5 Small Candy Makers Living the Sweet Life

NEW YORK ( MainStreet) -- Halloween is a time for ghosts and goblins, jack-o'-lanterns and haunted houses. But most of all, let's not forget the candy.

Small businesses that focus on gourmet chocolate and specialty candy are getting ready to start their holiday season, which begins with Halloween and lasts through Valentine's Day.

Halloween is a key time of year for the candy industry. This year, consumers plan to spend an average $72.31 on Halloween between costumes, candy, decorations and greeting cards, according to the National Retail Federation. While the largest percentage will go to costumes, nearly 30% of that average will be spent just on Halloween candy.

Wouldn't it be nice to turn a sweet tooth into a career? Here are five businesses successful in the candy industry.

1. Davidson Chocolate
Family-owned Davidson Chocolate, owned by John and Sue Elliott, makes handmade truffles and other chocolate confections using a century-old recipe acquired when they bought their first chocolate shop in 2003.

The Elliotts had always wanted to own their own food-hospitality business -- John had been in the contract food-service business for 30 years -- and looked first at opening a bed-and-breakfast. A realtor convinced them instead to buy a chocolate shop in the mountains of North Carolina that had been closed for nearly three years, a result of the former owners mismanaging the business.

The Elliotts took the plunge and eased their way into the chocolate industry -- rebranding and updating the chocolate shop while keeping the recipes. Eventually they sold the mountainside shop and opened a store in Davidson, N.C., in 2008, after their son convinced them to bring their expertise to a more urban area.

Last year, the Elliotts opened a second store in Charlotte, N.C.

"At the mountainside store, space was always an issue," Sue Elliott says. "There was no place for us to grow. That's when our son John started talking about coming over here and planting the seed."

But having a passion for chocolate and turning it into a business comes with its challenges. While the Elliotts find some products sell better in one store than the other, requiring them to shift product based on customer demand, their first challenge in Davidson was more fundamental: to educate customers on the value of gourmet chocolate.

Customers at first would balk at the higher price, but after trying the chocolate, would quickly change their mind, she says.

The gourmet chocolate industry is growing, though, and she acknowledges that the competition is heating up. Now the focus is on customer service.

"As we grow, you can't do 100%, but you certainly try to meet customers' needs and expectations to avoid damage control. We've also been very price conscious," she says. "We're not a $60-a-pound chocolate; we're a $32 chocolate. People are a little more comfortable with that."

For now, the Elliotts have their hands full with two stores and are working on expanding their Internet, corporate and wedding businesses. Eventually, Sue Elliott says she hopes to establish a production center and open other stores.

"We've been able to pick up corporate business that we never would have had if we just stayed in Davidson," she says. "It gives us a broader market area. It just seems like everyday something comes up and we say, 'Wow, that wouldn't have happened if we weren't here.' So it's a growing blessing."

2. Xan Confections
Xan Confections is known for being able to offer options for even those who shouldn't eat candy. The 2-year-old company has carved out a niche market in the chocolate industry by offering low-calorie, low-glycemic, gluten-free and vegan options as well as more traditional chocolate offerings.

Xan Confections is in more than 300 stores across the country, including Whole Foods ( WFMI), and is beginning to sell internationally, says co-owner Kerry Johnson Anthony, who started the company with her mother and a third partner who is no longer with them. The mother-daughter team has two other companies focused on healthy eating, so entering the healthy chocolate market seemed to be a natural fit, she says.

Johnson Anthony had no qualms about starting a business in the midst of a recession.

"It was actually a great time to start a chocolate business. We had the other companies, so we already had a lot of knowledge. It was low-entry cost for us because we already had the kitchen and the space," she says. In a recession "usually things like small luxuries -- chocolates and coffee -- do well because people can't spend a lot, but they've got to do something to feel good."

Xan Confections is the first of their businesses selling retail items.

"Doing retail is a whole new business model" considering brokers, quality control, packaging and order lists, she says. "We didn't have the experience. We had a quick and dirty lesson" on selling retail items, including figuring out proper and pleasing packaging.

The pace of the chocolate industry is frighteningly fast. Large companies such as Hershey's ( HSY) are quick to come out with new items and to be ready for the next holiday far in advance. Xan Confections has to be just as fast and just as innovative, she says, and is already preparing Valentine's offerings.

