Companies

Russell Stover's Slow, Candy Bar-Free Rise to a Billion-Dollar Asking Price


Do one thing, and do it well. You can find this earnest mantra championed all over the tech world—extolled by the folks who developed Unix, outlined in Google’s (GOOG) company philosophy, embedded in descriptions for apps, and sometimes falsely attributed to Steve Jobs—probably because he said so many things that sounded so similar. You can also find it at Russell Stover Candies, the 91-year-old Kansas City (Mo.) candy company. And last week that philosophy turned Russell Stover, at long last, into what might just be the next $1 billion company.

Russell Stover is the third-largest chocolate company in the U.S., behind Hershey (HSY) and Mars—very far behind, in fact. Hershey had more than $7 billion in revenue last year, while Russell Stover pulled in about $600 million. But Russell Stover doesn’t really compete directly with these chocolate titans. It avoids the cut-throat candy bar market and focuses almost exclusively on boxed chocolates and other gift items that people buy for holidays.

“Sure, [Chief Executive Officer] Tom [Ward] would love for us to come up with our version of Snickers,” Mark Sesler, Russell Stover’s chief marketing officer, told me during interviews for my article on how the chocolate maker won the Valentine’s Day war. “But our factories aren’t really equipped for that. We’re better at boxed chocolate.”

Russell Stover has a lock on that boxed chocolate market, selling an estimated 35 million Valentine’s Day hearts this year. “They’re one of the largest premium boxed chocolate suppliers in the U.S.,” says Paul Minger, Walgreen’s (WAG) category manager for confections.

And now Russell Stover is up for sale, with an initial asking price of $1 billion. Goldman Sachs (GS) is assessing the value of the company, which has about 3,000 employees.

Ward has run the Russell Stover for more than 20 years; his father, Louis Ward, bought the candy company from Stover’s widow in 1960. Under the younger Ward’s guidance, the company bought up its two major rivals, Whitman’s and Pangburn’s, streamlined its factories, and focused on making affordable chocolate for middle-class Americans who shop mainly at drug stores and big-box retailers.

So no, Russell Stover may not make your favorite candy bar. But it doesn’t need to. Come Christmas or Valentine’s Day, you’re going to find yourself browsing the candy aisle at Target (TGT) or Walgreens, looking for an attractive and affordable gift. And let’s be honest: How many times have you given a Snickers to someone as a gift?

Suddath is a staff writer for Bloomberg Businessweek.

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  • GOOG
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  • HSY
    (Hershey Co/The)
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