Frankford Candy finds its sweet spot in a category dominated by large CPGs

For much of its 75-year history, Frankford Candy had the market cornered with seasonal offerings like chocolate bunnies and Santas. But the 1990s saw candy giants such as Hershey, Mars and Nestlé muscle into the space, and the family-owned business soon realized it needed to adapt or risk going out of business.

“Just like [large confectioners] own a large portion of the everyday candy business, they started gobbling up a lot of seasonal business, so we had to adapt,” said Stuart Selarnick, CEO of Philadelphia-based Frankford Candy, during an interview at the recent Sweets and Snacks Expo. “The strategy really was to get into new white spaces that we weren’t in before.” 

Frankford’s unique and ever-changing product mix has played a vital role in helping it to navigate the market and carve out its niche in the cutthroat confections industry. Most of the seasonal product makers Frankford once competed against no longer exist, leaving the company as one of only two larger players left, its CEO said.

The company still pays homage to its heritage through the production of seasonal offerings, which makes up roughly 70% of sales, but increasingly its business has turned to licensing deals as a way to grow and survive.

Frankford entered licensed confections in the early 2000s, and soon had partnerships to create candy with the owners of characters like SpongeBob SquarePants, Super Mario and Mickey Mouse.

More recently, it has focused its attention on well-established food brands like M&M’s, Oreo, Kraft Macaroni & Cheese and Pebbles cereal given their reach with a broader segment of consumers rather than a specific demographic like a cartoon character targeted toward kids.

Today, Frankford is the No. 1 seller of licensed candy and gifting brands in the U.S, according to the company.

“If there’s one thing I can say for sure, that is things will change,” Selarnick said. “And at the core of who we are, we’re really good at adapting to change.”

Frankford’s portfolio includes more than 100 branded items, such as Dunkin’ Iced Coffee Flavored Jelly Beans, varieties of Hot Chocolate Bombs — chocolate balls with marshmallows inside — and its most popular licensed product, Krabby Patties gummy treats. 

Frankford’s products are on shelves at nearly all retailers selling food, including Walmart, Target, Dollar General and Amazon. The candy maker’s size gives it more flexibility to work closely with retailers to customize products that fit with what their shoppers are looking for, Selarnick said. Increasingly, retailers are wanting more. 

“Demand in the candy business [for something unique and new] is through the roof,” he added. “They want more, more candy, more innovation.”

Last year, Five Below, a retailer with a large presence in the teen demographic, was first to market with Frankford’s gummy candy Kraft Macaroni & Cheese, packaged in boxes just like the pasta offering.

And in 2019, Walmart was looking for new brands and products it could carry. It ultimately brought Frankford’s soon-to-be viral Hot Chocolate Bomb to its seasonal shelves. It proved so successful that Frankford brought in Dunkin’ as a licensing partner and launched another version with the popular coffee and doughnut chain last year.

While Selarnick declined to delve into the financials at the privately held company, he said the business is posting “strong growth.” Sales have been “far outpacing” the roughly 10% jump in the broader candy business since the start of the pandemic, he said.

Frankford consolidated its three facilities in 2005 and built a 500,000-square-foot plant in Philadelphia with state-of-the-art chocolate manufacturing capabilities. It’s investing millions more to triple its production capacity and add molding processes to bring additional innovations to the market.

Despite its recent success, Frankford is not immune to some of the current challenges impacting other candy companies and the food industry as a whole. The company has at times struggled to source sufficient quantities of commodities like milk chocolate. 

Still, Selarnick remained upbeat that the company will continue to thrive despite ongoing challenges and concerns about higher expenses in the future for everything from shipping to fuel.

“We’re really busy right now. There are a lot of changes,” he said. “We have a lot of opportunity ahead of us.”