"It's difficult to work in a company that isn't real time. You're selling for next year that's six months down the road. That has been the biggest challenge for us," Johnson Anthony says -- but a necessary one. "Winter is half your yearly business."

Still, Johnson Anthony says she wouldn't trade it to run her own store.

"Retail stores are money suckers. The overhead is daunting. So honestly it's just an easier business model with less upkeep and less risk to do it this way," she says.

3. Snap Infusion
Snap Infusion is another alternative to those who have a sweet tooth but want a good-for-you alternative. The so-called supercandy is targeted to people with active lifestyles.

The candy, created last year by husband and wife team Eric and Andrea Stoll and launched in July, is a low-calorie treat made with natural ingredients such as vitamins B, C and E and electrolytes. It offers "functional benefits and patented Snap beads that activate a sensory experience maximizing deliciousness while delivering the instant gratification associated with candy," the company says.

"My husband was the initial founder and creative behind Snap Infusion , and being an athlete and somebody who loves candy, he was really just looking for a snack that he felt tasted great and was at least not bad for you," Andrea Stoll says. "The idea was born out of that. We started really thinking about the category and what was out there. The idea just seemed to get more and more interesting as a commercial opportunity."

Andrea Stoll, who worked in strategic planning and product management positions at such companies as Nike's ( NKE) Converse, Vans and American Express ( AXP), used her pull to get companies to notice the healthy candy.

The company is starting with selling to sporting goods stores, fitness clubs and specialty stores, yet with an explosion in the health and wellness industries, she says the candy has potentially broad-reaching appeal.

"We do believe that people are expecting more from their products ... and are aware of what they're putting in their body, ' she says.

4. Moonstruck Chocolate
Portland, Ore.-based Moonstruck Chocolate was founded in 1993, opened its first chocolate cafe in 1996 and has since grown to five cafes in the Portland area and national retail distribution.

Moonstruck is most known for its artisan truffles, the company says, and Halloween brings its most popular collection: Popping Frankenstein (hazelnut praline with Pop Rocks), Creepy Cat (extra-bittersweet ganache in the shape of a cat), Milk Chocolate Pumpkin, Blood Orange Bat (with blood orange-infused dark chocolate ganache), PB&J Eyeball (filled with crunchy peanut butter ganache and jelly) and Milk Chocolate Spider (milk chocolate with a hand-piped spider on top).

"The whole goal is to offer innovative, different chocolates," says Allyson Savage, director of marketing at Moonstruck.

"In 1993, there wasn't a ton of gourmet single-origin artisan chocolatiers," Savage says. "People thought of chocolate in the same way you think about it in the grocery store. If you take a little bit more time, using fresher ingredients or smaller batches, the chocolate tastes a lot different and creates a better experience."

Moonstruck is expanding further, moving into large and small chocolate shops as well as larger retailers, she says.

In the cafes, the goal is to give customers an emotional reaction to the product -- from when they look at the hand piping to the hand-packaged purchases to sitting down and having a moment to savor the taste, Savage says.

"Customers who truly appreciate food and chocolate" are willing to pay for the experience, she says.

5. Sleepy Jean's Confections
Technically, Sleepy Jean's Confections is Jean Younger's third career. She went from a career in chemistry to patent attorney to, finally, chocolatier.

Younger began testing her chocolate product at farmers markets in Kansas and eventually jumped full time into chocolate making in 2006. As an entrepreneur, Younger acknowledges she was not prepared for the time spent at her business.

"I don't have Halloween done. It's made on a daily basis fresh," Younger says.

She also says she was not prepared for the amount of responsibility it takes to run a business.

"Everything pretty much falls on my shoulders. I have a few part-timers and assign them projects, but the whole planning and marketing, that all falls on my shoulders. Even though I was hoping for less time," she says of her responsibilities since starting Sleepy Jean's, "I think I am working about the same time."

Despite the challenges, Younger is looking to expand her product line, experimenting in the off-season (meaning summer) with chocolate coffee beans, for instance.

Sleepy Jean's is also expanding its distribution west of Kansas City; Younger is in search of shops that would be a good fit to carry her product.

"I make my own deliveries out there. They love it. It's the personal contact -- they relate to it," she says.

Younger prides herself on contributing to locally based economies and is thankful the focus on local goods helped her when she was starting out.

"The local movement is still very big. It was a big buzzword the last couple of years, but it's not fading," she says.

-- Written by Laurie Kulikowski in New York.

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