Fleer Corporation - Company Profile, Information, Business Description, History, Background Information on Fleer Corporation

1120 Route 73
Mount Laurel, New Jersey 08054

History of Fleer Corporation

The Fleer Corporation holds a special position in the history and development of two quintessentially American activities: bubble gum and trading cards. After nearly seventy years, Fleer continues to manufacture more than four million pieces of its Dubble Bubble--the original bubble gum--each day. As one of the top three trading card companies, along with Topps and Donruss, Fleer sells about $300 million per year in sports and entertainment cards. Sports, including baseball, basketball, and football, account for roughly $225 million of these sales. Fleer also manufactures a line of cards tied in with parent company Marvel's comic book heroes. Other card series bearing the Fleer name are Fleer Ultra MTV Animation, featuring the 1990s cultural icons Beavis and Butthead, and television and film tie-ins such as the Mighty Morphin Power Rangers, Casper, and Batman. In 1995 Marvel purchased SkyBox, merging its established line of basketball cards with Fleer. Fleer also manufactures candy canes through its Asher Candy subsidiary, a New York-based candy manufacturer purchased by Fleer in 1990.

Frank Henry Fleer was involved with chewing gum long before his company made history with the invention of bubble gum. The first incarnation of the Fleer family business was founded in 1849 by Otto Holstein, a German Quaker who built a flavoring extracts factory in Philadelphia. Fleer, born in 1860, joined the business after marrying Holstein's daughter and took over operations in the 1880s. Around 1885, Fleer's company began making chewing gum, adding its flavorings to the chicle gum base popular at the time.

Chicle, the dried sap from the South and Central American sapodilla tree, was first brought to the United States by the former Mexican president, dictator, and general Antonio Lopez de Santa Anna, whose exploits included the attack on the Alamo. In 1869 Santa Anna, who was living in exile in Staten Island, brought chicle to the attention of Thomas Adams. Adams agreed to try to invent a useful product with Santa Anna's chicle, eventually producing a chicle-based chewing gum. Sales of Adams's "New York No. 1" gum were slow at first, but helped by the inclusion in each box of gum of a "prize package" of tickets redeemable for prizes. Adams's business boomed, and soon chicle became the most widely used chewing gum base. The chewing gum habit quickly spread across the United States. Adams later became the first chairman of the American Chicle chewing gum trust, formed in 1899 from the country's five largest chewing gum producers.

In the late 1880s, trading cards made their debut. The honor for the first such insert is generally given to James Buchanan Duke, the tobacco magnate and popularizer of pre-rolled cigarettes. When Duke first began to produce packages of his cigarettes, he needed a way to keep the packages from being crushed during shipment. He added a strip of cardboard into the package and shortly after began to feature advertisements on the cardboard strips. Duke's first ads included graphics of popular actors and actresses of the time; by the late 1880s, however, other tobacco companies were adding cards to their packages featuring baseball players. By 1890, some twenty-five sets, or series, of baseball cards had been issued. The inclusion of trading cards would do much to popularize the use of tobacco, and especially cigarettes.

The Fleer family business continued making chewing gum, adding cola flavor to the chicle gum by 1897. During the 1880s, Fleer became one of the first companies to sell its gum in coin-operated vending machines. As related in The Great American Chewing Gum Book, Frank Fleer had been approached by a vending machine salesman with a proposal to sell Fleer's gum in the machines. Fleer was skeptical, but when the salesman asserted that the machines were such a novelty that people would be willing to use them even if they received nothing for their penny, Fleer agreed to put the machines to the test. A vending machine was placed at New York City's Flatiron Building, where people were told to "drop a penny in the slot and listen to the wind blow." People did just that, by the hundreds, until the machine was taken away by the police. Fleer ordered several of the vending machines.

Fleer's company developed two more significant products around the turn of the century. The first was created by Fleer's brother, Henry Fleer. At the time, candy-coated almonds were a popular treat, and Henry Fleer hit on the idea of coating small pieces of chicle gum with candy. Showing the initial results to his brother, Henry Fleer purportedly referred to his new candy as "little chiclets." Frank Fleer liked the name. "Chiclets" became a huge success, and would remain one of the best-known brand names for chewing gum throughout the next century.

By the turn of the century, gum chewing was firmly entrenched in the United States and spreading throughout the world. The companies that would dominate the chewing gum industry through the Twentieth century--American Chicle, Wrigley, and Beech Nut--were already established as the big three of the industry. Yet, while chewing gum could be stretched and pulled and chewed, it could not blow a bubble. Frank Fleer set to work. Instead of chicle, he experimented with other bases, moving toward a synthetic compound most likely based on natural rubber latex. In 1906 Fleer introduced the world's first bubble gum, called "Blibber-Blubber." The gum, while able to blow bubbles, had its drawbacks: it was hard to chew, it fell apart too easily, and it was difficult to blow bubbles with. Worse, the gum was nearly impossible to remove from the face or whatever surface the bubble burst upon. In 1909 Fleer sold his chicle chewing gum company to the Sen-Sen Company, which, renamed as the Sen Sen Chiclet Company, was later merged into American Chicle.

