Atkinson Candy Company

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Atkinson Candy Company

FAMILY CANDY BUSINESS MAKES A NAME FOR ITSELF IN THE SOUTH

NEW MARKETING TACTICS AND NEW CANDY LINES

2000–06: CONTINUING PROSPERITY DESPITE RISING SUGAR PRICES

FAMILY CANDY BUSINESS MAKES A NAME FOR ITSELF IN THE SOUTH

Basil E. Atkinson founded Atkinson Candy Company in 1932 in the small city of Lufkin in east Texas. Having been laid off as a lathe operator at the local foundry, Lufkin Industries, Atkinson scraped up some cash, borrowed a truck, and with his wife and two young sons, drove the two-day, 120-mile trip to Houston to buy candy and tobacco. The family slept in the car, and Atkinson began his new career selling candy and tobacco to small mom-and-pop stores on the drive back home to Lufkin where he opened a wholesale distribution business.

When one of Atkinson’s manufacturers in Jacksonville, Texas, began to compete with him by selling directly to some of Atkinson’s customers, Atkinson decided he could make his own sweets cheaper and better. He started out making peppermint sticks, coconut haystacks, and peanut patties, and by 1938, he was manufacturing candy in a 3,000-square-foot facility on Lufkin’s Cotton Square. Mabel Atkinson, his wife, also played a role in the business, packing and wrapping the candies by hand. By the late 1930s, the company was making its version of a southern specialty, called chicken bones, presumably because it resembled “a piece of fried chicken.”

Both of Atkinson’s sons, Joseph and Basil E., Jr., accompanied their father on his sales rounds in his truck and worked in the factory in the early days. According to Eric Atkinson in the Houston Chronicle, the candy business was then “all a good-boy thing and relied heavily on how nice you were, how wide your smile was, [how good your BS was,] and the level of service you gave.… You’d say, ‘Would you favor me with an order today?’”

Basil E. Atkinson, Jr., completed college and went on to Southwestern Medical School. From 1957 to 1967, he practiced medicine privately in Lufkin, Texas, while remaining active in the family business. When he quit medicine to join the family business full time, many of his former patients became his clients. Joseph Atkinson also worked in the business, and was responsible for inventing many of the machines used to manufacture Atkinson’s candies. When his father was about to shut down the candy-making side of business to focus exclusively on wholesale in 1938, Joseph Atkinson’s inventions helped to make the company profitable again.

By the 1950s, the company was growing rapidly and expanding beyond the South. J. Powell Wear, the company’s first vice-president in charge of sales and marketing, went to trade shows where he introduced the company’s products to a national audience and, in short order, put together Atkinson’s national brokerage network. In 1954, when Atkinson Candy decided to sell the peanut butter–filled hard candy covered in toasted coconut known as “chicken bones” outside the state of Texas, it named the candy Chick-O-Stick because another company already had rights to the name Chicken Bones.

In 1961, with the company still growing steadily, Atkinson Candy Company built a new production facility. In the years to come, it expanded upon that facility several times.

NEW MARKETING TACTICS AND NEW CANDY LINES

The third generation of the Atkinson family came on board in the 1970s. Basil “Eric” Atkinson III did not intend to work for the family business. Having majored in economics at the University of Texas in 1978, he began his work life as a systems consultant. When he approached his grandfather, Basil E., Sr., for a job in 1979, the founder of Atkinson Candy told him, “I can pay you this much. There’s plenty to do. Just get out there and do it,” according to Eric Atkinson in a Houston Chronicle article. The young Atkinson did and eventually found his place in sales and marketing, working side by side with J. Powell Wear.

Through the late 1970s, the company’s regional and national sales relied primarily upon count goods and took place through distributors, but times were changing in the marketplace. Retailers were consolidating, and brokers were having a profound impact on how candy makers did business, first through grocery stores and then through mass merchandisers. Although Atkinson Candy Company continued to sell count goods, it began primarily to market its candies in bags.

The company also expanded its lines with Basil E. Atkinson, Jr.’s 1983 purchase of Judson Candy Co., a San Antonio, Texas-based candy-making institution founded in 1899 that “made the best sour cherry balls in the world,” according to Eric Atkinson. Judson’s manufacturing plant in Alamo City also made chewy pralines, soft-centered candies, such as jelly beans, orange fruit slices, and marshmallow peanuts or circus peanuts, a “quirky” piece of candy described by Eric Atkinson in a 2006 Austin Chronicle article as looking “like a peanut but [tasting] like a banana.”

J. W. Judson originally bought the company in 1910 and built a new factory on the old Judson Ranch. During the 1930s, he added a starch department and began to make the company’s signature candies with jelly and creme centers, such as fruit drops and slices, jelly beans and Easter eggs. When he started to experiment with making a tarter jelly bean, he wound up inventing the sour ball. Judson’s sons purchased the company in 1941 and then sold it to Pearl Brewing Co. in 1965.

Basil E., Jr., and two of his daughters moved to San Antonio to run the renamed Judson-Atkinson Candy Co. Joseph Atkinson became president of Atkinson Candy in late 1992 and remained in that role until 2000. Eric Atkinson stayed in Lufkin and became national sales manager of Atkinson Candy, and in this capacity, he marketed the company’s candies as far and wide as possible. Company sales increased 22 percent during his first year at Atkinson. In 1990, the Southern Association of Wholesale Distributors honored him with its “Candy Man of the Year” award for his efforts.

