Bye-Bye to a City’s Bonbons

Clutching a wad of cash in a white-gloved hand, Carla Newman scours the nearly empty Fannie May candy shop for remnants of her childhood.

Every holiday, a slim box picturing a Chicago skyline would find its way onto the coffee table. Easter called for boxes filled with Mint Melt A Ways and their bright-green taste of spring. Christmas was time for Trinidads, with golden chocolate and the crunch of coconut. And for Valentine’s Day, Cupid always delivered piles of Pixies, oozing with caramel.

But now -- as Fannie May’s parent company files for bankruptcy and prepares to shut down the century-old Chicago candy giant and its legion of retail stores on Sunday -- Newman is hoarding chocolate.

“It kills me that this is happening right on Valentine’s Day,” says Newman, 58, a retired schoolteacher shopping for herself and her three grandchildren. “A Chicago without Fannie May is like a Chicago without snow, a Chicago without the Cubs. It’s a part of this city’s heritage.”

Though Chicago and the surrounding region make the greatest volume of candy in the country and employ the largest number of candy workers, the economic picture here has become increasingly sour. In the last decade, the region’s candy industry has shrunk 38%, down to about 7,400 workers, Illinois employment officials say.

Officials like Mayor Richard M. Daley, blaming the rising costs of labor and raw materials needed to make candy, see this as a painful lesson in international economics. It’s also a frustrating reminder that this city’s $4-billion candy industry -- and Chicago’s manufacturing legacy -- is slipping away.

“The closing of Fannie May isn’t only about jobs lost,” Daley said in a statement. “Chicago has lost one of its most identifiable and beloved cultural icons.”

Analysts who track the industry say the true downfall of companies like Fannie May rests in America’s changing chocolate-eating habits.

During the company’s heyday in the 1950s and ‘60s, people often took a box of chocolates when they visited friends and relatives. Businesses like Fannie May and Russell Stover in the Midwest and See’s Candies on the West Coast tapped into such social niceties with glossy boxes filled with sweet surprises. You reached in, hoping for one with caramel filling rather than pineapple or peach.

But “times have changed, and Americans are on low-carbohydrate diets,” said Leonard Teitelbaum, a managing director at Merrill Lynch who tracks the industry. “Polite company brings wine or flowers, not sweets.”

When people do indulge, they tend to choose a more decadent treat -- one that sells for more than $60 a pound, rather than mid-range chocolates at $10 to $20 a pound. The public is developing a discriminating attitude about its chocolate, and companies like Fannie May haven’t kept up.

“The box makers are all suffering from the artisan chocolate makers, who are up and coming,” said Barbara Murray, industry editor with the online business publication Hoover’s. “Part of the appeal is snobbery. The real driver is that people want more quality from their chocolate, and they’ll pay for it.”

Though there have long been niche players in the business, analysts say the trend toward high-end took off with Godiva, a subsidiary of Campbell Soup. Godiva has always been marketed to people with a taste for finer goodies.

Now Godiva has found itself having to reach even higher, reflected in the recent launch of its G line. Described as “edible works of art,” the collection includes delicately designed truffles made from Ecuadorian cocoa, Sicilian pistachios and Tahitian vanilla.

A pound of G chocolates costs $100 and has a shelf life of three weeks. In contrast, a pound of Fannie May Pixies costs $18.95. Though Fannie May recommends that Pixie lovers eat the candy within three weeks, the company said the treats could last indefinitely if carefully wrapped and frozen.

“Godiva is sold in a sleek gold box with a modern but classic-looking print. That appeals to a younger audience,” said Nicole Hanrahan, director of the Candy Institute, a nonprofit research group based in Chicago. “The average Fannie May customer was 65 years old, and their packaging looks like grandma candy. Fannie May didn’t change as times changed, and that killed them.”

Taking advantage of the consumer shift, more boutique companies are cropping up to sell chocolate as they would wine, coffee or cigars. Half a dozen new high-end chocolatiers have debuted or expanded their presence in Chicago since 2000, while dozens more have launched in New York and in California.

At the Dean & DeLuca store in St. Helena in the Napa Valley, the staff makes suggestions about what beverages work best to bring out the subtleties of dark chocolate. French company Valrhona even identifies its chocolates by vintage -- the year in which the cocoa beans were grown and harvested in a particular part of Venezuela.

Godiva is holding a free “chocolate school” at its stores later this month, with classes on tasting, decorating truffles, and mixing different spices and flavors with the chocolates in its G line, as well as its other sweets.

“Consumers have become much more educated when it comes to chocolate,” said Leah Rosenthal, merchandise manager and confections buyer for New York-based Dean & DeLuca.

“They’re not saying that they prefer a Venezuelan chocolate over one made in New Guinea, but it’s far beyond saying they like dark chocolate over milk chocolate.”

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Candy making, like meatpacking, rolled into Chicago in the mid-1800s with the railroads; the production of sweets grew to dominance as the city became the nation’s railway transfer point.

Cars full of cacao beans were brought in from Africa and Latin America, while molasses and sugar products came from the east, and containers loaded with milk and butter arrived from Midwestern farms.

