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Jelly Bean Factory Case Study

Cloetta has today acquired Aran Candy Ltd and the brand “The Jelly Bean Factory” – an Irish company producing and selling gourmet Jelly Beans worldwide. The acquisition will significantly strengthen Cloetta’s position in the UK.

The Jelly Beans from “The Jelly Bean Factory” are premium gourmet Jelly Beans produced in 36 different natural flavors.

“Jelly Beans are known as a product to consumers world-wide, and the acquisition of “The Jelly Bean Factory” will support Cloetta’s profitable growth by adding an offering to the Munchy Moments within the sugar confectionary category. The Jelly Bean Factory has shown strong growth over the last years and the acquisition will significantly strengthen Cloetta’s position in the UK market. In addition, we intend to roll out the products in our current core markets over time,” says Bengt Baron, CEO of Cloetta.

The Jelly Bean Factory had sales of about SEK 100m in 2013 with the UK as the core market. The USA, Canada, Middle East, Ireland and Germany are other important markets.

“We are very pleased to become part of the Cloetta Group. With Cloetta’s focus on brands and strong routes-to-market in their core markets, I am convinced that we will be able to further strengthen and accelerate the growth of The Jelly Bean Factory brand,” says Richard Cullen, Managing Director at Aran Candy Ltd.

Initially, Cloetta has acquired 75% of the shares of Aran Candy Ltd. The remaining 25% will be acquired in 2016. The upfront purchase price is SEK 140m in cash and the remaining shares will be acquired based on 2015 result targets. The acquisition will be financed utilizing Cloetta’s existing credit facilities. Restructuring costs are estimated to be approximately SEK 15m in 2014 whereas cost synergies will be very limited.

The company produces and sells Jelly Beans under “The Jelly Bean Factory” brand. It was established in Ireland in 1998 by father and son Peter and Richard Cullen and has had a consistent revenue growth over the last five years. The products are produced in a modern facility (established in 2005) in Dublin, Ireland. The Jelly Bean Factory has about 70 employees. Richard Cullen will continue as Managing Director for the company.

The sellers are the founders of The Jelly Bean Factory.

The information contained in this press release is such that Cloetta is required to disclose pursuant to the Swedish Financial Instruments Trading Act and/or the Swedish Securities Markets Act. The information was submitted for publication on 28 May 2014 at 08.30 a.m. CET.

Media contact

Jacob Broberg
SVP Corporate Communications & Investor Relations
+46 70 190 00 33.

FOR those who don’t want to say it with flowers or chocolates, The Jelly Bean Factory in Dublin is now offering the option of saying ‘I love you’ with pink and red heart-shaped jelly beans.

Trialled in the British market last year, The Jelly Bean Factory’s products for Valentine’s Day are now in shops and supermarkets in 30 countries in Europe and the Middle East. Consumers can get a small tub for €2.50 or splash out €15 on a large jar.

The launch of seasonal products, including Bunny Beans for Easter and red- nosed Rudolph beans for Christmas, is part of a strategy by the company to maximise sales in existing markets.

Achieving a turnover of €12 million in 2013, the company exports jelly beans to 55 countries worldwide.

“We are now the largest manufacturers of gourmet jelly beans in Europe and the second-largest in the world,” says joint CEO Richard Cullen, who set up the company in 1998 with his father Peter.

This came about after the closure of the Dublin confectionery company they had worked for. Observing that the chocolate market was very crowded, they identified a niche opportunity in the sugar confectionery space for a high quality product.

“Many jelly beans were made with a standard piece of jelly, with no flavour on the inside. We decided to make a premium quality all-natural jelly bean and develop a brand,” reveals Mr Cullen.

Subcontracting manufacture to a UK firm, the company Aran Candy, which trades as The Jelly Bean Factory, supplied the first products to Tesco in Britain in 1999. In 2003, at the height of the Celtic Tiger boom, Aran Candy brought jelly bean manufacturing to Blanchardstown in Dublin.

It wasn’t an opportune time, but the manufacturing company in Britain closed and offered to sell Aran the equipment, so the Cullens seized the opportunity.

With some assistance from Enterprise Ireland and Bord Bia, the company has grown rapidly since then. It now employs a staff of 72 at a 115,000sq ft facility which has been extended three times in recent years.

Mr Cullen estimates that sales have been increasing by an average of between 10% and 15% a year.

The factory produces 12 million jelly beans a day in 36 flavours. These are sold in jars, tubes, packs, boxes and bean-dispensing machines, as well as in toy planes, trains and cars.

According to Mr Cullen, Jelly Bean Factory containers are just one of a number of things which distinguish their products from the competition, which mostly sell jelly beans in plastic bags.

“Our jelly beans are also unique because we use 100% natural ingredients and no artificial colours and because of the high number of flavours we make. The way they are made also makes them unique since it takes two weeks to make one jelly bean,’’ he says.

He attributes the success of The Jelly Bean Factory both to the quality of the product, which in constantly being improved, and the successful creation of the brand, which has been carefully planned and monitored.

In earlier years Aran Candy made own-label jelly beans for large retailers but this is now being phased out.

“We are now putting all our efforts into developing The Jelly Bean Factory brand and have stopped all own-label production for customers in Europe and for some in the US,” says Mr Cullen.

In marketing its brand, the company has made extensive use of social media and the internet and has a team of five marketing and sales staff who work with distributors and retailers. Slogans such as “There’s never been a better bean” have helped The Jelly Bean Factory establish itself as Britain’s number one-selling gourmet jelly bean brand.

The UK, where the product is stocked in 45,000 retail outlets, is The Jelly Bean Factory’s single largest market. Other significant markets include Scandinavia, the US, Canada, Germany and the Middle East. Customers include household names such as Walmart, Debenhams, Boots and WH Smith.

With sales to 55 countries, there is now less scope to develop new markets, although Mr Cullen says the company does have plans for both the Middle East and China.

In 2012, as a new departure, it launched chocolate- coated jelly beans. Mr Cullen says sales have gone well in some countries and further chocolate-coated products are now being considered.

Identifying scope to sell to segments within existing markets, the company launched a travel range in 2013 which has sold to customers including Aer Rianta and four airlines in China.

“CVS, a major US pharmacy with 1,000 stores, has taken on our product and we have also got into the US supermarket chain Wholefoods and are in the final stage of negotiations on four new large accounts in the US,’’ reveals Mr Cullen.

Sales of Valentine’s Day jelly beans aren’t likely to be significant in the context of overall turnover, but he sees bigger prospects for Bunny Beans in the US at Easter.

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