COMPANY PERSPECTIVES

Our mission in this world is to produce traditional confectionery recipes in the way that they were originally produced. This brings a consistent quality of product that never goes out of style.

Throughout the 1990s Atkinson Candy held its own in competition with the candy giants. According to Atkinson in a 2006 Austin Chronicle article, the company has “relied on quality and [its] reputation to get [it] through the tough times,” but the industry as a whole had its ups and downs. In 1991, when the price and lack of sugar almost put the company out of business, the company decided not to move manufacturing operations to Canada or Mexico to take advantage of cost-savings in labor and sugar. This decision proved to be one that Eric Atkinson later regretted. He called it a “poor decision” in a 2006 Houston Chronicle article.

2000–06: CONTINUING PROSPERITY DESPITE RISING SUGAR PRICES

By 1999, the company was using nine million pounds of sugar and toasting three million pounds of peanuts a year for its product line that consisted of about 70 items. In 2000, under the direction of Basil E. Atkinson, Jr., as chief executive and Eric Atkinson as president, the company began operating 18-hour days in response to demand. However, beginning in the late 1990s, sugar prices and shortages again had an ongoing impact on Atkinson Candy Company. Florida hurricane-damaged crops in 2004 led to a drop in sugarcane production from four million tons in 2003 to 3.3 million in 2004. By 2004, a pound of refined sugar cost 23.5 cents in the United States, more than twice the world price of 10.9 cents.

When Hurricanes Katrina and Rita hit in 2005, the situation worsened further. Thousands of acres of ready-to-harvest sugarcane were damaged, and operations at two sugar refineries temporarily ceased, leading to an increase in the domestic price of sugar from 28 to 40 cents or more per pound. World price for sugar at the time was 14.8 cents per pound. To take the pressure off, the government temporarily increased sugar imports and released sugar beet reserves into the market.

Despite all this, Atkinson Candy Company continued to prosper. Between 2001 and 2005, the company experienced 10 percent annual growth. It acquired the Long Boy line from American Candy Company in 2002. The company, which placed a strong emphasis on customer service, attributed its success in large part to “getting the product where it needs to be, in the proper quantities and when it needs to be there.… [W]hen one of our customers needs an answer, we respond with speed. Our goal is to answer any questions the customer may have while they are still on the phone.”

By the middle of the first decade of the 2000s, the company was focused on “three categories for new product development,” according to Atkinson: internal development, strategic partnerships, and acquisitions. As an example of the first category of activity, it introduced Pic-O-Sito, a Chick-O-Stick spiced up with chiles, and Chocolate Long Boys, as well as miniatures of these two items. In 2006, it introduced sugar-free Chick-O-Sticks, Peanut Butter Bars, and Mint Twists. It also added larger-sized Peanut Butter Bars, and began selling combo packs of its candies, as well as developing candies to target the Hispanic palate.

With sugar prices still increasing and difficulty getting enough sugar from domestic suppliers, Atkinson and other candy manufacturers criticized the federal government’s policy of limiting sugar imports and restricting how much sugar could be sold domestically in the interests of propping up U.S. sugar prices and protecting domestic producers. They pointed to a Commerce Department study of February 2006 that showed that the confectionery industry lost nearly three jobs between 1997 and 2002 for every sugar-producing job saved through U.S. control of sugar prices.

Those hardest hit by the 30 percent jump in sugar costs were small confectioners and bakers who do not buy sugar on the futures market. For Atkinson Candy, which used 30,000 to 40,000 pounds of sugar each day, or between 11 to 14 million pounds of sugar by 2006, “[a] day without sugar … is like a day without air,” according to Eric Atkinson in the Contra Costa Times. The company tried to bring in two trucks of cheaper Mexican sugar after its distributor proved unable to deliver sugar three times in October 2005, but the plan proved prohibitive because of cost.

KEY DATES

1932:: Basil E. (B. E.) Atkinson, Sr., founds Atkinson Candy Company to distribute candies and tobacco.
1938:: Atkinson starts to manufacture his own candies.
1961:: The company erects a new facility.
1983:: Dr. Basil E. Atkinson, Jr., purchases Judson Candy Company.
1992:: Joseph Atkinson becomes president of the company.
2000:: Dr. Basil E. Atkinson becomes chief executive and Eric Atkinson becomes president.
2002:: The company acquires the Long Boy candy line from American Candy Company.
2006:: Atkinson Candy opens The Candy Kitchen.

The company continued to struggle with increased sugar costs throughout 2006. Trying to preserve market share, it passed on only half of its increased sugar costs to its customers. With about 90 percent of its sales outside the state of Texas and a steady rate of growth of 5 percent, the company experienced its second consecutive year of record sales. Also in 2006, Atkinson opened a retail store, called The Candy Kitchen, in Lufkin, which carried the full line of Atkinson’s candy as well as specialty made-to-order and seasonal gift items. Murals on the exterior of the store give passersby the illusion of peering into the factory to watch the candy-making in process, while in-store videos provide live monitoring of the workers in the factory.

Although the company opted to pursue its American Institute of Baking certification mid-decade to become a bona fide food production facility and to replace some of its original equipment with state-of-the-art technology, for Eric Atkinson, it was “still a matter of old-fashioned pride that we make the highest-quality candy we can. We still make it the way we made it in the ’30s and ’40s.” Nevertheless, as the fourth generation prepared to come on board starting in the summer of 2007, the company was exploring moving some of its operations to South America.