Hanna burns brighter with ‘Made in America’ push

The line in Shakespeare’s Romeo and Juliet says “a rose by any other name would smell as sweet.” Nothing could be truer at Hanna’s Candle Company in Fayetteville, which is one of the country’s leading candle and incense providers.

Hanna’s makes scented candles under many brand names that are sold in numerous stores including Wal-Mart, Publix, Pier One, Sam’s Club, Sear’s, Aldi, Lowes, and Kroger. At Wal-Mart, they provide popular brand names such as the store brand Mainstays and the Better Homes and Garden brand.

Located in Fayetteville, Hanna’s is geared up already for holiday-related production. They now employ about 200 people with the workforce at other times of the year reaching about 140.

“We’re doing about three times our average amount right now,” said company founder Burt Hanna. “We’ll be shipping 40,000 (candles) to Wal-Mart just this week.”

HUMBLE BEGINNINGS
The company started in 1987 in Hanna’s basement in Fayetteville. He and his then wife started making potpourri to sell and customers suggested they should expand to candles. They developed a six-inch, three-wick candle that was a top seller until the cost of wax made it not as feasible to manufacture. It’s what helped the company get into Wal-Mart, Hanna said.

In 1987, he started with $4,000 and by 1989 was already making $800,000 in sales. By 2000, Hanna’s Candles was bringing in more than $60 million in sales.

“From 1997 to 2005 candles were on fire,” Hanna said of the popularity.

He also owned seven outlet stores in the region but closed those in 2002. They were to sell the slightly damaged candles or those that came off the line that were not up to par. The stores were a financial strain plus the company developed better methods so that cast-off candles were no longer a major issue, he said. That’s when the decision was made to close the stores and to focus on manufacturing.

The company uses an “in-line” manufacturing system that requires them to create a continuous line of small batches instead of one giant batch of scented wax. By making small batches, it’s easier to control quality as well as the smell concentration in the factory.

BUMPY ROAD
When the economy turned south around 2008, Hanna said sales on discretionary items like candles slumped. It was then that consumer good companies like S.C Johnson and Procter & Gamble began into innovate in air care products with plug-in scent items which grew in popularity with the likes of more expensive products from speciality retailers like Bed and Body Works.

Hanna said sales went below $10 million a year, a far cry from the height of the candle craze. Just two years ago Hanna said his company hit the bottom, as sales slumped so severely lenders threatened to foreclose on the property if one payment was missed.

Hanna said he hung on and never missed a payment.

In May 2012 he sold the building in Fayetteville where Hanna’s Candles operated and was able to pay off the bank loan with interest.

“It was hard for them to argue that I was in bankruptcy at that point since I had paid off the loan,” he said.

He now leases back a portion of the building he once owned to manufacture the candles.

WAL-MART’S AMERICAN MADE
New life has been breathed into Hanna’s Candle Company, largely thanks to a new three-year commitment from Wal-Mart that brought 60 jobs to the manufacturer. The move is part of the retail giant’s decision to bring more “Made in America” wares to its stores. The deal has brought the sales back to at least $30 million this year, Hanna said.

A recent commercial was filmed partially at Hanna’s Candles to promote Wal-Mart’s Made in America promise. In it, Fayetteville Mayor Lioneld Jordan talks about the value of investing in local companies.

“When you invest in a (local company) you help a city. When you help a city, you help the people,” he said.

Hanna added that the company has paid out $150 million in wages since it opened more than 20 years ago.

RECIPE FOR SUCCESS
Hanna is quick to say that the biggest part of the company’s success is because he has excellent employees. The company has worked to establish a culture with values including family, work, and creativity. The values are displayed on walls in the break room and throughout the plant.

He said one of the company’s biggest strengths is that “we aren’t afraid to try anything. In this case, ignorance can be bliss. If you have preconceived notions about what you can do, you don’t get as much done.”

Ask Hanna the company’s greatest weakness, and you’ll get a similar answer.

“Sometimes we’ve spent too much time and effort on things that won’t work,” he said. “Sometimes our biggest asset is our biggest (flaw).”

COMPETITIVE SPACE
Candle manufacturing is a fairly competitive sector that has has done relatively well, growing at an average annual rate of 0.9% to $1.6 billion from 2007 to 2012, according to IBISWorld analyst Nikoleta Pantevea. She expects the segment to grow in step with consumer income gains and improvements in the housing sector.

IBISWorld estimates there are 413 companies to share a market of about $2 billion this year between branded and private label products. Industry giant Yankee Candle holds roughly 50% of the premium candle segment, according to IBISWorld. That brand that dates back 150 years and was recently sold to consumer products company Jarden Corp. for $1.75 billion in cash and up to $55 million in additional payments based on the candle firm’s performance.

Yankee sells at a higher price point than the private label brands Hanna makes for numerous retailers.

Another headwind for candle makers has been the rising cost of paraffin wax, which is a byproduct of petroleum. Pantevea notes that more than 20% of the candle makers are located in the West, predominantly California, and a number of manufacturers have moved their businesses off-shore, which gives marketing potential to those who are manufacturing American-Made products like Hanna.

“I’m in it for the long term. If we’ve done a good job now, someone will be making candles at this company in 150 years,” Hanna said. “No one thinks 100 years down the road any more. Americans are so focused on just the next quarter.”

Staying focused is key to the company’s longevity. The biggest perceived threat to his company is “complacency and laziness,” Hanna said.

“I can’t control external threats so I don’t worry about it,” he said. “What I worry about is complacency. I’m not worried about the past; I’m focused on the future.”