What do you do when you think cigarette smoke is disgusting and you are a bit of a germaphobe? Create a collectable candy empire, of course.

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

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Dave Young:

Welcome back to the Empire Builders Podcast. And I’m Dave Young, alongside Stephen Semple, where we’re talking about empires. And Stephen whispered the subject of today’s episode into my ear, and immediately, immediately my thoughts went not to my childhood as usually happens.

Stephen Semple:

Well, this is a variation. Can I guess where your brain went?

Dave Young:

Go ahead.

Stephen Semple:

Seinfeld?

Dave Young:

No, not even se Seinfeld.

Stephen Semple:

Okay. All right.

Dave Young:

I think it’s on Apple, the current, maybe it’s not on Apple. Maybe it’s Prime. I’m not sure. But it’s a current series, sci-fi series going on called Silo.

Stephen Semple:

Oh, yes, yes. I’ve started watching it. Yes.

Dave Young:

And they have these artifacts and somebody has a Pez dispenser, this Silo, futuristic, that mankind’s been living in these silos for 350 years. They can’t come out, but there’s some people have these trinkets from the past and there’s a Pez dispenser amongst them.

Stephen Semple:

That’s right.

Dave Young:

They have no idea what it is.

Stephen Semple:

Right, yeah. And then there’s that famous Seinfeld episode with the Pez dispenser in it as well. That was super popular one, where Jerry basically is being pain in the neck with this Pez dispenser. Yeah, but they’re huge. They sell about 75 million Pez dispensers a year, still, across 80 countries, as well as five billion individual Pez candies. There’s like 900 employees working for Pez.

Dave Young:

Wow. Okay. And the candy’s nothing special, other than it’s all uniform, like little bricks. It’s almost like eating a Lego and almost as flavorful.

Stephen Semple:

Yeah, there you go. Well, I can’t comment, because I’ve never eaten a Lego, but…

Dave Young:

Well, you didn’t have my childhood, Stephen.

Stephen Semple:

So, the Pez company starts in 1927. I didn’t realize how old it was. And it was started by Edward Haas III, and he lived in Vienna, and he couldn’t stand the smell of smoke. And he’s running this family, this successful family business, making a special kind of baking powder that was invented by his grandfather. So he was already a business person making this baking powder. And Edwin took the business in a new direction when he created the world’s first ready mix cake mixture during World War I.

Dave Young:

Oh, wow. Okay.

Stephen Semple:

Yeah. And so, by the late 1920s, they have a number of factories in Europe, and at this time, smoking booms with the invention of the rolling machine, the automated rolling machine, which suddenly makes cigarettes cheap and plentiful. And if you want to learn more about this trend, go back to episode 85 for American tobacco. So first, Dave, can you believe that was like a year and a half ago that we recorded that?

Dave Young:

No kidding, yeah, the automatic rolling machines.

Stephen Semple:

Yeah. So there’s a whole episode really on that. Go back and check it out. It’s actually quite a fascinating story.

Dave Young:

But this guy, he doesn’t like smoke.

Stephen Semple:

He does not like it. And one of the other things that happened is during World War I, soldiers are provided cigarettes as rations. And it’s really interesting. My grandfather served in World War I, he never talked much about it, but there’s a couple of things that he kept. And one of them was there was this little metal case that they were given at Christmastime that had special rations in it, and it had the royal seal and everything on it, and it was actually for putting cigarettes in.

Dave Young:

Wow. Okay.

Stephen Semple:

So the interesting thing, it was one of the few things that he kept his entire life, was this little metal ration case that cigarettes came in.

Dave Young:

That’s cool. Yeah.

Stephen Semple:

So suddenly, you had this additional explosion to smoking, not only because cigarettes are cheap and plentiful, people were being given it as a ration in the war. So they came back smoking. And Edward thinks this is a filthy, stinky habit, and he wants to reduce it. So he launches peppermint lozenges, and he’s hoping that reaching for a peppermint mint will reduce the desire for smoking, that whole mechanical thing. Plus, it’s going to improve the smell of breath, because thinks it’s a stinking, disgusting habit. But the big challenge is, in his day, peppermint is super expensive, because at the time, making peppermint flavoring involved boiling the peppermint down. And so, most of the peppermint was lost to evaporation. So he hires a chemist, Dr. Ortner, to solve the problem, and they develop a process for cold pressing peppermint into nice tablets, and it cuts the cost of peppermint in half.

Dave Young:

And so, they’re pressing them into uniform little tablets, okay.

Stephen Semple:

At this point, yeah, little tablets. And he names the product, and it’s really unbelievably hard to say. So it’s Pfefferminz.

Dave Young:

Okay.

Stephen Semple:

And it’s so hard to say, and it’s even hard to say in German, he creates an acronym using the first letter, the middle letter, and the last letter, which is P-E-Z, Pez.

Dave Young:

Or Z. Yeah, Pez. Pez. Pfefferminz.

Stephen Semple:

Yeah, exactly. So that’s how the name Pez comes about. It’s just an acronym from a terrible name, but they’re not yet brick shaped. They’re tablets, they’re round, they come in a little tin or foil roll, but they’re a huge hit. Edwin buys an old belt factory in the Czech Republic and turns it into a Pez factory. And Edwin leans hard into this whole anti-smoking angle. He even creates a verb called Pezzing. He runs ads playing up the fresh breath angle, hires young women to hand out samples, like game as old as ever, right? Handing out samples-

Dave Young:

Yeah, Pezzing.

Stephen Semple:

… and Pez is taking off. But I love this whole idea that he creates a verb, because we all know how powerful verbs are. Now, as Edwin looks to increase production, he finds that the round shape is hard to make in the volume that they want. So he changes the shape to little bricks. You can make a big slab and cut them. So now-

Dave Young:

And then wrap them and yeah, they’re all packed tight and uniform, no wasted space with air in between.

Stephen Semple:

Right. So that’s how they end up becoming the little bricks, it’s about production. Now, Hitler invades, annexes everything, production stops. But by 1948, after the war, he gets the factory back, and he’s up and running again. Edwin is a bit of a clean freak and a germaphobe. And this whole reaching into a tin to share mints sort of freaks him out a little bit. And he looks at how cigarette packets work. So if you look at a cigarette packet, you turn it over, you give it a tap, and one cigarette comes out at a time, no touching. So he decides to hire an engineer to create a new package. The engineer he hires as the guy who invented the one-handed self-closing lighter.

Dave Young:

The Zippo? Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

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Dave Young:

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