The Pearson Candy Company on West Seventh Street in St. Paul might not be an exact replica of the whimsical workshop made famous in the movie Willy Wonka and the Chocolate Factory. But the scene inside is not far off. Michael Keller, the company’s president and CEO, arrives not in a top hat and purple velvet frock coat like Wonka, but just as eager to show off his workshop. Keller, a Gen Xer in well-worn charcoal-colored jeans (“It’s casual Friday,” he explains) dons a white hairnet, and the doors of Minnesota’s largest and one of its oldest candy companies swing open.

Inside, a huge stainless steel drum churns the soft, cool-tasting centers for Mint Patties, while liquid caramel is drizzled onto a giant, stainless steel cooling roller. “It’s like a caramel waterfall—all you want to do is stick your head in it,” says Keller. A one-ton bag hanging from the ceiling feeds the finest Virginia roasted peanuts into a filter that spills them onto a conveyor belt as a worker busily pulls out those with even a hint of overroasting. Machines lightly spray the peanuts with oil, sprinkle them with salt, and send them tumbling down a large, round tube to the lower-level production floor of the two-story candy factory.

The production floor includes the starch room, which is like entering heaven. Everything is white: the workers’ uniforms, the molds, the candy centers, and the fine, white cornstarch dust that settles over everything.

Just outside, workers “enrobe” Mint Patties, Nut Goodies, and Bun Bars in chocolate, creating little swirls of chocolate on top of the Buns. Nougat centers for the company’s flagship product, Salted Nut Rolls, are fed one after another onto a bronzed sheet of caramel resting on a layer of peanuts. Another shiny sheet of caramel is laid on top, and the sweet-smelling pieces are rolled together, then cut into bars.

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With 150 total employees (110 in the plant), Pearson’s is the largest candy company based in Minnesota. Proximity to raw ingredients, to some of the nation’s top retailers, and to the Twin Cities transportation hub make Minnesota a sweet spot for candy making.

Pearson’s has had several owners since its founding by P. Edward Pearson and his brothers John and Oscar in 1909. In August 2011 Brynwood Partners VI, a private equity fund based in Greenwich, Connecticut, acquired the company. Brynwood Partners plans to make Pearson’s a platform for additional candy company or brand acquisitions, and the company’s 120,000-square-foot facility offers plenty of room to grow.

“The idea is to invest in the company and see it grow, both organically and through targeted acquisitions,” says Keller, who was chief marketing officer at Edina-based International Dairy Queen before coming to Pearson’s in 2011.

A Rich History

There are at least 35 candy companies in Minnesota making everything from handmade caramels to licorice to gourmet specialty chocolates. Combined, Minnesota candy plants employ an estimated 1,110 people and generate roughly $138 million in annual plant sales, according to the National Confectioners Association, a trade group based in Washington, D.C.

That’s a small bite of total U.S. candy sales, estimated at $22.3 billion in 2012, according to IBIS World, an independent research information service. “Four companies—Hershey’s, Mars, Nestlé, and Kraft—have more than half of the percentage market share of the U.S. chocolate and candy industry,” says Olivia Tang, an analyst at IBIS World.

A little-known fact: Mars, the maker of Milky Way and Snickers candy bars and M&Ms, actually got its start in Minnesota before moving to Chicago decades ago (see sidebar, page 31). Now it’s the largest candy maker in the United States.

While no other Minnesota candy company has come close to Mars’ success, we make enough of the sweet stuff here to rank ninth nationally in sales from candy manufacturing. The state has a rich history in the candy business, with several companies that have survived for a century or more.

In 1909, the same year Pearson’s opened its doors, Albert Abdallah, an immigrant from Lebanon, opened a candy shop at Hennepin and Lake in Minneapolis with his Swedish wife, Helen. The Abdallahs worked out of several retail locations in the Uptown area before moving the company to Burnsville in the 1960s. Abdallah now employs 120 people there.

Today Abdallah Candies Inc. is the state’s third-largest candy maker and is known for its fine chocolates. Now owned by Albert and Helen’s great-grandson, Steve Hegedus, and his wife, Karen, Abdallah sells chocolates through the company’s on-site retail store, as well as in hospital gift shops, Hallmark stores, and specialty shops. About two-thirds of the 20,000 pounds of candy the company makes daily is sold under the Abdallah name, the rest under private labels.

Steve Hegedus says Minnesota is a great place to make chocolate. “Minnesota has a good business climate … and the Upper Midwest is perfect for candy making. We are not pummeled by heat 365 days of the year.” Even more important, he adds, is the company’s loyal local customer base. “We make exquisite toffees,” says Hegedus. And the locals have noticed. Besides the firm’s butter almond toffee, Abdallah customers are rabid about the company’s “alligators”—pecan-caramel clusters covered in milk chocolate—and its mouth-watering truffles.

Also known for its rich, handmade chocolates, Regina’s is another family operation that has prospered over the decades. Cindy Racine manages one of Regina’s two retail outlets. Her grandfather, Frank Elliott, an immigrant from Greece, opened the shop in 1926 in downtown St. Paul. Today Regina’s makes and sells a wide assortment of handmade specialty candy—everything from nut brittles to fudge to assorted chocolates—at its location at St. Clair and Cleveland in St. Paul. It also has a retail shop on Robert Street in West St. Paul.

