Tootsie Roll Industry Analysis

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TOOTSIE ROLL INDUSTRIES Introduction Tootsie Roll Industries is an American manufacturer of confectionery products. The company's history date back to 1896 when Leo Hirschfield began making and selling individually wrapped, chocolate flavored candy named after his daughter "Tootsie". The product became an instant success and demand quickly exceeded supply. To increase output, Hirschfield merged operations with local candy manufacturer Stern & Staalberg (1). In 1917, the company changed its name to The Sweets Company of America and began advertising nationally. In 1966, the company’s name changed again to what it is known by today, Tootsie Roll Industries. (2) The Tootsie Roll empire continues to expand. With its …show more content…

Fierce competition in the confectionery industry means Tootsie Roll must innovate in order to maintain strong sales. The company does so by reinvesting in its operating assets and creating new products. In 2013, Tootsie Rolls spent $16 million upgrading plant equipment and added Cry Baby Chews, Naughty or Nice Pops, and Andes Creme de Menthe Trees to its product line. Special promotions aimed at the company’s high volume customers also boosted sales. Tootsie Roll’s clever Advertising and Public Relations techniques evolve. In addition to television, the company recognizes the growing importance of digital marketing and thus increased its internet presence in 2013. The Mr. Owl character and his famous “How Many Licks” commercial are now on all popular social media websites such as Twitter, Facebook, Youtube, and Pinterest. Mr. Owl is also featured on a variety of website games, contests, and banner ads. Keeping Cost of Goods Sold at a minimum is just as vital as Marketing and Advertising. Maximum value for both customers and shareholders rely on the company’s operations being as lean as possible and its raw materials prices as low as possible. Tootsie Rolls Industries continually upgrades its plant assets to add capacity, improve quality, or increase efficiency. The company manages cost of raw materials through competitive bidding and using commodities futures …show more content…

Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process. Seasonality has a major impact on Tootsie Roll Industries in terms of sales volume. Its most profitable seasons are the summer movie season, followed by the holiday season. Conversely, the company is least profitable outside these periods. Tootsie Roll’s products are sold at many movie theaters throughout North America. During the summer, when box office sales are the highest historically, Tootsie Roll’s sales enjoy an added boost (12). Increased profit during the holiday season is driven by strong sales of specially packaged items designed for Halloween and

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