Tootsie Roll Industries
After working her way up the corporate ladder to president of the company, Ellen Rubin Gordon used modern business strategies to keep Tootsie Roll Industries, Inc. at the top of the international lollipop business, while still maintaining the feel of a "mom and pop" operation.
Gordon was born Ellen Rubin, the daughter of William B. and Cele H. Rubin in New York. She attended Vassar College from 1948 to 1950. While at Vassar, she met and married Melvin J. Gordon, 11 years her senior, who would later become CEO of Tootsie Roll. The two were married on June 25, 1950, and had four daughters—Virginia, Karen, Wendy, and Lisa.
After her marriage, Ellen Gordon eventually returned to college. She attended Wellesley and ultimately received her B.A. in 1965 from Brandeis University. In 1968 Gordon did graduate work at the Graduate School of Arts and Science at Harvard University, which was the same year she started to work at Tootsie Roll.
Gordon has served as president and board of director member of the Committee of 200 and as vice–president and board member of the National Confectioners Association. She has served as director and president of HDI Investment Corporation. She has also sat on the Harvard University Board of Overseers Visiting Committee for the university's medical and dental schools. She has received a number of honors for her contributions and her work, including the Dean's Award from the National Candy Wholesalers Association in 1978 and the Kettle Award from the candy industry in 1985.
When the Gordons are not in Chicago, the headquarters of Tootsie Roll Industries, they reside in Center Harbor, New Hampshire. The Gordons eventually hope to turn the business over to their four daughters and to the company's senior managers.
Ellen Gordon's involvement with Tootsie Roll began in 1922, a decade before her birth, when the company went public and Gordon's mother, a schoolteacher, bought some shares of the company stock; she also encouraged all of her relatives to do the same. Gradually accumulating stock, by the 1930s she had a controlling interest in the company because of her stock holdings. Eventually, Melvin and Ellen inherited the business. Melvin joined the board in 1952, and in 1968 Ellen Gordon went to work for the candy company, starting in the areas of pension planning and product development. Two years later, she had moved into the position of corporate secretary. From there, her rise in the company was steady: vice–president of product development in 1974; senior vice–president in 1976, and president and chief operating officer (COO) in 1978, a position she continues to maintain.
By all accounts, Tootsie Roll is a sweet place to work—literally. Employees are encouraged to sample as many of the confections as they would like during the business day, and Gordon is known as a boss who takes a personal interest in her staff and employees. She greets everyone in the company by name.
Tootsie Roll was started in 1896 by an Austrian immigrant, Leo Hirshfield, who brought his secret candy recipe to the United States and began selling his hand–rolled chocolates for a penny a piece in a small store in New York. Hirshfield named his chocolate candies after his daughter, nicknamed Tootsie, who was five years old at the time.
By the early 1900s the candy was manufactured at a small candy factory. Its name was changed to Sweets Co. of America in 1917, and at that time, the company began to advertise its confection nationally. The company was registered on the New York Stock Exchange by 1922. The Tootsie Pop—a hard lollipop with a chewy Tootsie Roll center—was invented in 1931, and within seven years, the company had moved its operation to Hoboken, New Jersey, and began assembly–line mass production of the candy.
As demand for the candy increased, the company opened a West Coast division, in Los Angeles, in 1949. It wasn't until 1966 that the company changed its name to Tootsie Roll Industries, Inc. At that time, the corporate headquarters were moved to Chicago, and a manufacturing plant was opened there, too.
When Gordon was named company president and COO in 1978, she was only the second female president of a company listed on the New York Stock Exchange. She would often get letters, she once said, addressed to Mr. Ellen Gordon or with the greeting, "Dear Mr. Gordon." In 1993, Gordon proved her executive mettle when she won her company $1.4 million in state and local tax exemptions and other incentives, in exchange for keeping the business in Chicago.
Although Tootsie Roll was worth an estimated $245 million at the time, Gordon managed to obtain a lucrative incentive and benefits package for her more than 800 employees, capitalizing on the fact that the city had suffered a major economic blow the previous year. That move had cost the Windy City 2,000 jobs, and officials were willing to negotiate with Gordon to avoid losing another substantial segment of the workforce.
