The mysterious company behind Tootsie Rolls
The maker of the famous candies likes to keep a low profile, but it may be an attractive buyout candidate in the consolidation-happy sweets industry.
Tootsie Roll Industries (TR) is steeped in history and has been run for 50 years by 92-year-old Melvin Gordon and his 80-year-old wife Ellen, The Wall Street Journal reports.
The 116-year-old company rarely gives tours and interviews and doesn't like quarterly earnings calls. The similarities to Willy Wonka are so strong that I wouldn't be surprised to see golden tickets packaged with Blow Pops one day.
Lifestyle network LX.TV did get a peek inside the Tootsie Roll factory in the following video:
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There are no analysts covering Tootsie Roll -- why bother when you can't get any information? -- so the company goes largely ignored even as it continues producing some of the country's most beloved candies, including Junior Mints, Sugar Babies, Dots, Sugar Daddy's and Charleston Chews.
Though investors can buy shares of Tootsie Roll Industries -- they're priced at about $25 -- the Gordons retain tight control over the company by owning class B stock, each of which is worth about 10 shareholder votes, the Journal reports. Tootsie Roll shares are trading at about where they were a year ago, after falling to under $22 this spring.
Tootsie Roll is falling on tough times, however. Profits are dropping -- by about 20% last year to a mere $43.9 million -- even though revenue rose 2% to $528.4 million, the Journal reports. Margins have been halved in the past decade to 11%.
But Tootsie Roll has accomplished an admirable feat: It nearly doubled revenue over the past 20 years without huge advertising budgets. The campaign it did spend money on long ago -- how many licks to the center of a Tootsie Pop -- continues to resonate.
It's unclear what the future holds for Tootsie Roll Industries, which started making candies in 1896 and went public in 1922. How long can Melvin Gordon continue to lead? Will any of the couple's four children take the reins (the Journal doesn't think so), and will Tootsie Roll continue to stay independent?
There has been intense consolidation in the candy business recently. Kraft Foods (KFT) bought Cadbury in 2010, and Hershey (HSY) is in buyout mode as it furthers its global expansion plans. Mars, a private company, bought Wrigley in 2008.
It's admirable to see Tootsie Roll still going strong, making candies in America and sticking to tradition. Here's hoping the Gordons can revive profits and set the company on course for another 116 years.
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Many years ago when my grandmother was carrying my mother, she was addicted to Tootsie Rolls. That's all she ever wanted to eat was Tootsie Rolls. The year was 1929. My mother was named Catherine but her family nickname for her entire life was 'Toots' or Tootsie and my cousins called her 'Aunt Tootie.' Of course, to me, she was 'Mom,' and people outside of family members called her Kay and in later years, Cathy. But to our family, she was always some variation of 'Tootsie.' Mom was 'Toots/Tootsie' for 80 years! :-)
Thank you to all the Tootsie Roll makers, employees, and former employees for one of the better things in life that we just won't give up! And thank you for some great memories this news story brought to me tonight! :-)
I don't know if this was a mid-west thing, but does anyone else remember about the "urban myth" that if you got the wrapper of the indian shooting the star, but he had to be fully intact, you got a free tootsie pop? I must have believed that until the 4th grade. Of course, it was perpetuated with the help of a nice elderly man that owned the local convenient store would always give us kids a free tootsie pop when we handed in the wrappers. I know they were cheap back then. You could get a sucker for .10 and a individual tootsie roll for a penny. Still, when he closed up shop and retired, I was suddenly disappointed when I tried to "cash in" several wrappers around town. Ahhhhh.. still, good times of an older age.
Dots are still my favorite. I still eat them the same way when I was a kid. Empty the box, sort out all the colors, eat the few stragglers and then pop in all 5 flavors at once. Funny how that's never changed for me.
Tootsie Rolls and Charleston Chews, it doesn't get much better than that!
When I was a kid , I got my 25 cents went to the movie for 9 cents , got a big toosie roll for 5 cents and a drink for 5 cents and pop corn for 5 cents and had a penny left to buy 2 mary janes . How time flys!!!!!!!!!!!!!!!!!
And thanks for that other jem... "It's unclear what the future holds..."
But if you want to speculate... when Mr. Gordon passes, and if none of his kids take over, some food/candy conglomerate will snatch it up for a song, move the factories over seas, change the formula, then shuttle the product when they don't see a 500% return on investment.
So my advice is when Mr. Gordon passes buy Tootsie Roll, not the stock, but the candy itself, because once greed gets a hold, it'll never be the same. (Thankfully it's mostly sugar so it should last for YEARS!)
Back in the 50's early 60's growing up in SE Iowa, we had a Sheriff by the name "Toots" Delahoyd.
When he saw you walking down main st. he would honk his horn and throw out Tootsie Rolls. Kids would run out to the street, etc. and grab them... I'm talking those big log looking ones.
I could see that happening now. LOL
Good times, good product
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