Valentine’s Day will be less romantic this year. Due to financial troubles, corporate acquisitions, time constraints, and a lack of supply chain planning we won’t be able to tell the ones we love things like “Be Mine", "Kiss Me", "Call Me", “Let's Get Busy", or "Miss You" in sweet, chalky letters. That’s because, for the first time since their creation in 1901, Sweethearts candies, an iconic staple of our Valentine’s Day celebrations won’t be manufactured.
Consumer packaged goods is a tough and evolving market
Faltering consumer packaged goods (CPG) companies are a very common phenomenon in this new consumer world, so it’s no surprise that Necco shuttered its doors. There were company specific issues with cleanliness in their factory, and larger trends of slowing sales of sugary foods as well as distribution limitations. Like many other consumer product companies, Necco was heavily reliant on retailers to sell all items in their portfolio. Necco didn’t evolve, and for that reason, they went the way of Clearly Canadian and Dunkaroos. Which brings us to the Sweethearts deal where, in July of 2018, the Spangler Company (who make Dum Dum lollipops and Circus Peanuts) snapped up the company for $18.83 million. CPG acquisitions are common. According to a recent blog by One Space, a consumer search insights and analytics company, “CPG companies engage in three traditional investment areas to grow and increase sales yearly: mergers and acquisitions, venture capital, and private equity. The CPG industry has shown a strong preference for focusing on M&A. According to GlobalData, M&A has historically been the preferred investment area, accounting for 86% of total transactions in Q4 2018 ($4.5 billion) and 80% in Q1 2018 ($3.2 billion).”
Manufacturing Valentine's Day Sweethearts leaves a sour taste
But even though the M&A trend is common, apparently Spangler wasn’t able to integrate the Necco product into their manufacturing run to supply eight billion Sweethearts to the market. Granted, when they did purchase the company Spangler said it would take time to sort out what it called "a lot of manufacturing challenges and unanswered questions." With M&A being such a common occurrence in the CPG vertical, buying a company with such a loyal following that customers actually cry and say they couldn’t imagine a world without that product, this was not the time to have supply chain and manufacturing issues be the reason you disappoint customers. Because as those in the CPG space know, disappointing a customer by not having the item on the shelf is a cardinal sin. Integrating a new product into your portfolio doesn’t need to be this hard, or not done in a timely fashion, as is the case at Spangler. Along with the post-M&A integration, integrating the physical supply chains and their digital twins is important. Getting all the data, people and processes connected, and enabling the users to get end-to-end visibility important. Especially when learning the supply chain behavior of these “new to you” products, being able to evaluate multiple scenarios is invaluable. All of which leading to sweet outcomes. For now, lovebirds around the country will have to rely on substitution products like conversation Hershey’s kisses and conversation Krispy Kreme donuts (yes these are really a thing). But don’t worry, it looks like there is a heart shaped glimmer of hope on the horizon. Spangler will be back for Valentines Day 2020. For now, they’ll just say: