Dear lemold-ga,
You requested information about the degree of vertical integration at
Tootsie Roll Industries (TR).
Wirehouse.com provides a good overview of Tootsie Rolls Industries at
http://www.wirehouse.com/research.asp?Ticker=TR
According to wirehouse.com, “the group's principal activities are to
manufacture and sell candy. The majority of the group's products are
sold under the registered trademarks tootsie roll, tootsie roll pops,
child's play, caramel apple pops, charms, low-pop, blue razz,
zip-a-dee-doo-da pops, cella's mason dots, mason crows, junior mint,
charleston chew, sugar daddy, sugar babies, anes and fluffy stuff.
The products are distributed through approximately 100 candy and
grocery brokers and by the group itself to approximately 15,000
customers throughout the United States. The customers include
wholesale distributors of candy and groceries, supermarkets, variety
stores, chain grocers, drug chains, discount chains, cooperative
grocery associations, warehouse and membership club stores, vending
machine operators, and fund raising charitable organizations.”
The company provides an overview of company acquisitions at
http://www.tootsie.com/history.html
TR has made many acquisitions of branded candy manufacturers – but
apparently had *never* acquired neither a raw materials manufacturer
nor a distributor. Therefore, if TR had embarked on any kind of
vertical integration, it would have developed such capabilities in
house.
TR’s 2001 annual report, available at –
http://www.tootsie.com/pdf/annualreport2001.pdf
claims the company “seek(s) to outsource functions where appropriate
and to vertically integrate operations where it is financially
advantageous to do so.”
The section on purchasing, however, states that “prices for the major
commodities we use firmed somewhat during the year,” again indicating
that it is not likely that the company does much in the way of
backward integration. Rather, they purchase raw materials on the open
market, and even hedge against extreme fluctuations is price.
The list of subsidiaries on the last page of the annual report,
however, provides some evidence of forward integration. For example,
the Henry Eisen Advertising Agency is listed as a subsidiary, as is a
company called TRI Sales. Clearly, these companies are not likely to
be in the business of manufacturing candy, and probably engage in
activities related to advertising and sales, respectively.
Following is a list of Tootsie Rolls Industries subsidiaries that are
likely to provide services that may be considered to be vertically
integrated (forward) -
Andes Services LLC
C.C.L.P.,Inc.
C.G.C.Corporation
C.G.P.,Inc.
TRI de Latino America S.A.de C.V.
TRI Finance,Inc.
TRI International Co.
TRI-Mass.,Inc.
TRI Sales Co.
Henry Eisen Advertising Agency,Inc.
J.T.Company,Inc.
TRI Sales Finance Company Ltd.
World Trade &Marketing Ltd.
I would conclude that there is no backwards integration at TR, and
that there is evidently some forward integration, mostly limited to
advertising, sales and financing.
Anecdotally, the Gordon family that has been in control of the company
for about 70 years acquired TR when the latter had difficulties paying
its bills. The Gordon family supplied packaging to the company before
the Depression... One may say, therefore, that the Gordon’s had
forward integrated into Tootsie Roll Industries! (H., 1998)
I hope this response adequately addresses your request.
Thanks,
ragingacademic
References:
H., W. (1998, Jan 12). Roll Model. Forbes, 161, 168.
Additional Links:
Hoover’s Online
www.hoovers.com
Search Strategy:
1) Copernic: “Tootsie Roll” and “vertical integration”
2) EBSCO: “Tootsie Roll Industries” |
