Detroit candy icon Sanders launches expansion

Revamped company banks on sentimentality for revival, but targets younger generation, other states for expansion

Jaclyn Trop / The Detroit News

Sanders, one of Detroit's most beloved brands, is finding new legs for its boxed chocolates, ice cream toppings and egg salad sandwiches after nearly fading from the retail landscape several years ago.

The confectioner, which traces it roots to a rented Detroit storefront in 1875, was for decades a staple along Woodward and suburban main streets, once counting some 60 stores and lunch counters in the metropolitan region.

But generations of Detroiters were left with only fond memories of lunch and dessert at Sanders when the last of the company's stores closed in the mid-1990s, after decades of financial woes and new ownership.

Now, nearly 135 years after its founding by Fred Sanders Schmidt, the company is enjoying resurgence under the roof of another local candy giant, Morley Brands LLC. Not only are new stores opening and more Sanders products returning to grocers' shelves, but the brand's owners, a team of private investors, are determined to take Detroit's sweetheart nationwide.

"We thought, why reinvent the wheel?" said Brian Jefferson, chairman of MCM Holding Co., the group that owns Sanders and Morley's. "We know what Fred's philosophy was: European-style chocolate at a reasonable price. Why can't we capture that?"

Banking on a lingering appetite and sentimentality for Sanders confections, the owners are reinvesting heavily in new stores, packaging and menu items, while forging partnerships with national retailers, such as Kohl's, Macy's and Bed Bath & Beyond.

The revival will be slow, starting locally and spreading through the Midwest before a nationwide launch. Just a few weeks ago, the company opened a flagship store at Twelve Oaks Mall in Novi. The shop, brightly lit and outfitted in yellows, oranges and browns that mimic the chocolate maturation process, is a prototype for future Sanders locations, complete with soda fountain and low-slung counter seating.

So far, Metro Detroiters are eating it up. The private company has grown at a 20 percent clip the past two years, with sales nearing $15 million in 2008. Five years after opening a Sanders store in Livonia, the company expects to operate a dozen locations and kiosks around the suburbs by the end of the year.

Many reasons for original demise

That's a far cry from Sanders' heyday, when the empire boasted several stores along Woodward Avenue in Detroit and in most suburban communities. Its 400,000-square-foot Highland Park plant employed hundreds of workers who concocted everything from chocolates, ice cream and toppings, to cookies, donuts and bread, to colonial butter cream and bumpy cakes.

Annual sales were in the tens of millions, and Sanders products could be found in major grocers, drug stores and department stores.

But the company struggled in the 1970s and 1980s, filing for bankruptcy three times before being sold to Country Home Bakers of Connecticut.

A decade later, after continuing to lose market share to national brands such as Hershey and Mars, the last of the Sanders stores closed. The brand was sold to Morley earlier this decade.

Ice cream toppings and boxed chocolates still were available on grocery store shelves, the only reminders of founder Fred Sanders Schmidt's legacy. Beyond its impact on Detroit's palate, the company was noted for industry innovations, including carry-out service, low counter tops and ice tray packages, the beginning of take-home packaged ice cream.

"I could sit here and try to tell you all the reasons it went to nothing: zero stores -- at one point they were even down to $500,000 in sales -- but the problems were so numerous that it's beyond (the) pale," Jefferson said.

A down economy, weak leadership, failed banking relationships and overexpansion each played a role in its demise, he said.

"Back in the heyday of the 1920s and 1930s, Fred Sanders was up there with Edison and Ford," Jefferson said while in the company's Clinton Township factory, which also manufactures private-label chocolate for Disney and Dollar Tree among many others. It's so busy that the executive team works the assembly line during lunch breaks. "We haven't had two shifts running like this in 20 years."

Some retooling required

Sanders, once a prolific machine that pumped out dozens of new products, cannot thrive unless it gains traction with younger generations and appeals to chocoholics beyond Michigan.

Out-of-staters are unlikely to feel sentimental over a brand whose history is contained in southeastern Michigan, where it dominated the candy market for nearly a century.

But Sanders' strong family heritage and American-made identity will be "strong selling points" in a national market, said Louise Kramer, a spokeswoman for the National Association for the Specialty Food Trade.

The company's dark chocolate sea salt caramels and butterscotch caramel topping show Sanders is in touch with sweet trends nationwide, she said.

Instead of playing on heartstrings to make a sale, Sanders is hoping a new slogan -- "chocolate worth sharing" -- coupled with tasty products in attractive packaging will win over new palates.

The Herculean effort means retooling every detail about the brand. The company spent hundreds of thousands of dollars reviving the block-letter logo from the 1920s to reprint on new packages and take-out coffee cups, while painstakingly recreating the tried-and-true recipes of yesteryear.

Millions of dollars have gone into developing and marketing new products, including coffee drinks with real whipped cream and hot fudge or caramel topping; three toppings (dark chocolate peppermint pattie, caramel apple and cinnamon pear caramel); and cookies with Sanders candy pieces.

"People always want to know when we will be bringing back their favorite Sanders item," said Mike Koch, vice president of operations. "Our goal is to help bring back those memories while helping to create new ones for the next generation."

Sanders plans to continue building stores locally before spreading regionally. A Morley Candy store in downtown Rochester will be transitioned into the Sanders brand next month. Some of Sanders' current locations, such as Grosse Pointe, likely will be remodeled in the image of the Novi shop.

"If we hadn't started opening stores five years ago, we'd have lost a whole generation," said Diane Lynch, a longtime Sanders employee who now works under the new ownership.

Good memories

Older generations are pleased to see Sanders return.

"It means everything to me," said Helen Keast, 90, of South Lyon. "It was my life."

Keast began working for Sanders as a soda fountain girl at the downtown store after high school graduation, and moved up into supervisory and managerial positions over the next decade.

Daily lunch traffic in Novi has mostly included customers like Nancy Paggi, 55, of Farmington.

Generations of her family, beginning with her grandmother and ending with her children, dined at Sanders until the last store closed more than a decade ago. Paggi and her mother recently sat at a counter, eating egg and tuna salad sandwiches and hot fudge sundaes.

"It just brings back good memories," Paggi said. "Good feelings."

jtrop@detnews.com (313) 222-2300