EMPRESAS: Chupa Chups, The Story of Lollipops (in English)

The famous idea of the "candy with stick" was developed by Enric Bernat Fontlladosa, the founder of Chupa Chups, the company that has changed the way of eating sweets all over the world.


1. THE BEGININGS: A GREAT AND SIMPLE IDEA

The lollipop was born in Spain during the 50´s decade. In that time the Spanish children ate candies with a round shape, like little sugary balls. It was very commun that the children put these candies out of their mouths while they were eating them, because the balls were quite sweet and took a long time to be melted. So when the children took the candies with their hands, they became dirty and sticky.

In this situation, Mr. Bernat (who was the owner of a candy shop located in Asturias and specialized in the production of "peladillas" -a typical Spanish sweet-) had the idea of nailing a fork in each sugary ball. In this way the children could hold the candy using the fork while they were eating it, and their hands would be clean all the time.

Mr. Bernat´s candy store started to sell "candies with fork" between the children, and it was a real success: the young buyers felt the advantages of the new format. The "fork + candy" format was actually a market test to prove the commercial acceptance of one idea: to produce and sell a large-scale of candies with a stick (in stead of a fork) to be holded.

In this way, the first Chupa Chups factory was established in 1,958 in Villamayor (Asturias), and it was called Granja Asturias, S.A. The first lollipops produced had a wooden stick, less expensive and dangerous than a fork. The advertising was very important to show the lollipop to the Spanish population. In fact, the first brand choosen to call the lollipops was "Chups", but a slogan that said in Spanish "chupa Chups" (suck "Chups") became very famous between the population, and the people assumed it as the name for the lollipops.

This first factory produced lollipops with seven different flavours, and each Chupa Chups was sold  in the market for one peseta (the old currency of Spain). The price was relatively high, but the company wanted to compete for quality and differentiate its particular candy. The product was a success, and more and more children started to buy the lollipops all over the country.

The company sales were increasing during the 50´s and 60´s decades, and Chupa Chups started to grow significantly at the same time that the lollipop was becoming more and more popular. Throughout all Spain Chupa Chups lollipops were sold in many places: kiosks, supermarkets, candy shops, food stores, bars... The company decided to change its name to Chupa Chups, S.A. in stead of Granja Asturias. In 1,964 the company set up a distribution network to arrive at more than 300,000 points of sale throughout all Spain.

2. THE HIGH GROWTH STAGE AND THE OPENING OF NEW FACTORIES 

In 1,967 Chupa Chups opened a new factory in Sant Esteve de Sesrovires (Barcelona), and this year the company also established its first foreign subsidiary in Perpignan (France). It was the first step to sell the lollipops throughout Europe and the begining of its internationalization. The French population received so well the product that Chupa Chups decided to open another factory in Bayonne (France) years after. In this moment, the Spanish company decided to change the wooden stick by one made of plastic, safer, cleaner, and much more commercial.

In that time, the 90% of the sales came from the Spanish market and the remaining 10% came from the foreign market. But the total percenteage sold abroad was increasing at the same time that the lollipop was introduced in new countries of Europe. In the 70´s decade the company started a growth strategy based in going into new geographical markets, first in France, and after in other countries like Portugal or Italy.

The Spanish lollipop was becoming very popular in several countries, and the company decided to renew its image and packaging in 1,969. To do that, Chupa Chups called Salvador Dalí (a very famous Spanish surrealistic painter) who designed the famous current daisy shaped logo in less than one hour, drawing it in a napkin, and in exchange for a large amount of money.

During the 70´s and 80´s Chupa Chups was coming into new countries of Europe, America and Asia. In 1,977 the lollipops were introduced in Japan. In 1,980 Chupa Chups arrived to USA, and the lollipops became in a social and commercial phenomenom: for the American teenagers and young people it was fashionable to wear a lollipop in their mouths, and famous people like actors, singers, models or athletes showed themselves sucking the Spanish candy.

In 1,980 the exports represented the 90% of the total sales. During the 80 and 90 decades there were established subsidiaries and factories in Germany (1,982), Russia (1,990), China (1,994) and Mexico (1,997).

Russia was one of the markets with a better aceptance of the product, and it actually was a very huge market to exploit. Chupa Chups was the first candy consumed in the space: the Russian factory provided lollipops to the crew of the MIR space station, and the whole world could see them floating inside the spacecraft. The lollipop was becaming in a global product consumed by people in Europe, America and Asia.

In 1,997 the king of Spain, D. Juan Carlos I participed in the celebration of the 1,000 millions of lollipops produced in Russia, and this same year Chupa Chups received the Príncipe Felipe Prize for the business excellence.

3. THE DIVERSIFICATION IN PRODUCTS AND MARKETS AND THE CONSOLIDATION OF A WORLD LEADER

During the 90´s the company also adopted a diversifiying strategy, launching to the market new products like the mint tablets "Smint". This product was launched worldwide with a very good aceptance of the consumers. Chupa Chups also launched a new brand in the field of sweets, "Crazy Planet", and the company started to produce little cakes in Russia using the brand "Tornado", among other projects.

The company knew the great value of its brand "Chupa Chups" worldwide and discovered another business different of producing and selling just candies: the licensing. In this way, Chupa Chups created a own licensing department to exploit its well-known brand putting it on t-shirts, folders, pens, glasses, perfumes, board games, toys...

In 1,998, Chupa Chups established a new production center in Brazil. Years later, Canada, South Korea and South America would have factories too.

The total turnover had grown a lot because of the diversification strategy, both by opening new lines of business, as the development and launching of new products. In this moment (around the 2,000 year), the Spanish company had 12 factories in 9 countries and a turnover of around 450 million euros.

4. THE TIME OF CRISIS AND THE SALE OF THE COMPANY

The year 2,000 marked a turning point in the evolution of Chupa Chups. The sales started to fell down drastically and benefits became into looses. One internal crisis inside the company, joined to the global economical and financial crisis in the market, started to ballast its results and evolution.

Chupa Chups had based much of its growth in the opening of new factories, financing it with debt. Because of this, the financial expenses grew enormously (while the sales and margins were reducing more and more) and the results of the company started to offer red numbers.

Some of the problems that worsened the results of Chupa Chups were:

1) The internal crisis that afected the management of the company.
2) The general economic and financial crisis, that afected strongly to the sweets industry (declining of  sales, reducing of margins, incrising of the production costs...).
3) Excesive indebtedness (large financial expenses).
4) The product portfolio was poorly diversified: the total sales were dependent on few products (the lollipops represented the bulk of sales) and the company couldn´t compete with the world leaders like Wrigley, Cadbury-Kraft or Nestlé, specially when they started to produce similar products.

Chupa Chups began to feel stifled, and decided to carry out a reestructuring and downsizing plan, focusing only on the core business and reducing its total debt. To do this, several factories were sold and some business were left.

In 2,006 the Italian-Duch company Perfetti Van Melle reached an agreement with Bernat heirs to acquire the 100% of the capital paying about 400 million euros. Since then, Perfetti is trying to get again good results for Chupa Chups.

At present Chupa Chups is the Spanish subisidiary of Perfetti Van Melle, and produces around of 17,000 tons of lollipops a year (about 12 million each day), in 7 factories (2 in Spain, 2 in Russia, and one in France, Mexico and China) giving work to 1,700 persons, and its products are sold in more than 150 countries all over the world.