Hearts Set On Growth

After 162 years, the New England Confectionery Co. wants to be more than your valentine.

The maker of Sweethearts - the tiny heart-shaped candies inscribed with messages such as "I Love You" and "Kiss Me" - and other sugary nostalgia such as Mary Janes, Necco Wafers and Clark Bars says now is the perfect time to broaden its offerings, despite the recession and saturated candy market.

"It's the oldest multiline candy business in the United States. There are some iconic brands here that are just marvelous," said Necco's new chief executive, Richard Krause. "We thought it was an excellent opportunity to take this company to the next level."

When Necco opened in 1847, there were 29 states in the Union, the Civil War had yet to start and Abraham Lincoln was in Congress. It began making its signature Sweetheart Conversation Hearts in 1866, spreading G-rated messages of affection.

It has since introduced many different themes, with hearts in Spanish or more modern messages such as "Text Me." It also offers Sky Bars, Double Dipped Peanuts and Thin Mints, but the tiny hearts - billions a year - remain Necco's best-sellers.

Krause says if the company wants to survive in a global economy - and take advantage of consumers' need for less-expensive entertainment - it needs a little change of hearts.

Next month, Necco plans to unveil a new line of Sweethearts connected to "Twilight" - the young-adult vampire-romance book series. They'll be released at the same time as the DVD of the movie and will feature sayings such as "Bite Me," "Bedazzle" and "Live 4 Ever."

Around Memorial Day, Necco will introduce a "Red, White and You" series aimed at veterans returning from Iraq, with messages such as "Proud" and "Love the USA."

"We're going outside of just the seasons," said Jackie Hague, the company's new vice president of marketing. "And during the seasons, we want to expand at the right time. And these brands are perfect for that."

Krause, who joined the company in August as its CEO, said Necco needs to expand its brand in the United States so it is in a better financial position to expand globally. He is aiming for 30 percent growth within two years for Necco, whose annual revenue has hovered around $100 million since 2005.

Necco isn't the first confectionery company to try expanding a seasonal product's appeal. Brach's Confections, now owned by Farley's & Sathers Candy Co., began an effort seven years ago to expand its Candy Corn brand beyond Halloween, said company spokeswoman Michelle Graber. The conical sweets can be found year-round in a variety of flavors and colors, including a pink and white version for Valentine's Day.

"It's been very successful for us," Graber said.

Privately held Necco was sold in 2008 to a group of investors that is led by private-equity fund American Capital Strategies Ltd in Bethesda, Md., and includes Necco Chairman Dominic Antonellis and Dallas-based private investment firm Clear Creek Capital LLC.

Myung Yi, managing director of American Capital's special situations group, said the private-equity fund sees growth for Necco in product-line extensions and new products.

A few months after the purchase, Necco closed a plant in Pewaukee, Wis., as it faced increased competition from candymakers abroad.

Toward the goal of streamlining, Necco will replace some of the machinery at its new 820,000-square-foot factory.

"Some of this equipment ... we've been using since the 1930s," said Manny Da Costa, Necco's facility manager.

As for releasing new products during a recession, Conroy said candy is inexpensive.

"People still like to reward themselves," Conroy said. "At the end of the day, a little candy won't tilt their budgets."

That's what Krause is banking on.

"Sometimes maybe they can't do their $30 bottle of wine, but they can still do their Necco Wafers," Krause said. "And their Sweethearts."