After 70 Years, Success Is Sweet to See’s Candies

The candy making business isn’t always a sweet one. Vigorous competition, high costs and fickle public preference have left the landscape littered with the melted remains of failed candy makers over the years.

But See’s Candies--they of the little-changing white-and-black stores and the cherubic smile of Mary See--is celebrating the 70th anniversary of the company’s birth with special candy tins, free Victoria Toffee hammers and commemorative advertising.

Making candy much as it did in 1921 when Charles A. See set up shop in Los Angeles with his mother Mary’s recipes, See’s cooks, cuts, spreads, dips, “enrobes” and packs about 28 million pounds of the sweet stuff a year out of kitchens in Los Angeles and San Francisco. (Enrobing is the process of dunking the candy in chocolate.)

For See’s, strict cost control and a commitment to quality and service have paid off in steadily increasing sales and operating profits for most of the past decade. Revenues increased slightly more than 5% to $196.1 million last year while pretax operating profit jumped nearly 16% to $38.6 million.

“They put out a good product,” said Davis Lott, publisher of Candy World Illustrated and Chocolate & Nut World, two Santa Monica-based trade publications. “The secret of their success is a very close control on quality, and they listen to what the public tells them.”

To be sure, the company’s fortunes haven’t always been as sweet as its product.

Sales have been down recently because of decreased mall traffic during the Persian Gulf War. Revenues and profits could dip this year if volume does not improve, according to the most recent annual report of See’s corporate parent since 1972, Berkshire Hathaway Inc., the investing conglomerate of Omaha multibillionaire Warren E. Buffett.

Expansion into Colorado and Texas turned sour when those states’ oil-shocked economies went bad. The company has pulled out of Texas and has only one store in Colorado. A foray into the St. Louis area ended a few years ago thanks to a static economy and a new, lower-priced competitor.

The importance of service to See’s can be seen in two incidents from recent years.

When See’s decided to cull 14 pieces from its product line in 1987 to keep it at about 100 varieties after some new introductions, the company was flooded with hundreds of angry letters. The two missing varieties that generated the most heat were reinstated, and See’s President Charles N. Huggins sent a letter of apology and a gift certificate to each unhappy customer.

Last year, See’s planned to close its Albuquerque store because of lease problems. This time, the unhappy customers totaled 263. The mall’s landlord softened his negotiating stance, the store remained open and Huggins sent personal letters of thanks plus gift certificates to all the protesters.

“Chuck’s imprint on the business--a virtual fanaticism about quality and service--is visible at all of our . . . stores,” Buffett enthused in his 1990 annual report. See’s sells its candy in boxes bearing Mary’s likeness out of 210 stores in 10 Western states and in Hong Kong.

“Candy stores are fun to visit, but most have not been fun for their owners,” Buffett noted in his 1987 annual report. “From what we can learn, practically no one besides See’s has made significant profits in recent years from the operation of candy shops.”

“It’s a fun business, but it’s also tough because of all the operating costs,” said See’s Vice President Richard Van Doren. “The Sees family persevered through Depression and wars and everything else by maintaining quality, and that’s what we still emphasize.”

The family decided to sell in 1971, two years after Charles A.’s oldest son Laurance died at age 57. His younger brother, Charles B. (Harry) See, wanted to try something different. Buffett came calling and was hungry enough for the candy company to pay three times book value--the highest premium he had paid for a company up to that time.

Long-time employee Huggins, then president of See’s Northern California operation, was put in charge, and the company headquarters were moved to South San Francisco a few years later.

Buffett believes in buying good companies and then letting their managements run them. Indeed, Huggins has been to Omaha only once in the 19 years that Berkshire has owned the company. However, Buffett frequently visits San Francisco and helps set prices. (The candy sells for $8.40 a pound, a few dollars less than most of its local competitors and about one-third the price of high-end Godiva chocolates.)

About 60% of See’s candy is made in the San Francisco kitchen, which specializes in truffles and creams. The Los Angeles kitchen concentrates on the hard centers--such things as caramels, nougats, chips and bonbons.

Although the hum of machines dominates the factories, very little computerization is evident. Workers--whose ranks swell from about 250 to as high as 1,500 during the Christmas season--do much of the candy making by hand amid the almost overpowering smell of chocolate, caramel, roasting nuts and other ingredients. See’s still uses copper kettles over open flames to cook many of its confections.

Whatever it is they do, it breeds a loyal customer.

Gary Seto was in the Pasadena store Wednesday buying his third bag of “It’s a Girl” chocolate suckers to celebrate the May 1 birth of his daughter, Elizabeth.

“Our family always gives See’s at holidays,” Seto said. “My wife has a cousin who lives in Canada, and every time she visits, she loads up. She buys by the case.”

How Sweet It Is The following is a list of some of Southern California’s best known chocolate retailers with a bit of their history.

See’s Candies: See’s was founded in 1921 in Los Angeles by Charles A. See, using many of his mother Mary’s recipes. Now based in South San Francisco, See’s is a subsidiary of Berkshire Hathaway Inc., the Omaha, Neb.-conglomerate run by renowned investor Warren E. Buffett. See’s sells its boxes of candy, bearing Mary’s smiling face, out of 210 stores in 10 states.

Helen Grace Chocolates: The late W. T. (Bill) Grace was a shipyard worker in World War II who made candy at night, hoping to start his own store one day. He did in 1944 and named it after his first wife, Helen. The Los Angeles company now has 11 stores and markets chocolates for fund-raising groups around the country.

Allen Wertz Candies: Pennsylvania candy maker Allen Wertz came West to start his candy store in 1930, living above a tiny storefront and kitchen on Wilshire Boulevard. The candy, sold in gold boxes emblazoned with the company’s name in lower-case letters only, is made at a factory in Atwater on Los Feliz Boulevard.

Ethel M Chocolates: The Las Vegas company, a division of Mars Inc., has 50 stores in California, Arizona and Nevada. Ethel was the matriarch of the Mars family.

Godiva Chocolatier: Founded in Belgium, the then-tiny company was bought in 1966 by Pepperidge Farms, a division of Campbell Soup, and now sells its pricey chocolate across the United States. A likeness of Lady Godiva, with flowing hair strategically placed, is the New York-based company’s logo.