In some ways, Ellen Gordon is a typical Midwestern grandma. Really, great-grandma. She has a pleasant smile, a wonderfully coiffed hairdo that appears prefer it’s refreshed on the salon as soon as a month, and a signature wardrobe of blazer-and-turtleneck combos, usually completed with an identical brooch. And identical to my very own grandmother, I might guess good cash Ellen has a chunk of sweet tucked away in her purse, able to be slyly slipped right into a grateful little hand.
However for Ellen’s grandkids and great-grandkids, it in all probability will not be a Werther’s Unique. Odds are, it will be a Tootsie Roll.
Ellen Gordon is not simply your unusual candy-purse-hiding grandmother. She would not personal a stash of Tootsie Rolls purchased from a retailer. She owns Tootsie Roll. The entire firm. And even higher, she’s not a disconnected heiress passively cashing dividend checks. She’s the CEO! Even at 93 years outdated, she’s nonetheless the lively, day-to-day CEO of Tootsie Roll Industries, which is a publicly traded firm! Oh. Yet another factor that makes Ellen Gordon barely completely different from most grandmas. She’s a billionaire.
(UPI Photograph/Invoice Greenblatt through Alamy)
Earlier than I dive into Ellen’s story, I wish to spotlight how a lot I like stumbling throughout a random model I at all times assumed was simply one other cog in some huge company machine, solely to search out out it is truly a publicly traded firm. Tootsie Roll is unquestionably my favourite, however listed here are another enjoyable examples:
Take LaCroix, for instance. Most individuals in all probability assume that La Croix is one among a thousand manufacturers owned by a large beverage conglomerate like Pepsi or Coca-Cola. Nope. It is publicly traded beneath the ticker “FIZZ.” FIZZ additionally owns Shasta and the Juggalo-approved Faygo.
WD-40? Public. Crocs? Public!
Even Construct-A-Bear Workshop is publicly traded and has completely ripped within the final 12 months! FYI: Within the final 12 months, Construct-A-Bear’s inventory value (ticker: BBW) has elevated 120%. That is greater than 10x the returns of the S&P 500 in the identical time interval. Sadly, the identical cannot be stated for Crocs (ticker: CROX), which is down 40% within the final 12 months because of tariffs hitting its abroad manufacturing in Vietnam, China, and Mexico.
A Sweet That Would not Soften
The origin of the Tootsie Roll begins with an Austrian immigrant named Leo Hirshfield (typically spelled “Hirshfeld”), who landed in the USA in 1884 and settled in Brooklyn. Leo got here from a household of sweet makers. It was all he knew find out how to do. And by 1896, he had opened his personal small sweet store specializing in conventional Austrian chocolate bars.
However there was an issue.
Leo shortly discovered that conventional Austrian chocolate bars melted right into a messy liquid after sitting within the New York Metropolis summer season warmth for just some minutes. Moreover, if he needed to mass-produce and promote sweet bars across the US, most can be ruined by the identical warmth throughout transportation. So, Leo determined he would attempt to invent a sweet that tasted and seemed like chocolate, however would not soften within the warmth. He additionally compelled himself to make use of economically reasonably priced chocolate options so the top outcome can be low cost sufficient for a child to purchase. He named the sweet after his daughter Clara, who, since she was a child, had passed by the title “Tootsie.“
The “Tootsie Roll” was a smash hit within the New York Space proper out of the gate. Youngsters and adults alike beloved this little chocolate deal with that would sit in a pocket for hours on a sizzling summer season day and nonetheless style as recent as ever.
In 1917, Leo reincorporated as “The Sweets Firm of America.” In 1922, the corporate was publicly listed on the New York Inventory Trade. All through all of it, Leo continued inventing new candies. A type of innovations, the Tootsie Pop, grew to become particularly well-liked through the Nice Despair and Mud Bowl period. At a time when nearly all of Individuals have been coping with unimaginable monetary stresses, the Tootsie Pop was an reasonably priced but enjoyable deal with that introduced a bit little bit of pleasure to a principally joyless time.
New House owners & WW2
Regardless of their product’s recognition, like most American corporations, through the early Thirties, the Sweets Firm of America fell on arduous occasions. In 1935, a person named Bernard D. Rubin efficiently pulled off a semi-hostile takeover of the corporate and changed Leo as President. One in all his first instructions as President was to extend the scale of the Tootsie Roll. He additionally tweaked the unique components barely to make it much more chocolate-like.
In 1938, Bernard moved the manufacturing services out of Manhattan to close by Hoboken, New Jersey, the place each lease and labor have been barely inexpensive. These small enhancements went a protracted strategy to revitalizing the corporate’s fortunes, nevertheless it was the Second World Warfare that made them greater than ever.
