In early June, like the owners of other businesses selling everything from bread to milk, Craig Leva issued an apology, posting a flyer explaining to his customers why he'd had to increase his prices. Chicago Candy & Nut, the small retail outlet of his company, Arway Confections, was raising the price of cashews by a dollar per pound. The reason? In late 2007 and early 2008 exporters in Vietnam—as of last year the world's largest source of cashews—defaulted en masse on contracts, citing rising labor costs and financing troubles. As importers' warehouses emptied, they raised their prices for buyers like Leva, who in turn passed the increases on to consumers.
As president and co-owner of a 75,000-square-foot candy factory, Leva is at the mercy of the market. Nevertheless, Arway, established in 1950, is still thriving, a low-profile survivor of the once dominant, now dwindling Chicago candy industry. The air surrounding the plant, just off the Kennedy on Kimball near Addison, bears no trace of the overpowering ambrosial aroma that issues from the Blommer Chocolate factory (one of Arway's suppliers), though you may catch a whiff of cinnamon. And you'll never come across a package of Arway-brand chocolate-coconut haystacks on the shelf at Target—but it's possible that you've bought them there under another company's name. Arway primarily sells its chocolate-covered peanuts, yogurt pretzels, and sponge candy in bulk to private-label manufacturers, catalog companies, distributors, fund-raisers, gift packers, and retailers who resell the candy as their own brands.
"We have a ton of customers that just let their customers believe that they actually make this stuff in the back, and, yep, we make it," Leva says. "Generally we don't always know where our product is at retail, and a lot of times our customers don't necessarily tell us that they're selling our product to retailers. Sometimes we walk in a place that we don't sell to and say, 'This product looks familiar.'"
Leva came into the business 17 years ago just looking for a little experience after graduating from the University of Wisconsin-Madison. His stepdad, James Resnick, whose father founded the company, hired him on to work in sales, but he gradually got pulled into all aspects of the business. "Listen, candy manufacturing is interesting to a lot of people," he says. "It raises eyebrows—'Ooh! You're in the candy business. Fascinating.' But really I could be making widgets. It's the same thing. I come in, check my e-mails. I get back to my voice mails. It's customer requests throughout the week, insurance and finance and the building and problems with employees. It's the same thing with every other company in America. Just we happen to be putting chocolate on it."
Leva spends a fair amount of time studying commodities markets and making purchasing decisions based on economic forecasts. Usually something is out of whack: cocoa prices are up because of political unrest in Ivory Coast, almonds are volatile because honeybees are dying off in California, or pecan prices are surging because southern farmers are growing corn, soy, or cotton instead. But lately, with oil prices skyrocketing and the dollar weakening, everything is going up at once, and consumers are paying the price.
Cashews (including chocolate covered and honey roasted) make up only a small percentage of Arway's business, but Leva does buy some 300,000 pounds each year. "I haven't bought all my cashew needs, and now the cashew market has gone higher than it should have gone," he says. "It created a whole vacuum within the industry.... All of a sudden all the importers had nothing in their warehouses. They weren't receiving anything from the origin, and they had people trying to place orders for their stuff that they had contracted."
The ups and downs of the market make candy manufacturing sound like no fun. "We can't afford Oompa-Loompas anymore," says Leva. "Even that commodity went up." But it's been said that candy—like alcohol and tobacco—is recession-proof, and Arway isn't doing too poorly. Leva employs some 50 people full-time, and that doubles during the season leading up to the holidays. Last year, after 16 straight years of growth, Arway launched a major expansion project that included the addition of two 50,000-pound liquid chocolate tanks. And new production lines let the company start making drizzled pretzels and do its own packing for private labels instead of shipping in bulk.
"Candy in general has been growing," Leva says. "Not by leaps and bounds, but in a great economy, candy slowly grows. Crappy economy, candy slowly grows."v
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