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The Chocolate Company
Imagine a world without chocolate bars and you'd be back in the '70s -
the 1870s, that is. But that began to change in 1872 when a teenager
named Milton started working at Royer's Ice Cream Parlor and Garden in
Lancaster, Pennsylvania. It was here at Royer's that Milton learned
the skill that helps make our lives a little sweeter today.
Milton the Proprietor
At Royer's, Milton learned how to make candy from boiled sugar. He
also learned how to manage workers, control inventories, and price products.
When he was 18 years old, he decided to take his skills to Philadelphia and
start his own business. With the financial backing of his mother's
family, he opened the Spring Garden Confectionary Works in 1876.
Milton's new business was a proprietorship, a company owned and run by
one person who receives its profits or bears its losses. The business
grew at first but eventually ran into difficulties. Despite more money
from his mother's family and Milton's long hours and hard work, it failed in
1882.
Stuck on Caramel
After his business failed, Milton then went to Colorado in search of silver
but ended up working in - you guessed it, a candy shop.
The shop produced caramels with an innovative process that used fresh
milk. The caramels were softer, smoother, tastier, and had a much
longer shelf life. After learning how to make the caramels, Milton
went to New York City to start another candy business. His mother's
family again provided the funds. Again the business began well, but in
the summer of 1886 it ran into trouble. Unable to pay a large loan for
his candy making equipment, Milton experienced his second business failure.
Penniless, he returned home to Lancaster, Pennsylvania. Despite
this, he decided to start another candy business. Lacking financial
help from his family this time, he rented a small warehouse room. He
began producing candy and selling it from a basket during the day. His
sales increased, so he moved to a larger location. To make enough
candy, however, Milton had to borrow money to buy an expensive copper
boiling pot. When the loan came due, he couldn't repay all of it.
Fortunately, this time a British importer came to the rescue after
discovering the flavor and shelf-life of Milton's caramels. The
importer began ordering large quantities, so Milton's sales and income
soared. At last, Milton had succeeded. His third company, the
Lancaster Caramel Company, was prospering.
Chocolaty Dreams
In 1893, Milton attended the World's Fair in Chicago. An exhibit of a
chocolate-making system from Germany greatly impressed him. He decided
to concentrate on making fresh-milk chocolates instead of caramels.
While most people had never even heard of milk chocolate, Milton was hooked
on it. "Caramels are too rich to eat every day," he said to a
relative. "I am going to concentrate more and more on making chocolate
because I believe it will be a more permanent business in the long run."
The Swiss had developed a technique for making milk chocolate, but the
product was very expensive. Milton believed he could make high-quality
milk chocolate at a price most people could afford. But accomplishing
this goal would be a difficult task requiring a willingness to learn from
mistakes.
"He had no knowledge of chemistry to help him.
It took him years of messing around
in overalls to discover the basic procedures in
the manufacture of milk chocolate. He
felt his way from experiment to experiment,
undaunted by failure and elated by success."
Milton's perseverance paid off when he finally discovered a process of
making affordable milk chocolates. In 1900, he sold the Lancaster
Caramel Company for $1 million, a huge sum in those days. The money
from this sale was used to build a plant in a rural farming area of
Pennsylvania. Milton knew that the local dairy farms could provide
lots of fresh milk. The area also had many industrious workers, and
nearby Philadelphia and New York had supplies of imported sugar. The
opening of the plant marked the start of the Hershey Chocolate Company.
Chocolate Corporation
The Hershey Chocolate Company grew rapidly and began introducing new
products. Hershey's Kisses appeared in 1907, Mr. Goodbar in 1925, and
Hershey's Syrup in 1926. But the company's continued growth would
require large inflows of new funds. To raise the money he needed,
Milton Hershey decided to incorporate the business and sell stock to the
public. A corporation can raise substantial sums from investors
because it offers them attractive features. One of them is "limited
Liability", which means an investor's potential loss is limited to the
amount invested in the company's stock. Another attractive feature is
a corporation's long life. A corporation is a separate legal entity,
just like a person, so it lives on even if its founders or managers leave or
die.
In 1927, the business became a corporation and changed its name to the
Hershey Chocolate Corporation. It sold stock to the public to fund its
continued growth. In 1968, it changed its name to the Hershey Foods
Corporation to recognize its growing line of products. Its name
changed once again in 2005, when it became the Hershey Company to reflect
its global growth (stock symbol: HSY)
Complete the following questions.
With your stock market group, identify one product that you all use.
Research the company that makes that product and fill out the following
table with the information that you find.
Researching a Company |
