A decade ago, people would stop by the PEZ Candy factory in Orange, Conn., and find barriers set up to keep them from taking pictures or coming onto the property. But this was not the image the marketing-minded Joe Vittoria wanted when he took over as president and CEO in 2004, and it was one of the first changes he made.
“If there’s any innovation or thought worth something, it’s remembering who your customer is and what the brand means to many people,” Vittoria told CMO.com. “It’s important to recognize who you are.”
When people visit now, however, it’s a new scene. Vittoria built a 6,000-square-foot museum and visitor’s center offering the most comprehensive collection of PEZ memorabilia on public display in the world. More than 50,000 PEZ enthusiasts have stopped by in the past six months alone.
“It’s a small setup connected to the factory and was designed professionally. The goal is PR and to remind people about [PEZ’s] history,” said Vittoria, who, ironically, about 30 years prior as CFO at Henckels Cutlery contacted the owners of PEZ about acquiring the company--an inquiry that was rebuffed.
“The family knew it had a great asset and would never sell it,” he said. “Years later, while working at Pricewaterhouse/IBM, I got a call from the management and the question was, ‘Would you be interested in running Pez for us?’”
‘Wake Up The Brand’
The rest, as they say, is history. But taking over to lead the 85-year-old Austrian company was no easy task, even for an executive well-known in the business world for his branding and marketing experience.
“When I first got here, the factory and equipment were worn down. So were the offices, and the brand was just about forgotten in the market except for those that really loved it,” Vittoria said. “My first step was to put a plan together and rebuild the building, restructure the factory to become more efficient, more cost-effective, and look like a fun place.”
Vittoria met with the board and laid out a plan that would concentrate on all those objectives and additionally transition into more licensing, better branding, and finding a way to evoke a sense of nostalgia for the customer. But first, there were some immediate solutions to “wake up the brand.”
“I knew I couldn’t build the company if I’m not producing the product accurately, properly, at a high quality, and also with packaging that stands out,” Vittoria said. “We invested millions in getting things ready.”
PEZ now ships more than 150 million dispensers per year globally, which is about double what it had been prior to 2004. PEZ’s Connecticut home houses the North America operations and produces the candy, while its European headquarters produces approximately 50 percent of the dispensers. Its factories in China produce the other half, mostly hand-painted.
“I’m an old PEZ nut myself and have always loved the dispensers. There’s a certain quality feeling around PEZ as a brand,” Vittoria said. “Parents bought dispensers and put them in stockings at Christmas, and that’s how many people remember them. They don’t remember the candy as much as the great memories attached to every PEZ dispenser that they bought.”
Vittoria’s day soon became about figuring out how to capture this feeling without losing what PEZ was while keeping it current.
“That’s why we went with more licensing as a strategy. If a movie is coming out, Disney or Marvel, for example, would come to us early in the development process and suggest doing certain characters. They send us preliminary shots, and we work on the characters and how we’ll position them on the dispenser,” he said. “It’s all about trying to find that one character that will bring more kids back to the brand, and this process has been working the last eight years.”
PEZ already had a long history with Disney as its second longest licensee. Vittoria also brought in other strong names, such as Major League Baseball, NCAA Football, and Hello Kitty, to the mix. Currently, licensing accounts for nearly 60 percent of PEZ business, though its No. 1 best-selling character to date—Santa Claus—is not a licensed product.
Beyond Product Licensing
In addition to going heavy with licensing, Vittoria had other innovative ideas—“silly things,” he said. His first was creating the first-ever collector’s set, a series of nine Star Wars PEZ dispensers.
“We put them all together in one box, set a sensible price, and numbered them. We sold half a million right off the bat, and that was a huge success and great PR,” Vittoria said. “We woke up our business, our collector base, and we also woke up the general consumer to Pez. Sets have become very popular and so much a part of our business.”
Next, he set out to broaden PEZ’s demographics and focused on the Teutuls from Orange County Chopper (OCC).