The railways also brought immigrants from Germany and Italy, and with them their recipes for hard candies. Inside the early shops, sugared violets sparkled next to tart lemon and frosty peppermint sticks.

“Because the raw materials were coming through Chicago, it was easy to set up manufacturing plants here,” said Ray Broekel, a food historian and author of “The Chocolate Chronicles.”

“The same thing happened with chocolate when machines automated the production,” Broekel said.

In 1869, there were nearly 1,000 chocolate factories in the U.S., many of them in the Chicago area. Today, the warm scent of cocoa still floats in the air at sunset throughout downtown, as the Blommers Chocolate factory cranks into production.

Mars makes its Milky Way and Snickers bars here, and Tootsie Roll Industries sends out truckloads of its chewy candies and Blow-Pop lollipops. The city, often called the candy capital of America, is also home to William Wrigley Jr. Co. and Jelly Belly maker Goelitz Confectionery, among others.

Three companies -- Mars, Nestle and Hershey -- control about 80% of the chocolate market in the U.S., Teitelbaum said. What’s left of the market is small and highly competitive.

Take See’s Candies, a rival of Fannie May’s based in South San Francisco. See’s has seen relatively flat sales for the last couple of years, company officials say, though it enjoyed a 7% spike for this Valentine’s Day.

Sales of Fannie May and its sister brand, Fanny Farmer, which is sold mainly on the East Coast, had been declining steadily for several years, industry sources say. The parent company, Archibald Candy, was already struggling financially from acquisitions made in the last decade, when it fell short of paying its debt.

After filing for bankruptcy protection last month, the candy maker agreed to sell the two brands and 31 retail stores to privately held Alpine Confections in Utah for an undisclosed amount.

The deal, which requires the approval of the U.S. Bankruptcy Court, would allow Alpine to manufacture the candies and run some of the stores. Neither company would say which stores would reopen.

The loss of Fannie May and Fanny Farmer is just the latest blow to Chicago.

Brach’s Confections, known for making hard candies and chocolate malt balls, closed its west Chicago plant in December and moved 1,100 jobs to Linares, Mexico. In 1999, department store giant Marshall Field’s shut its downtown candy kitchen and began making its popular Frango mints at a nonunion factory on the East Coast.

Like these chocolate makers, other Midwestern candy producers have been leaving the U.S., in part because of the higher cost of ingredients and labor in this country. Kraft Foods closed its Lifesavers plant in Michigan last year and moved operations to Canada, where sugar is half the price and its work force is nonunion. Ferrara Pan of Forest Park, Ill., the maker of Red Hots and Lemonheads, has transferred much of its manufacturing operations to Mexico and Canada.

“The problem is that we have a lot of older companies with older equipment,” said Rob Hoffman, director of business development at World Business Chicago, a nonprofit economic development association. “When the time comes for them to upgrade their factories or expand, that’s when they leave.”

For Archibald, shifting consumer habits hurt far more than sugar prices, according to company officials and industry analysts.

Today, the Fannie May factory stands empty, the trucks long departed with the last batch of chocolate-covered cherries. When the company’s 250 stores nationwide close their doors this weekend, 3,000 jobs will vanish. Another 600 disappeared when the factory closed.

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Just two blocks from one of Fannie May’s largest stores on Michigan Avenue, the face of Chicago’s chocolate future has set up shop. Cordon Bleu-trained chef Katrina Markoff isn’t just selling candy -- she’s selling a lifestyle.

Inside her cozy Vosges Haut-Chocolat boutique, attendants in chic black pants and snug shirts serve chipotle-chili-spiked hot chocolate in champagne flutes and discuss the benefits of mixing curry with milk chocolate or olive oil with white chocolate. Each ingredient was picked up from “my travels throughout the world,” Markoff says.

Founded in 1998 in Markoff’s kitchen, the $4-million privately held company has two factories and retail shops in Chicago, as well as stores in New York and Miami. A Los Angeles location is to open this summer.

Shoppers lean down to peer through the glass and steel cases at a handful of precisely placed truffles, which cost $37 for nine pieces. Visitors browse through a stack of lingerie, slip on the $900 leather jackets and read about a $3,900 weeklong chocolate and yoga retreat Markoff will lead this year in Oaxaca, Mexico.

“The flavors are all about new experiences and emotions,” Markoff says.

That’s not what draws Carla Newman to Fannie May’s L-shaped counter at the store on Michigan Avenue. For Newman, chocolates are about familiar flavors and comfortable memories.

Years ago, Newman recalls, her grandmother regularly took her to a Fannie May store on the avenue, where the two would press their noses against the glass counters and stare at row after row of sweets. Was this a day for chocolate-covered caramels? Or a bag of butter creams?

Today, the hunting is slim. At this store, the white counters are marred with milk chocolate smudges, and only a sprinkling of sugar remains inside the empty display cases. A wicker basket, once overflowing with chocolates in the shape of long-stemmed roses, holds just shredded red ribbons.

A gray-haired attendant tells Newman that a Fannie May shop down the street might still have some Trinidads. What about Pixies? Mint Melt A Ways?

The candy attendant shakes her head. Sorry.

Disappointed, Newman puts her money back into her purse, races out the door and heads to the next Fannie May store.