As part of the settlement, Gordon asked for a $1.4 million exemption in both city and state taxes over a 15–year period. In addition, she sought a low–interest loan so the company could buy its manufacturing plant, $200,000 in job training funds, and tax breaks on machinery and processing equipment. In addition to staying in Chicago, Gordon agreed to add an additional 200 workers to the company payrolls and begin a loan program for workers who wanted to buy houses. The negotiations between Chicago and the candy company were said to have been peaceful; to keep the deal sweet, Gordon reportedly kept chocolates on the table throughout the transaction.
By 1995 company sales topped $300 million—making Tootsie Roll the largest lollipop producer in the world. Since then, sales have continued to rise, to meet the demands of a sweet–toothed public as well as international sales. Net sales jumped from $264.4 million in the third quarter of 1996 to $289.1 million for that same period in 1997. Also in 1997, stocks rose almost 70 percent, and the company had a net profit margin higher than Wrigley's or Hershey's Foods. Revenues for 1999 topped $396 million. In 2001 the company was producing 49 million Tootsie Rolls and 16 million lollipops daily.
Tootsie Roll candies are now sold in Canada and exported to more than 30 other countries, including an office in Hong Kong. In addition to operations in Tennessee, New York, and Massachusetts, the company has a manufacturing plant in Mexico, which produces the confection for the Mexican market.
Chronology: Ellen Gordon
1965: Earned B.A. from Brandeis University.
1968: Attended Harvard University.
1968: Began working at Tootsie Roll Industries.
1970: Promoted to corporate secretary at Tootsie Roll.
1974: Chosen as vice–president, product development at Tootsie Roll.
1976: Named senior vice–president.
1978: Named Tootsie Roll President and CEO.
1993: Bought Warner–Lambert Co.
1996: Celebrated Tootsie Roll Industry's 100th birthday.
2000: Acquired O'TEC Industries and Andes Candies.
2001: Produced 49 million tootsie rolls and 16 million lollipops daily.
In 1996 Tootsie Roll celebrated its 100th birthday with a gala celebration at the corporate headquarters that included a huge party and a tour of the manufacturing plant for employees and their families. The mayor of Chicago declared it "Tootsie Roll Day" in the city, and the story of the company was broadcast, via satellite, to many national television stations.
Social and Economic Impact
There are, in all likelihood, several keys to Gordon's success with Tootsie Roll. For one thing, she has never tampered with the candy's original recipe. Tootsie Roll is a quintessential American product, with virtually universal recognition and a rich history. The candy, for instance, was a staple for troops in World War I. Legendary crooner Frank Sinatra always insisted that there be Tootsie Rolls in his hotel room when he traveled. Sammy Davis, Jr. would pass the candies out to his audience when he sang, "The Candy Man," and Jacqueline Kennedy Onassis reputedly kept a bowl of Tootsie Rolls in her office for guests.
Gordon has paid attention to her product's value and has priced traditional Tootsie Rolls in a variety of prices, ranging from a penny, just as it was when Hirshfield sold it a century ago, to 50–cent varieties. The product is sold both in individual pieces and in bags.
However, Gordon has not relied solely on Tootsie Rolls for the company's success. In fact, since the 1970s, she has acquired multiple other promising candy makers. These have included the 1972 acquisition of Mason Division of Candy Corporation of America, which makes Mason Dots and Crow brands. In 1985, Tootsie Roll bought Cellas' Confection, which makes chocolate–covered cherries. It was the 1988 purchase of Charms Co., a lollipop maker, and the combination of Charms and Tootsie Pops that turned the company into the largest manufacturer of lollipops in the world.
In 1993 Tootsie Roll branched out into a somewhat different arena when it bought the chocolate and caramel brands of Warner–Lambert Co., which included Junior Mints, Sugar Daddy, Sugar Babies, and Charleston Chews. In 2000 Tootsie Roll acquired two more candy companies: O'TEC Industries and Andes Candies. After the O'TEC acquisition, Tootsie Roll began to manufacture Fluffy Stuff Cotton Candy. The Andes acquisition added Crème de Menthe Thins, Cherry Jubilee Thins, Toffee Crunch Thins, and Mint Patties to the Tootsie Roll family. So far, the company has concentrated on other candy companies, choosing not to venture into other products. That is due, in part, to Tootsie Roll's success, but also, Gordon once admitted, to what she calls "the magic of candy. It always brings smiles when we tell people what we do."
