COVER STORY – Cocoa Nuts – On the chocolate trail in Northeast Wisconsin

Posted on Jan 1, 2012 :: Cover Story
Sharon Verbeten
Posted by , Insight on Business Staff Writer

“We are the music makers, and we are the dreamers of dreams.” – Gene Wilder as the title character in Willy Wonka and the Chocolate Factory (1971) (From poet Arthur O’Shaughnessey. 1864)


In the 1980s, when 20-something Liz Garvey and her siblings heard an Appleton chocolate shop was going on the market, they had a sweet dream: “Why not buy the place?” • Although the English major was raised in an entrepreneurial family (her parents owned a local concrete company), Garvey had no previous experience – short of eating it – with chocolate. • “I went into it thinking of it like the movie Chocolat,” she says, recalling her romantic vision of running a boutique chocolate shop. • But after starting Wilmar Chocolates in the 1950s, Wilbur Srnka probably never imagined three young upstarts taking over his business. “He knew we didn’t know anything,” Garvey admits. Still, he took a chance on the trio, selling his business to them in 1984 as an apprenticeship of sorts.

“You learn as you go,” says Garvey, who bought, and still owns, the business with her brother, Paul, and his wife, Lisa. And while life hasn’t always been a box of chocolates running a small business, Garvey – whose license plate reads LUV CHOC – has few regrets.

“It’s a lot of work, don’t get me wrong,” she says. “But I just love the candy making process; I like the feeling of having a party every day.”


The business of bonbons

Now past the half-century mark, Wilmar Chocolates is just one of about a dozen chocolate makers that call Northeast Wisconsin home. From Manitowoc, onward west past Lake Winnebago to Oshkosh and back north through Appleton and Green Bay, traverses a cockeyed “Willy Wonka” trail around the New North. The 150-mile perimeter of a rough triangle was once dubbed “Wisconsin’s Candy Delta” by a writer in the New York Times.

In much the same way as wineries have – many of which have also clustered amid the region – the state’s confectioners are finding comfortable camaraderie while running thriving businesses.

And that’s good news, says Bob DeKoch, president of The Boldt Company and co-chair of New North, Inc., a collaborative effort among business and community leaders to promote cooperation and economic development in the 18-county region of Northeast Wisconsin.

“I view it first from a business perspective,” he says. “We talk about these ‘clusters’ in Northeast Wisconsin and the New North.”

And while many of the companies may compete in some way, “There’s an opportunity to collaborate on business direction, size and impact on the region,” DeKoch adds. “It could be from a tourism standpoint or a business or supply chain standpoint. From a consumer standpoint, many of these producers have specialized areas that they focus on; in that way, they are unique products.”

While he notes the economic benefits of the chocolate businesses go “far beyond tourism,” he suggests the New North consider producing a “touring map” detailing not only the region’s “cluster” businesses, but also other corporate and cultural highlights, especially for those considering a move to the area.

“We have many diverse assets,” he says. “Let’s try to picture those.”

Bringing business to the region is one thing; keeping niche businesses strong during economic challenges is another. While the recession may have taken a bite out of some companies, both casual buyers and certified chocoholics are still jonesing to sink their teeth into the region’s locally made chocolate treats. And while many of the sweet treats – from Wilmar’s famously gooey Wilmarvels triple-nut turtles to the inimitable Mint Meltaways made by Seroogy’s in De Pere – may be diminutive, rest assured, chocolate is no small business.

According to a report by market research publisher Packaged Facts, retail sales of chocolate in the U.S. reached $17 billion in 2009. And the report found – echoed by many local chocolatiers – that higher prices didn’t discourage budget-conscious households from buying quality chocolate as an affordable indulgence.

“No business is recession proof,” says Garvey. “Even though sales levels have rebounded to pre-2007 levels, profits have not followed suit. The cost of our raw ingredients has increased dramatically, especially sugar. We have held prices since then, resulting in much lower profit margins.”

One way Wilmar has tried to balance out profits is by creating a custom build-your-own candy bar (sweet curry and coconut anyone?). Even though they incurred added costs by adding an employee and buying new equipment, Garvey remains “optimistically hopeful” the novelty will pay off. “It dovetails beautifully with what we like to do – get people involved.”

That’s because, she believes, chocolate just has a way of cheering people up, even in tough times.

“The candy business usually does well in a poor economy,” agrees Steve VandeWalle, second-generation co-owner of VandeWalle’s Candies, located just a few miles away in Appleton. “It gives people a little self-gratification. You can live without it … but it’s a ‘feel good’ thing.”

Carol Johanski, co-owner of the historic Kaap’s Old World Chocolates in Green Bay, adds, “The recession, cold weather and cloudy days actually help candy sales. [People] are treating themselves to little luxuries.”