Fleer was not yet finished with gum, however. In 1913 he went back into business, forming the Frank H. Fleer Corporation, still in Philadelphia. Terms of the sale of his former company prevented him from returning to chicle-based chewing gums. Instead, the new company manufactured other confectionery products, including Fleer's Bobs and Fruit Hearts. This may have been the first Fleer product to include trading cards--a set of 120 cards featuring entertainers and athletes, including Babe Ruth, Gloria Swanson, and Mary Pickford, issued in 1923. Fleer had not yet given up the pursuit of bubble gum, even after Frank Fleer retired and the company was taken over by his son-in-law Gilbert Mustin. Frank H. Fleer died in 1921.

The search for bubble gum continued until August 1928, when, after a year of trial-and-error experiments, Walter Diemer, a 23-year-old Fleer cost accountant with no background in chemistry, hit upon the right combination of ingredients. Not only did the batch produce a large bubble, but the gum didn't stick when the bubble burst. The first batch had its problems, however: after sitting overnight, it would not blow bubbles. Diemer worked on the problem for another four months, finally preparing a 300-pound batch that proved successful. The next day, while preparing a second batch of the new formula, Diemer realized he had forgotten to add coloring. The only food coloring at hand was pink, so Diemer added that. Bubble gum has been predominately pink ever since.

The new gum, composed of natural ingredients, was dubbed Dubble Bubble and first tested at a small Philadelphia candy store on December 26, 1928. Fleer developed the market further by offering free samples of its product to candy, drug, and grocery stores. The product proved wildly successful. Diemer did not, however, patent his formula--he did not want to reveal its secret--and soon imitations rushed on the market. Dubble Bubble nonetheless dominated the market, far surpassing any other bubble gum in sales. Its biggest competitors were the Bowman Company's Balony bubble gum and, shortly before World War II, the Topps Company's Bazooka bubble gum. Fleer also produced trading cards in the years leading to the war, including a Cops and Robbers set in 1935, but these were packaged with its other confectionery products, not with its bubble gum, which were small balls wrapped like taffy and sold for a penny a piece. Novelties were nonetheless an important element of the bubble gum business from the beginning; early on Fleer added a comic strip--starring Pud&mdashø the inside of the Dubble Bubble wrapper.

By the beginning of the war, bubble gum had grown to a $4.5 million industry. However, shortages of jelutong, a Asian gum essential to the manufacture of bubble gum, forced Fleer and many other bubble gum makers to halt production during the war. After the war, the bubble gum shortages continued, so much so that a "pink" market developed that saw a penny piece of Dubble Bubble often sell for as much as $1. The bubble gum craze boomed, and by the mid-1950s accounted for ten percent of all chewing gum sales. By then, Gilbert Mustin had passed leadership of Fleer to his sons Gilbert Jr. and Frank Mustin.

Chewing gum makers had long included trading cards, and especially baseball cards, with their products, but the success of Dubble Bubble made it unnecessary for Fleer to resort to this type of marketing. Instead, by the 1950s, the bubble gum trading card market was owned by Bowman, which would be challenged and later bought up by Topps. By the time Fleer made its first attempt at baseball cards--with an 80-card Ted Williams commemorative set in 1959--Topps had exclusive contracts with nearly every player in the major leagues, and much of the minor leagues as well. Fleer produced two more sets of commemorative cards in the first two years of the 1960s. But Topps, with its trading cards, promotional offers and tie-ins, and gifts for its retailers, soon pushed Fleer to the margins of the industry.

Fleer next attempted to produce sets featuring contemporary ballplayers. Topps, however, had already signed practically all of Major League Baseball to exclusive contracts, which were signed with individual players and set to expire at varying times. Fleer began signing up minor league players, hoping to be able to produce a full set of cards. With over 3,000 players signed, Fleer released a 66-card set in 1963. Topps quickly won an injunction again Fleer from producing more baseball cards. Topps' contracts gave Topps not only a monopoly on major league baseball, but also the exclusive right to market their cards with any gum, candy, or confectionery product. The courts upheld Topps' exclusivity, and Fleer stopped producing baseball cards. Fleer sold its players' contract to Topps for $395,000 in 1966. Fleer could, however, market other types of cards, and through the 1960s, it produced sets of commemorative baseball, American Football League, and National Basketball Association cards; entertainment sets such as Casper, Indians, Three Stooges, Gomer Pyle, Hogan's Heroes, McHale's Navy, Drag Strip racers; and novelty cards like "Baseball Wierdohs." Baseball cards, however, remained the most important trading card market. Fleer's annual sales in the late 1960s and early 1970s ranged from $8 million to $12 million per year. Net income reached a high of $382,300 in 1973. The following year, however, Fleer posted a loss of $309,000, its second losing year since 1969.

