In a move that expands its North American business beyond the premium Ghirardelli brand, the upscale Swiss chocolate maker Lindt & Sprüngli is buying Forrest Gump’s favorite brand of candies, Russell Stover. The mass-market chocolates and its sister brand, Whitman, are distributed in drug, grocery and big-box retailers such as Walmart.
“The two companies said they had agreed not to disclose the price of the deal, or any other contractual details. People close to the deal previously told the Financial Times that a figure of $1.4 billion was under discussion,” writes the FT’s James Shotter, who broke the news Saturday night with Ed Hammond and Arash Massoudi that the two companies were in “advanced discussions.” They pointed out that both companies “employ the strategy of marketing their chocolates primarily as gifts, rather than tempting consumers into buying from the candy racks at check-out tills.”
But some observers were caught off guard.
“Vontobel analyst Jean-Philippe Bertschy was surprised by the move since Russell Stover is known for its boxed chocolates sold in drug stores and gift shops, which are expected to grow at a slower rate than chocolate overall,” reports Reuters’ Caroline Copley, but he said the move “should strengthen Lindt's presence in the seasonal business” and “give it more sales outlets in central U.S. states.”
Kepler Cheuvreux analyst Jon Cox “was also taken aback, saying he had expected any deal to come in a large emerging market such as Russia or Brazil,” Copley writes.
Candies from Russell Stover’s “The Gift Box” assortment had their “status in American life cemented by their appearance in the 1994 movie “Forrest Gump,” when the lead character, played by Tom Hanks, quoted his mother: "My mama always said: 'Life is like a box of chocolates — you never know what you are gonna get,” writesThe Guardian’s Jennifer Rankin. The company’s Corporate Gifts catalogue reminds us of that fact, which is helpful since the brand name is not easily discerned in a clip from the movie.
“This biggest and most important strategic acquisition to date in Lindt & Sprüngli’s history is a unique opportunity for us to expand our North American chocolate business and will greatly enhance the group’s status in the world’s biggest overall chocolate marketplace,” said Lindt CEO and chairman Ernst Tanner in a release announcing the deal, which it claims makes the company the No. 3 manufacturer in the U.S. behind Mars and Hershey.
“We proved with the integration of Ghirardelli back in 1998 that we are able to integrate a U.S. company,” Tanner said. “The Ward family acknowledged that and that might have played an important part.”
Kansas City-based Russell Stover was founded in the basement of a Denver couple, Clara and Russell Stover, in 1923 when they started making “Mrs. Stover’s Bungalow Candies.” They opened their first shop in December of that year and had five stores operating in the Denver area within a year. Russell died in 1954.
In 1960, Louis Ward, who ran the company’s longtime box manufacturer, purchased the company, according to the company history. Russell Stover acquired Whitman, which dates to 1842, in 1993. Ward died in 1996 and his heirs — his sons Tom and Scott Ward are co-presidents — hired Goldman Sachs in February 2014 to explore a possible sale, James Dornbrook of the Kansas City Business Journalreported.
“Significant national television and print advertising began in 1993, but a prominent fixture program remains at the heart of the company’s promotional activities,” according to the company, which says it maintains displays at 40,000 retailers that “provide a prestigious anchor to their card, floral, and candy departments.”
Russell Stover has four factories — in Kansas, Texas and Colorado — and about 2,700 employees, the AP reports. Annual sales are around $500 million. It also markets the Pangburn’s brand — “Texas born and loved by all!”