0213_sweetland_pic2.jpgAt Abdallah, pouring butter caramel to cool.
Cindy’s brother Mark Elliott owns the company, which employs 15 full- and part-time employees during the busy season, many of whom are family—or could be soon. “Mom met Dad here when he was in high school. She was working in the store,” says Racine. “My brother Mark also met his wife while they were both working in the store. I always joke and tell people if they want to find a husband or a wife, they should come and work for us.”

Regina’s makes most of its candies, offering seasonal specialties like candy canes and hard ribbon candy. “We also offer heart-shaped boxes, both prefilled or empty so you can fill your own,” Racine notes.

Birthplace of the Milky Way

Mars, one of the world’s largest candy companies, got its start in Minnesota.

Frank C. Mars was born around 1883 in Hancock, Minnesota. Mars had polio as a young boy, and his mother, Alva, kept him entertained by allowing him to hand-dip chocolates, sparking his love of candy making.

As a young man, Mars tried selling molasses chips, but that first candy venture was a failure. According to the company history, Mars and his wife, Ethel, moved to Tacoma, Washington, and in 1911 started to make buttercream candy in their kitchen. Soon they rented a candy factory and sold their candies wholesale along the West Coast.

In 1920, Mars moved his factory to Minneapolis, calling it the Nougat House. He renamed the company Mar-O-Bar, after his latest creation, but the Mar-O-Bar was too fragile to withstand transportation. Finally, in 1923, the Milky Way was born, and the company’s sales took off, reaching nearly $800,000 in a year.

In the late 1920s, Mars moved his company to Chicago, which offered better rail access to other parts of the country. By 1929, Mars’ state-of-the-art plant was producing more than 20 million candy bars a year. The next year, Mars sales reached $26 million. According to Candy Industry magazine, the company’s global sales in 2011 topped $16 billion.

Even older than Pearson’s or Abdallah, Canelake’s Old Fashioned Hand Made Candies was started in Virginia, Minnesota, in 1905 by Gust Canelake, who later handed the business to his sons John and Leo. In 1983, the Canelake brothers sold the shop to native Iron Ranger Jim Cina, then an apprentice in the store.

“I borrowed money from my relatives to buy the business,” says Cina. The shop employs eight to 13 people year-round and 20 to 30 during the holiday season. Canelake’s specializes in chocolates, peanut brittle, almond bark, turtles, toffee, cashew clusters, and fudge.

Cina’s main competition on the range is the Great! Lakes Candy Kitchen, in Knife River, which was started a few years ago by Gust Canelake’s granddaughters (John Canelake’s daughters) Pamela and Patricia.

A Love of Licorice

“I love licorice and have eaten it ever since I can remember,” serial entrepreneur Ken Nelson. As a boy growing up in the small town of Perham, Minnesota, in the 1940s, he says licorice was a special treat. “When my mom and dad went to Minneapolis,” he recalls, “I requested they bring back licorice allsorts,” colorful candies made of black licorice and other flavors. It was an unusual request for a 5-year-old, but the beginning of a lifelong love affair.

It took a while for Nelson to see candy as a business, however. In 1964, after graduating from Notre Dame, he and his father, Tuffy, founded Tuffy’s Pet Foods in Perham. Seven years later, the father-son team sold Tuffy’s to ketchup maker H. J. Heinz Company.

Nelson next launched Barrel O’ Fun, a snack food company, in 1973 and eight years later sold it to Wisconsin-based G. Heileman Brewing Company. Finally, in 1987, after completing his five-year employment contract with the brewer, it was time to get serious about licorice.

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While Nelson had some prior candy manufacturing experience through Barrel O’ Fun, which used to package and sell candy, he did plenty of homework before launching Kenny’s Candy Company. “Europe is big in licorice, so I went to England, hired a consultant and bought equipment,” he notes. “I brought the equipment and the consultant back, and he helped us get started.”

Initially a supplier of red, black, and chocolate-flavored twists and bites to bulk, rebag and private-label customers across the United States, Kenny’s created the Juicy Twist brand, a premium product made with real fruit juice, in 1996.

Nelson hasn’t forgotten about allsorts, either. Kenny’s imports allsorts from Spain to rebag and sell under the company’s Wiley Wallaby brand, created in 2007. Kenny’s also manufactures watermelon, blueberry, green apple, black, and strawberry licorice as well as two types of Outback Beans (chewy licorice centers coated in candy).

Today in its 150,000-square-foot factory, Kenny’s employs 125 people who come from a 40-mile radius around Perham. They produce $25 million worth of dozens of different varieties of licorice each year, making Kenny’s the state’s second-largest candy company. It is also the official licorice supplier of the Minnesota Twins.

Nelson bought Barrel O’ Fun back in 1988. He repurchased Tuffy’s in 2001, when the previous owners were about to close the plants. In 2011 he started a fourth business, called Nutheads, which manufactures chocolate-covered snacks and Kookamunga Crunch, a caramel corn with nuts. All four businesses are currently rolled into KLN Family Brands, a company with projected combined annual revenue of $500 million in 2013.


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