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By Maureen Flanagan
Hospitality Mints LLC, in Boone, NC, has created a winning recipe for using mints and candies to advertise, promote and say "thank you." With a daily production of four million candies, the company serves more than 6,000 customers whose needs range from 1,000 candies to thousands of cases. The company's products are sold in customized wrappers and packaging that bears a customer's marketing message and logo. More than 9 million pounds of candy in 25 varieties are sold annually to major foodservice and advertising specialty distributors and specialty retailers.
In a November 19, 2004 transaction, Hospitality Mints was acquired by American Capital Strategies, Ltd. (Nasdaq: ACAS). American Capital completed the buyout with $46 million of financing. Texas Capital Bank provided a revolving loan facility and a senior term loan.
"Under American Capital's ownership, Hospitality Mints has opportunities to expand its product offering, further penetrate existing channels, enter new channels and increase production and capacity," said Allen Peterson, the company's President and CEO.
Hospitality Mints was founded in 1978 to produce soft candy dessert mints for food distributors in the Carolinas. After purchasing a food processing company near Boone, NC, the company diversified and expanded its product offerings and distribution, and established in-house printing capabilities. In 2000, a private-equity led investor group acquired the company and partnered with management to grow the business by introducing new products and diversifying its distribution channels.
Hospitality's core product offerings are buttermints, a nugget-shaped soft, creamy mint with a buttery, peppermint taste. The company manufactures buttermint variations for every taste, including flavored, chocolate-coated and jelly-filled. Hospitality Mints produces hard candies including peppermint, cinnamon and spearmint swirls, ice crystals, hard peppermints and fruitballs. The company also manufactures and fulfills sugar-free breath mints in a variety of flavors and shapes.
With a dominant market share, Hospitality Mints is the largest supplier of custom-imprinted mints to the foodservice industry. Its mints and candies are sold to key foodservice distributors such as Sysco and US Foodservice, leading national chain restaurants, as well as caterers, hotels and resorts, airlines, cruise ships, and sports arenas. Customers buy the company's soft or hard candies in individually wrapped packages that bear their logos, custom-designed imprints or a stock design such as "Thank You" or "Thanks A Mint."
Hospitality Mints is also a leading supplier of custom-imprinted confections to the ad specialty market. Its products are distributed through a variety of independent distributors and catalog houses which sell the company's customized products to customers who use candies as a token hospitality or merchandising tool.
In 2003, Hospitality Mints introduced its Party Sweets branded product line into the party store and other specialty retail channels. Party Sweets are buttermints that are individually packaged with a theme or event-related wrapper. The product is proving to be highly successful at major party store chains and has significant new customer prospects and growth opportunities.
The company also produces its candies on a contract manufacturing basis for other partners in the confectionary market.
"Hospitality Mint's business is thriving in all its market segments," said Jeff MacDowell, American Capital Principal. "In addition to a strong market position, the company sets itself apart from the competition with its proprietary manufacturing platform that allows for small runs and quick turnarounds - critical factors for the variety of businesses and customized accounts it serves."
Since 1997, American Capital has invested more than $3 billion in the middle market. It currently manages a portfolio of more than 100 companies in a broad range of industries, a number of which are in the food sector.
For more information about American Capital's portfolio click here. Hospitality Mints' strength in the foodservice market is projected to enable the company to increase sales and gain market share. Many restaurants, including chains and independents, are realizing that custom printed and wrapped mints are a low-cost method to increase brand equity and express gratitude to customers.
In the ad specialty market, mints continue to be an important part of the mix of promotional products and make up almost half of the confections spending through the advertising/specialty channel. As the overall promotional marketing sector rebounds with the economy, consumer spending on all promotional products will continue to grow. Hospitality Mints, with its strong distribution relationships and product portfolio, is positioned to increase its market leadership.
Opportunities in the specialty retail category are plentiful. These include customized mint and candy products for college bookstores, dollar stores, and club stores as well as craft and card/gift/novelty outlets. Professional sports teams are seen as another potential channel for expansion.
With its market strength, experienced leadership, and opportunities for growth in all its sales channels, Hospitality Mints is savoring its position as a highly successful business.
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