And all signs point to those numbers going up. According to the aforementioned study, global demand for chocolate is expected to rise over the next several years, with the U.S. chocolate market expected to exceed $19 billion in 2014.


The charm of chocolate

The phenomenon of treating oneself to little luxuries is nothing new for Kaap’s. In the early 20th century, people would drive miles – even from Chicago – for former bank teller Otto Kaap’s homemade chocolates. And with every bite of Kaap’s chocolate creams came a healthy dose of old-world charm – perhaps the real reason behind the success of the century-old confectionery.

That charm – as much as pure vanilla, locally sourced cream and high-end chocolate – has proven to be a key ingredient in all the sweet successes.

“Otto created … generations of memories. Kaap’s had so much old world charm,” says Johanski, who co-owns the company with her husband, Carl. “He created an ambience.”

Today, the Johanskis maintain that familial atmosphere with the cozy shop’s tin ceiling, vintage candy boxes and historic aluminum molds on display, an old brass lamp from the original store, framed historic photos and, perhaps most importantly, original recipes. “Our goal was to bring back as much as existed,” Johanski says.

Only Carl Johanski – who, like Garvey, entered the chocolate field as a neophyte – knows and crafts all of Kaap’s original recipes. All the hand-dipped chocolates (“We don’t enrobe,” stresses Johanski) means there is more chocolate on a piece; those details do, in fact matter.

“The customers can tell you what the difference is,” Johanski says, adding that about 80 percent of the company’s business is done at its small shop. Its busiest season? Far and away, 75 percent of the annual business is done during the Christmas/holiday season.

Christmas is a big deal, you might imagine, at all the confectionaries. While chocolate may be king at Beerntsen’s Confectionery Inc. in Manitowoc, one of the company’s historic holiday sidebars has put them on the map: homemade ribbon candy.

“Trends in the industry change,” says Dean Schadrie, the first non-family member to own the longtime family business, which dates back to the 1930s. “We are one of the few companies that make ribbon candy,” as well as hard candy opera sticks and seasonal candy canes.

Still, their best seller remains the ever-popular, ever-decadent turtle.

Bringing people into the shop, Schadrie says, isn’t just about offering them sweet treats – like the ice cream served in their adjacent parlor. The chocolate may draw customers in, but ambience keeps them coming. “I like the romance of the ‘mom and pop’ shop,” Schadrie says.

“There’s still that Willy Wonka feel,” he adds, slyly noting there are, indeed, trade secrets behind closed doors – most decades old.

“Everyone has the [brands of] chocolate they use, and they won’t even share that with you,” he says. “There are some wonderful long-lived, high quality chocolate makers in the area,” he says, complementing – albeit not naming names – his cronies in cocoa.

“It’s just a bit more of a secretive business,” he notes, echoing a refrain heard by most of the chocolatiers.

“There are closely guarded recipes,” VandeWalle admits, not willing to share even a peep about his family’s popular (and anxiously awaited) seasonal angel food candy, except to note that it is “humidity sensitive” and very tough to make.


The camaraderie of confectioners

Secrets aside, the chocolate makers in Northeast Wisconsin do share an affinity as part of the region’s covey of confectioners – one that’s really more camaraderie than competition.

“There’s so much room for everybody,” says Garvey, who calls Wilmar – with its boutique counter and trademark awning – “a destination business.”

“We’re really happy in our little niche,” she says, which for them includes hand wrapped caramels, salted caramels, handcrafted chocolates and truffles.

Johanski adds that because they aren’t the biggest (and don’t aspire to be), that they don’t feel “competition,” per se. Their customers, she says, come for many reasons aside from chocolate – from the personal service, to the original recipes to the hard-to-miss history of the place.

But remember, as VandeWalle cheekily points out, “A vanilla cream is not a vanilla cream” everywhere. And, he notes, “Competition isn’t always a bad thing.”

He admits, however, that while local chocolatiers obviously are very familiar with the competition, they all have slightly different products, different recipes and different niches (like a homemade bakery at VandeWalles and a lunch and ice cream counter at Beerntsen’s in Manitowoc).

Chocolate companies may come and go – although most of the ones in Northeast Wisconsin have long-term and, often, family histories. But what doesn’t seem to change is the expectation not only for quality, dreamy can’t-eat-just-one chocolates. Rather it’s all about the charm, hand dipped in chocolate and topped with a dollop of satisfactory service.

“When you’re enjoying chocolate from a Northeast Wisconsin candy shop, you’re getting a memory,” says VandeWalle. “It’s more than just making candy. It’s about making people happy.”