 1980s.

Perfetti launched its own acquisition drive in the 1980s, acquiring Caremoli and its Golia brand; lollipop and candy maker La Giulia; and Gelco, which specialized in jelly candies and licorice. Perfetti also developed its presence in the international markets, acquiring Belgium's Frisk in the mid-1980s and opening its first foreign factory in Greece in 1982. Through the end of the 1980s and into the 1990s, Perfetti added production sites in Turkey, India, and China, an expansion that culminated in the opening of a modern production site in Brazil in 1999.

The merger with Van Melle, which cost Perfetti EUR 966 million, provided the new company with total sales of more than EUR 1 billion. The combined operations of Perfetti and Van Melle also gave the company a particularly strong position in many of the markets in the Asian region, such as China and India, where the company held number one or two positions in several categories.

Perfetti Van Melle continued enhancing its market position, notably through the creation of new marketing alliances, such as the creation of a joint-venture distribution business with Spain's Chupa Chups for the U.K. market in 2005. Also in 2005, Perfetti Van Melle announced its plans to build a factory in Russia. By then, too, the company's continued success in the United States had led it to announce plans to nearly double the size of its Erlanger, Kentucky, site. Perfetti Van Melle looked forward to a sweet future in the 21st century.

Principal Subsidiaries

Dimpex S.A. (Switzerland); Frisk Int. Nv (Belgium); Gelco S.R.L.; Gum Base Asia Ltd. (Hong Kong); Gum Base Co. S.P.A.; Gum Base Shanghai (China); La Giulia Ind. S.P.A.; Perfetti Confectionery Co. Ltd (China); Perfetti Confectionery Vietnam Ltd; Perfetti Cr S.R.O. (Czech Republic); Perfetti Do Brasil; Perfetti Gida San. Ve Tic. A.S. (Turkey); Perfetti Hellas S.A. (Greece); Perfetti India Ltd.; Perfetti S.A. (Spain); Perfetti S.P.A.; Perfetti South Africa Pty Ltd (South Africa); Perfetti Van Melle Benelux BV (Netherlands); Pt. Perfetti Indonesia; Sulá Gmbh & Co. Kg (Germany); Van Melle Export B.V. (Holland).

Principal Competitors

Nestlé S.A.; Kraft Foods North America Inc.; Mars Inc.; Cadbury Schweppes PLC; Hershey Foods Corp; HARIBO GmbH und Company KG; Ferrero S.p.A.; Chupa Chups SA; Oy Karl Fazer Ab; Masterfoods Veghel B.V.; August Storck KG.

Key Dates:

1841:: Izaak Van Melle opens a bakery in Breskens, the Netherlands.
1882:: Abraham Van Melle takes over the bakery and begins producing candies.
1900:: Izaak van Melle, the founder's grandson, takes over the bakery and builds a new factory for large-scale production of candy and confectionery.
1926:: Van Melle begins production of English-style toffee.
1946:: After its production site destroyed during war, Van Melle builds a new factory in Rotterdam; Perfetti brothers launch Dolcifico Lombardo, later Perfetti, in Lainate, Italy, in order to produce chewing gum and other candies.
1950:: Van Melle opens its first foreign sales and distribution subsidiary in Belgium.
1966:: Perfetti launches a subsidiary, Gum Base Company, for production of natural and artificial gum bases.
1972:: Van Melle starts U.S. operations in Kentucky.
1982:: Van Melle moves to a new production site in Breda and makes its first acquisition, of PPW in Gilda; Perfetti sets up its first foreign production site in Greece.
1983:: Van Melle lists shares on Amsterdam Beurs' Parallel Markt and begins a marketing relationship with Perfetti.
1991:: Perfetti buys a 37 percent stake in Van Melle.
1995:: Van Melle enters India.
1997:: Van Melle enters China, building a production site in Shenzen.
2000:: Van Melle switches its listing to Amsterdam exchange's primary board.
2001:: Perfetti acquires 100 percent control of Van Melle for EUR 966 million.