Our topic this Foodie Friday is the plight of The New England Confectionary Company, makers of NECCO wafers (did you know the name was an acronym?), Sky Bars, and Sweethearts, among other well-known candy brands. There is a fair chance that the 120-year-old company will soon be out of business. Their factory was sold and the company is actively looking for a buyer. The company has notified the city and state that layoffs may soon be coming. The situation is pretty dire.
Even though most of their brands are not really great candies (Sky Bar being the exception in my book), panic has ensued among fans of NECCO wafers. An article on Grubstreet highlights how fans have responded to one candy-selling website:
The site says that during the month of March, after the panic began, it received 253 emails and 167 phone calls from customers looking for Necco-brand candies. Twenty-nine people offered to pay at least double the going bulk rate, and three reportedly said they’d perform free labor in exchange for priority treatment. One woman wanted 100 pounds of Necco’s glorified Tums, which she planned to vacuum-seal to keep her prepper stash fresh “for years.” (A standard 24-wafer roll weighs 2.02 ounces, so she was requesting about 800 packs.) Another woman said she’d trade her late-model Honda Accord for all of CandyStore.com’s remaining Necco candy.
There is a lesson in this for any business since these hard-core fans seem to be preparing for a funeral rather than figuring out how to cure the disease. All of their panic buying is misplaced effort since what they should be doing is trying to get the company the capital it needs to continue operations. While 420 people may have asked how to buy candy, only 73 people have donated to a GoFundMe campaign the CEO has organized. He, by the way, is apparently clueless about the difference between donation crowdfunding and equity crowdfunding since he had to amend his campaign to say he can’t offer stock:
We have been informed by several people that we cannot offer shares in the company in return for your donations. We are sorry, we do not know if they are right or wrong but we can’t take the chance . If you would like us to return your donation just let us know.
He is apparently in panic mode too and hasn’t sought advice from anyone who is familiar with equity crowdfunding or maybe even an initial coin offering. Running scared will do that to you, although I know $20 million isn’t just laying around the street anyplace. I’d rather find customers than investors.
Worrying about the symptoms instead of the disease is generally a futile exercise in the long-term. I recognize that when someone is bleeding out you have to staunch the flow before you can worry about what caused it, but in this case, the efforts that have been made by fans of the company (buying up all the product) won’t be as effective as sending the money directly to the company. The company, for its part, hasn’t been very proactive. The factory was sold a year ago and this situation has been coming ever since. I don’t know how they involved their supply chain and their customers in stabilizing the situation, but the fact that they’re down to asking for money on GoFundMe (and it would be among the largest non-blockchain crowdfunding projects if it works) tells me that a lot of time was wasted.