“We were interested in making a Pez motorcycle, and OCC was the hottest thing on cable TV, so I called them and agreed to make a small set of the three Teutuls,” he said. “It was a way to waken up the young boys, the 8-to-14 demographic, but believe it or not, we woke up young women. The show’s No. 1 demographic was women 16-to-45.”
The immediate publicity that came with the limited edition set was incredible. The PEZ dispensers were discussed on major talk shows, such as Late Show With David Letterman, where the product was featured in the show itself (which averages more than 3 million viewers and episode). The buzz surrounding PEZ was at its highest level since a Tweety Bird dispenser made an appearance on Seinfeld.
“We try to take what’s currently popular and adapt it to PEZ,” Vittoria said. “If you can and do it in a way that’s consistent with the company’s clean, wholesome, well-designed reputation, and make something not controversial yet something people talk about, that’s a win.”
Such thing as too much PEZ?
While others have encouraged Vittoria to ramp up PEZ’s collector sets, the wise businessman knows it’s more important for the brand not to saturate the market and ruin a good thing.
“For us, we wanted to keep the brand growing, but not overdo it with sets, and we’ve only done one to two a year since then,” he said. “The only way to create collectability is to create scarcity. Also, we don’t want to abuse our collectors. We don’t want to treat them as just another way to make money.”
So PEZ continues to innovate, developing and marketing, for example, different types of dispenser.
“Years ago it was a PEZ dispenser with a head on it, and you simply tilted the head back. That was great, but how do you make Superman? He would be just a guy with a nice curl on his forehead,” Vittoria said. “We made some changes to the standard look, but kept the dispensers somewhat traditional looking. This opened up a whole, new market of characters that could never have been done before because the character didn’t stand out enough.”
Today, you can see the “S” on Superman’s chest, Princesses and Bratz characters are depicted from the waist up, and Disney Fairies have wings. In addition, last year, the company tested 2.5 million “pull n go” magnetic detachable cars, where the cars could come off the tops of the PEZ dispensers, leaving a tire as its head, and allowing the pull back cars to be played with.
“It was huge, and this year we will have Hot Wheels on it,” Vittoria said. “We are building a million, and what we really want to understand is if there’s more to PEZ than just the simple dispenser in its original form.”
Vittoria hinted that the idea may lead to a Classic Car collection to be put on PEZ dispensers in the same form.
Another new venture involves an educational PEZ series: the complete set of U.S. presidents, five at a time, available every six months.
“Candy companies are not always seen as educators. With the educational series, the goal is to create a product that teaches,” he said. “It tells the story of the president and what he’s famous for, and we will not skip a president.”
The marketing of the presidential dispensers, Vittoria said, will follow the same old-time concept of when encyclopedias were sold in stores, with a new one being offered every few months until someone had the whole set. Although Vittoria knows it’s not going to be a profitable venture (“the volume will be too minimal”), he believes it’s another important way to get the PEZ brand back in the minds of consumers.
Since coming on board, Vittoria also has revved up PEZ’s participation in social media, dedicating employees to both the U.S. and European versions of its Facebook and Twitter pages. The company has amassed thousands of Twitter followers and more than 100,000 likes on its Facebook page globally. People are talking about PEZ products at all times of the day.
“We like to use social media as a way to talk about things happening and upcoming, more as an informative platform,” Vittoria said. “It’s an area you have to be involved in these days, and we’ve learned about some interesting dynamics from it.”
A strong global company, PEZ also has been growing in Europe, where it altered its initiatives a bit to tackle its fan base there.
“We reinforced the collector base in Europe, as well. Europe has a slightly different consumer base—they are younger—and our goal is to broaden our demographic there,” Vittoria said. “In Europe we have also done lunch box tins with Hello Kitty and Thomas the Train. Barbie tins are planned for Europe and the USA in 2012.”
Going back to the visitor’s center, Vittoria said it could be a possible precursor to another part of the model he originally presented to the board upon taking the job.
“We will potentially be opening retail stores in key markets,” he said. “We have enough product to fill a store. We’re thinking possibly Vienna, Austria, downtown near the original factory, and even New York.”