In the end, it is still the Tootsie Rolls and the Tootsie Pops that lead the company sales, even after 100 years. As Gordon said in a 1996 interview with Food Processing, "the chocolaty chews and the hard candy have remained favorites."
As company president, Gordon has been quick to spot trends, pitching the low–fat content of her products to an increasingly calorie–conscious consumer. She was the first in the confection industry to pick up on what would become a huge marketing trend. In addition, Gordon has never been shy about developing new products. She introduced Caramel Apple Pops in 1996—a mix of sour apple hard candy and milk caramel in a flat pop. This has become very successful, as has the company's redesigned Sugar Blow Pop. In mid–2001 Tootsie Roll had plans to introduce Hot Chocolate Pops, chocolate–flavored hard candy lollipops dipped in marshmallow caramel, later that year. Tootsie Roll was the first to use raspberries, previously popular in drinks, in candies. Its Blue Razzberry Tootsie Pop was voted product of the year in the candy industry. In their other lines, Gordon also proved innovative, introducing a tropical mix in its Mason Dots, which include Jungle Punch, Citrus Safari, Wild Peach Berry, Ape Grape, and Orang–aga–tangy.
In an interview with Candy Industry in 2000, Gordon explained her company's commitment to trying new things. "We do see ourselves as innovators. Innovation is coming up with a new way of doing things—be it in technology, ingredients, or marketing. We are developing new ways of doing things all the time," she said. Gordon's innovative ways seem to be paying off; in the fiscal year 2000, her company posted a net profit in excess of $75 million, a 6 percent increase from the previous year, on sales of $427 million. The Gordons own 70 percent of the company's stock, valued at $970 million, and the two earn combined annual salaries nearing $4 million.
While Tootsie Rolls still come in their traditional wrapper, Gordon has changed a decades–old ad of an owl and a turtle to animated, high–tech creatures asking the traditional question: "How many licks does it take to get to the center of a Tootsie Roll Pop?" This is meant to appeal to a younger, more technologically savvy audience. Gordon's management style has been cited by industry watchers as very successful. For one thing, she and her husband emphasize cross–training employees, so workers have a broader understanding of the business and a sense of what goes on in all the other departments. The two attempt to discourage office politics and encourage teamwork, always rewarding creativity. The company maintains a workforce of almost 2,000 employees.
Tootsie Rolls have become a part of American life in much the same way as other household brands. While it can be difficult to sort out fact from myth, it may be that fancy is part of the product appeal. In her Food Processing interview, Gordon told this anecdote: "There's one story about a man who went into a convenience store and held up the cashier. Along with the money, he took a bag of Tootsie Rolls. He left the store and began eating them, dropping the wrappers one by one. The police were able to follow the wrappers and caught up with him."
Sources of Information
Contact at: Tootsie Roll Industries
7401 S. Cicero Ave.
Chicago, IL 60629
Business Phone: (773) 838–3400
Amire, Roula. "Innovation and Quality Keep Tootsie Roll On Top." Candy Industry, August 2000.
"Bigger Breaks for Small Business." Working Woman, November 1993.
Celebrity Register. Detroit: Gale Research, 1990.
Miller, Dan. "The Rich List." Chicago Sun Times. Available at http://www.suntimes.com/richlist/index.html.
"On a Roll: Candymakers Ellen and Melvin Gordon, Tootsie Roll's Leaders Keep Brand On Track in Its 100th Year." Food Processing, December 1996.
Strahler, Steven R. "Tootsie Roll Industries Inc." Crain's Chicago Business. 7 June 2000.
"Tootsie Roll Company." Hoover's Online, 2001. Available at http://www.hoovers.com.
"Tootsie Roll Company History: 1896–2000." Tootsie Roll Industries. Available at http://www.tootsie-roll.com/history.html.
Who's Who of American Women. New Providence, NJ: Marquis Who's Who, 1996.
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