Question

Not Just Another Jelly Bean

Easter may be long gone, but the Jelly Belly Candy Company is still producing jelly beans, 300,000 pounds a day.

An anomaly in the stagnant $29.1 billion candy industry, the company, based in Fairfield, Calif., continues to grow and increase market share, with sales up 25 percent since last year. Jelly Belly’s success, industry experts say, is because of wider availability and global expansion. And, according to candy connoisseurs, it just makes a better bean.

“All you have to do is look at them, and they are brighter, shinier and prettier,” said Sarah Gencarelli, a candy reviewer for CandyAddict.com, a blog about sweets. With unusual and, in her opinion, superior flavors like buttered popcorn, kiwi, margarita and cappuccino, she said, “Jelly Belly has this artisanal niche.”

The challenge for the company now is to maintain that gourmet image as it moves into more retail outlets. While Jelly Belly beans used to be hard to find, available only in large glass jars in mom-and-pop candy shops, they have been gradually appearing since 2000 packaged in more grocery and convenience stores as well as at mass merchandisers like Wal-Mart, Office Depot and Bed Bath & Beyond.

“It used to be a coup to score Jelly Bellies, but now it’s gotten so they are everywhere,” said Marcia Mogelonsky, senior analyst with the market research firm Mintel in Chicago. “Without the search, you’ve got to wonder if they’ll lose some of their appeal.” In response, company officials said they were not concerned because the popularity of Jelly Belly beans is based on taste not exclusivity.

Jelly beans have been around since the 1890s, but Jelly Belly claims to have made the first gourmet jelly bean in 1976. “We were making candy corn before then and we were starving,” said Herman Goelitz Rowland, the chief executive of Jelly Belly. The company was then called the Goelitz Confectionery Company and was founded in 1898 by Mr. Rowland’s great-grandfather, Gustav Goelitz. The name changed to Jelly Belly in 2001.

Unlike traditional jelly beans that have only flavored shells, the Jelly Belly innovation was to flavor the chewy insides as well. Jelly Belly beans are also smaller and come in 50 flavors using real ingredients like fruit, peanut butter and coconut, not, industry consultants said, the six or seven usually artificial and often unidentifiable flavors available in regular jelly beans. Ms. Gencarelli described the other jelly beans as “the kind that were probably stuck together in your grandma’s candy dish.”

Jelly Belly beans sold well enough. But in 1980, word got out that Ronald Reagan was a devotee. “Our sales went from $8 million to $16 million in one year,” Mr. Rowland said. Coping with the media attention and running the California factory around the clock to try to keep up with demand, he said, was “very traumatic for our little company.”

Sales today are $160 million, and the company is aiming for $200 million by next year. The number of employees has jumped from 10 in 1980 to 675 today, with an additional 50 expected with the completion of a 50,000-square-foot-plant under construction in Thailand.

“International sales are our biggest growth area,” said Robert Simpson, president and chief operating officer. Jelly Belly beans are available in 40 countries, up from 20 two years ago.

The Thai plant, which will be capable of producing five million pounds of Jelly Belly beans a year, will supply markets in Asia and the Middle East, company officials said. The company also has plants in Fairfield, Calif., and Chicago as well as a warehouse and distribution plant in Pleasant Prairie, Wis.

While Jelly Belly beans appeal to a broad audience, Sports Beans, introduced last year, are marketed specifically to US athletes between the ages of 23 and 54 as a “performance bean” with vitamins to protect the body against oxidative damage and with extra electrolytes to keep athletes hydrated.. Many athletes turn to specialty foods and supplements to provide extra energy, aid in recovery from training and to ward off injury and illness. Unlike other performance foods, the Sports Bean provides the legendary flavor of Jelly Belly jelly beans with an extra punch of vitamins and energy. The ads for the Sports Bean also tout the fact that they are made in the U.S. with non-GMO ingredients.

This year, Jelly Belly signed a deal with Cold Stone Creamery to sell a line of Jelly Belly beans that taste like some of the chain’s popular ice creams. Jelly Belly is also developing lines of bulk candies like JBz, hard-shelled chocolate candies similar to M&Ms, that come in flavors like fudge brownie, Mr. Rowland and Mr. Simpson said.

“We’re always trying to extend our reach,” Mr. Rowland said, adding that he does not believe in focus groups, preferring to go with his gut in making business decisions. He is the undisputed leader of the company, supported by Mr. Simpson, whom he met golfing, and his four adult children who are Jelly Belly employees and who sit on its board. “I get approached to sell all the time but unless my kids say it’s time to move on, I’m not going to,” said Mr. Rowland, who is 67 and has no immediate plans to retire.

Despite broadening its product line, Jelly Belly’s original gourmet beans remain the company’s focus and represent 85 percent of its sales. The candies have an enthusiastic following. In myriad personal Web sites and online food and confection forums, fans argue passionately over what flavors are best and the tastiest flavor combinations (for example, toasted marshmallow, chocolate pudding and cinnamon toast, making s’mores).

Around 700,000 tourists, some dressed as jelly beans, visit the Jelly Belly California and Wisconsin plants each year to observe the manufacturing and see portraits of notables like Reagan, Abraham Lincoln and George Clooney made out of Jelly Belly beans.

Increased public concern about obesity has not hurt sales, perhaps because at four calories a bean and no fat, Jelly Belly beans are perceived as healthier than many other kinds of candy, said Ms. Mogelonsky at Mintel. And a 10 percent price increase since 2015 because of increased sugar, corn syrup and other ingredient costs has so far not had a significant impact on unit sales, according to the company and Mintel.

“Jelly Belly is not the only one raising prices,” said Bernard Pacyniak, editor of Candy Industry, a monthly trade magazine. “We’ve had announcements of price increases from all the major candy companies due to ingredient costs.”

Yet with the price of corn sweetener alone up 50 percent since 2015, manufacturers are reluctant to pass on the full costs to customers, and large retailers, particularly Wal-Mart, are extremely resistant. “Margins have shrunk significantly,” Mr. Pacyniak said. “These are tough times for everyone.”

But the confection industry is often thought to benefit from economic anxiety as people eat candy in response to stress. Moreover, candy is seen as an affordable luxury.

“We’re definitely seeing an increase in traffic lately, which is the case anytime something major upsetting happens” like a flood or an unexpected drop in the stock market, said Tino Ramirez, part owner of Candylicious, a candy store in Houston that carries all kinds of sweets, including a rainbow of assorted Jelly Belly beans. “It’s a comfort thing,” he said. “People get their fix and feel better for a while.”

Please answer the following question ( no more than 100 words)

please discuss two risks to the company of pursuing that growth strategy.

Answer 1

While there are no greater risks for the company with the growth strategy implemented by them as they are careful enough to keep their traditional product as their priority , they might be at a risk of being questioned for those sports related beans as there would be many restrictions in that industry for the athletes. Also when they collaborate with all those companies and come up with their flavours and when they make their beans easily available, if any one product goes wrong the whole reputation and demand for the product might be at stake which they need to be very careful about.