In the late 1960s, baseball's newly formed Players Association approached Fleer with a trading card contract offer: for $600,000, Fleer would gain exclusive rights to market baseball cards with gum, once Topps' contracts ran out in 1973. Fleer did not want to wait that long, however, and turned down the offer. Through the 1970s, Fleer remained a small, family owned business. Its president, Don Peck, who had been with the company since 1952 and named president in 1966, introduced new products to increase Fleer's market share, but still wanted to bring Fleer into the baseball card market. Realizing that he had made a mistake when he turned down the association's offer, Peck once again faced Topps' lock on the market.

This time, Fleer took Topps to court, filing an antitrust suit against Topps and the Players Association in Philadelphia in 1975. Meanwhile, the bubble gum market was growing, reaching $100 million in sales and a 20 percent share of the entire chewing gum market by the mid-1970s. Fleer was turning out more than five million pieces of Dubble Bubble each day. More and more companies were making bubble gum. But in 1976, a new entry created Fleer's biggest challenge--a new type of soft bubble gum created by Lifesavers Inc. called Bubble Yum. Other companies, including Fleer, brought out their own soft bubble gum products, which helped the bubble gum market reach new heights--Bubble Yum alone sold $100 million in 1979. Fleer's sales, which now included its Gatorgum, flavored with Gatorade, alongside its Dubble Bubble gum, grew to $15.6 million in 1978 and to $20 million in 1979. In that year, its suit against Topps finally came to trial. Fleer was granted the right to produce baseball cards (although, in a later court action, Topps retained the exclusive right to package its cards with gum). Fleer was also awarded $1 in damages. The baseball card market was then worth about $10 million per year.

Fleer's first Major League Baseball set appeared in 1981. Subsequent sets included team logo stickers instead of gum. Through the 1980s, Fleer added basketball cards and, by the end of the decade, football cards to its line. Sales rose to $51 million by 1988, with a net income of nearly $11 million. By then, the Mustin brothers were aging, and it was apparent that their children were unlikely to succeed them in the family business. In 1989 Paul Mullan, a former executive with another Fleer competitor, Donruss, approached Fleer with a $75 million leveraged buyout offer. The Mustins agreed. The following year, Mullan's Charterhouse Equity Partners took Fleer public, selling 1.9 million shares to raise $30 million. A secondary offering in 1990 raised an additional $12.2 million. Revenues in that year rose to $144 million, with a net income of $21.5 million. As the 1990s began, Charterhouse acquired the Asher Candy Company of New York and its line of candy canes, with the intention of expanding further into the candy and confectionery market. In 1991 Charterhouse sold its equity interest in the company; Mullan remained chairman and chief executive officer. That year, Fleer began to segment its products, introducing a premium series, the Fleer Ultra card.

In 1992 Fleer agreed to be acquired by Marvel Entertainment Group for 28 cents per share, or $265 million, a figure that analysts considered low. The Fleer-Marvel pairing nonetheless seemed a perfect match, combining the passions--baseball cards and comic books--of both companies' target market, which comprised boys between the ages of six and sixteen. Under Marvel, Fleer, which was reorganized as the Fleer Entertainment Group, introduced the new Fleer Flair premium trading card line, while adding new lines featuring Marvel comic book heroes, such as the X-Men. Fleer also issued its first National Hockey League cards in 1992.

In 1994 Fleer acquired the Panini company to expand its European presence. After the baseball strike of 1994, Fleer stepped up its production of entertainment cards, including television and movie tie-ins, and in 1995 also acquired SkyBox--for $150 million--allowing it to increase its position in basketball and entertainment cards, and to lessen its reliance on the volatile sports market. By then, Fleer's sales had topped $300 million. And in the booming trading card market--which topped $2 billion by 1995--Fleer, which still makes more than five million pieces of Dubble Bubble each day, had not yet seen just how big a bubble it could blow.

Additional Details

Further Reference

Ambrosius, Greg, "The History of Fleer," company document, Mt. Laurel, N.J.: Fleer, 1995.Hendrickson, Robert, The Great American Chewing Gum Book, Radnor, Penn.: Chilton Book Company, 1976.Seideman, David, "RBIs and LBOs," Philadelphia, May 1990, p. 87.Smith, Geoffrey, "The Dangers of Playing It Safe," Forbes, October 29, 1979, p. 95.Williams, Pete, Card Sharks, New York: Macmillan, 1995.Wyatt, Edward A., "Big-League Performance: Can Fleer Extend Its Torrid Growth?" Barron's, November 19, 1990, pp. 16, 18.

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