Throughout World Warfare II, Tootsie Rolls have been included in each American soldier’s subject rations. As soon as once more, the truth that the sweet stood up properly in each excessive warmth and excessive chilly made the Tootsie Roll an ideal deal with for a soldier at struggle.
Ellen & Melvin
When Bernard Rubin took over in 1935, the Sweets Firm of America was producing $1 million a 12 months in income. That is the identical as $23 million as we speak after adjusting for inflation. By the point he died in 1948, the corporate was producing $12 million a 12 months. That is equal to roughly $160 million after adjusting for inflation.
Upon Bernard’s loss of life, the corporate handed to his brother William B. Rubin. After William grew to become sick in 1962, he handed the reins to his 30-year-old daughter, Ellen. Technically, Ellen grew to become President and Chief Working Officer, and her husband, Melvin Gordon, grew to become CEO. Melvin had been on the corporate’s board of administrators since 1952. Ellen and Melvin married in 1950. In 1962, they modified the corporate title from the Sweets Firm of America to Tootsie Roll Industries. Round this time, the corporate’s company headquarters was moved to Chicago, Illinois.
Over the subsequent 5 a long time, Ellen and Melvin steadily co-ran Tootsie Roll Industries collectively. The corporate launched or acquired a handful of latest manufacturers, together with Charleston Chew, Junior Mints, Sugar Infants, Blow Pops, and Dubble Bubble.
Ellen and Melvin weren’t typical Wall Road CEOs. Just about each single publicly traded agency on earth produces shiny quarterly stories, has a complete group devoted to investor relations, holds quarter analyst calls, and places on an annual promotional convention for buyers. Tootsie Roll Industries, against this, by no means spoke to reporters. They did not maintain investor conferences. Did not conduct quarterly earnings calls. And its quarterly earnings releases have been usually badly scanned PDF recordsdata. It might have been unorthodox, nevertheless it labored. Beneath is a chart of TR’s inventory value over the past 40 years, since 1985. As you may see, it is a gradual and regular march upwards:
Quiet Sweet Billionaires
On the time of Melvin’s loss of life in January 2015, on the age of 95, Tootsie Roll had a $2 billion market cap. Ellen and Melvin owned 49% of the corporate’s fairness. That gave them a mixed paper web price of $980 million.
On the day Melvin’s loss of life was introduced, TR’s inventory value truly jumped 7% on the concept that perhaps it will now be in play as an acquisition goal. Nope. Quick ahead a decade to the current, and Ellen has continued her gradual and regular stewardship of the 103-year-old firm.
At present, Tootsie Roll’s market cap is $3.25 billion. The inventory is buying and selling close to an all-time excessive. Ellen instantly owns 48.67% of the corporate’s shares. Utilizing the corporate’s present $3.25 billion market cap, meaning Ellen Gordon’s web price is $1.58 billion.
What makes Ellen and Tootsie Roll’s story much more gorgeous is that by all affordable logic, in some unspecified time in the future within the final century, the corporate completely ought to have been swallowed up by Mars, Hershey, Warren Buffett, or a dozen different candy-minded suitors.
Think about the destiny of fellow Chicago sweet magnate Wrigley Firm. William Wrigley took his gum empire public in 1919. Quick ahead 117 years to 2008, and Mars acquired Wrigley for $23 billion. Care to guess who Mars partnered with to seal the deal?
Warren Buffett.
Warren’s firm, Berkshire Hathaway, offered $4.4 billion of the $23 billion buy value.
And Tootsie Roll couldn’t be a extra good acquisition goal for Buffett. First off, he is 95, simply two years older than Ellen. In order that they in all probability have lots in widespread and a number of shared experiences. However extra importantly, it is a family-run enterprise with a beloved model, Midwestern values, and regular money circulation. Additionally, Warren is famously obsessive about sweet and sweets. Berkshire Hathaway owns roughly 9% of Coca-Cola’s shares, and it wholly owns See’s Candies. I might guess my life Warren has Ellen’s telephone quantity on velocity dial.
Ellen Gordon could seem like a typical Midwestern grandmother, however she’s a 93-year-old billionaire CEO who controls one among America’s most iconic sweet corporations — proof that appearances could be deliciously deceiving.
Full disclosure: I don’t personal any shares of Tootsie Roll (or any of the opposite shares talked about earlier on this article). I do personal a couple of Berkshire Hathaway Class B shares.
PS: In case you have been questioning, the rumor that you just get a free bag of Tootsie Pops from the manufacturing unit should you discover an Indian taking pictures a star in your wrapper… is false. It is truly by no means been true within the firm’s total historical past, they usually don’t know the place that story got here from. To today, they get a whole lot of letters each week from individuals all around the world in search of their free bag of lollipops.
