A new CEO takes over at Pearson Candy, backed by local money and ideas to grow

Two women in hairnets and smocks sit at the end of a conveyor belt as fully wrapped candy bars come shooting down the line at Pearson Candy Co.

The first woman grabs six bars and, in one fluid motion, slides them into a box while the second woman catches the next six and does the same.

Just days before Halloween, the year's biggest candy holiday, the work at St. Paul-based Pearson resembled that infamous "I Love Lucy" episode, in which Lucille Ball's character fails to keep up with chocolates coming down a factory line. Pearson workers are far more proficient than Lucy, but some of the factory's equipment was in use when that episode first aired in 1952.

"This is fairly old-school," Joe Driscoll, the new chief executive of Pearson, said on a recent tour of the factory. "It's what you might call vintage manufacturing."

It's been nearly a year since Spell Capital of Minneapolis bought Pearson from Brynwood Partners, a private equity firm in Connecticut, and eight months since it hired Driscoll to reorient the company.

Spell is spending about $3 million on capital improvement projects this year and committed to spending at least that much in each of the next two years. With that financial foundation, Driscoll hopes to update the company's old-time classics — such as Salted Nut Roll, Bit-O-Honey and Nut Goodies — and create new products that get Pearson growing.

"You can be retro and cool, but you just can't be dated," Driscoll said.

A marketer for much of his career, Driscoll worked at General Mills for 12 years, then for several years at Angie's Boomchickapop, and then became CEO of an Atlanta-based beverage startup. He jumped at the chance to return to the Twin Cities.

"Our goal is to become the premier candy company of the Midwest," he said.

When Spell bought Pearson last November, the company was in financial trouble. Pearson — commonly called by its brand name "Pearson's" — had expanded its plant so that it could also make other companies' products. But those contracts dried up, leaving it with dormant space and not enough cash flow to pay overhead costs, Driscoll said.

Meanwhile, its own candy products weren't growing and its most loyal customers are over 55, a large base but not one that will drive growth. The company had done little marketing and missed the rise of e-commerce. It bought Bit-O-Honey and tried to diversify with an upscale chocolate product line, dubbed 7th Street Confections for its address on St. Paul's W. 7th Street. Even so, the 110-year-old company needed a new start.

Spell specializes in investing in manufacturing companies, and its spending should help improve the Pearson factory. The new owner knew Pearson's products needed a new image and sought out a career marketer to lead the candy maker.

"You can't be too precious with your brands. Then you are stuck," Driscoll said.

For decades, the candy maker didn't have a single employee dedicated to research and development. It's hired two people in the last year to focus on developing new products.

"We used to be operationally driven. The mentality was: 'Here's what we can make, so let's do that,' " Driscoll said. "The thinking always has been, 'If you build it, they will come,' but that's not the case."

It has also hired people focused on improving communications with both its existing loyal base and potential new customers. A month ago, Pearson launched Instagram pages for Salted Nut Roll and Bit-O-Honey. The two products are both distributed nationally and together represent about 75% of Pearson's approximately $50 million in annual revenue.

Pearson will update all of its packaging by January to better explain products. For instance, the company is replacing the "Original" banner on its Nut Goodie packages with one that says "Maple."

The word "original" worked "if you don't care about attracting any new customers, who might not know it is a maple product to begin with," Driscoll said.

The company is also updating its equipment and package formats with a focus on the consumer.

For instance, it plans to replace its "bunch wrappers" — which are basically a tinfoil-like material folded around its mint patties — with a "fin seal flow wrapper" that better seals the candy. This increases the shelf life by keeping the chocolate from getting crusty and the creme filling from hardening.

"Our mint is supposed to be softer, creamier and chewier than York, but our customers don't always experience that," Driscoll said, referring to Hershey Co.'s York Peppermint Pattie.

Pearson launched 7th Street Confections in 2017 under former CEO Michael Keller. The bark-like chocolates didn't take off, though, a problem Driscoll attributed to marketing strategy. A few versions are still being produced for retailers who continue to order them. Keller could not be reached for comment.

"Launching any new brand is extremely challenging. It's easier to take existing brands and branch out, which is why you see a million flavors of M&M's or Cheerios," Driscoll said.

The 7th Street Confections effort isn't a complete wash. Pearson this week will start selling a similar product called Thins. Unlike 7th Street's upscale chocolate bark with freeze-dried fruit and gluten-free quinoa, Thins will contain variations of Pearson classics, like Mint Patties and Bit-O-Honey. Nut Goodies Thins will have a maple base with crunchy marshmallow bits and peanuts mixed in. Thins will come in resealable "snack" bags that are increasingly en vogue with chocolate lovers.

Pearson already had the equipment to make this type of candy and was using it for 7th Street Confections and as a contractor to Ripple Brand Collective's BarkThins products. It lost that business last year, however, after Hershey bought Ripple Brand Collective and moved BarkThins production to its facilities.

Pearson is far down the list of U.S. candy makers in terms of size, sitting with a host of other regional candy companies far below powerhouses such as Hershey's, Mars and Tootsie Roll Industries. Salted Nut Roll is among the nation's top five bestselling specialty nut or coconut candies, according to IRI, a Chicago-based market research firm.

"We have a very dedicated workforce. Even if we are small, we have to be polished in order to go in and fight for shelf space," Driscoll said. "We have to get fit to compete."

Driscoll is exploring other ways to grow the business, such as through acquisitions and by turning the W. 7th Street plant into a destination with public tours and a gift shop.

"If you aren't willing to innovate and push, you will go away," he said.

Kristen Leigh Painter • 612-673-4767