Lancaster Caramel Company

The Lancaster Caramel Company was an American confectionery business established in Lancaster, Pennsylvania, in 1886 by Milton S. Hershey. It was Hershey's first successful candy enterprise and provided the commercial and financial foundation for his later expansion into chocolate manufacturing. Although the company no longer exists as an independent business, its history is closely connected with the origins of the Hershey chocolate enterprise and with the development of the American caramel industry. The business began in a warehouse on the west side of South Duke Street near Vine Street in Lancaster. The initial premises were unsuitable for production because they did not have a boiler capable of cooking caramel. Hershey therefore moved operations to an older factory building on Church Street, a site that had previously housed the Edison Electric Plant. The early period was financially difficult. A substantial order from a British candy importer helped provide a commercial breakthrough, while a cashier at Lancaster County National Bank supported a loan that enabled Hershey to buy necessary supplies. These developments allowed the company to move from a precarious start into sustained production. As demand increased, the company occupied additional parts of the Church Street facility and expanded its manufacturing footprint. By 1894, it employed approximately 1,300 people, making it a significant local industrial employer. The company also developed a multi-site production and distribution structure. In 1891, Hershey acquired three lots and a small factory in Mount Joy, Pennsylvania, where caramel production was added. In 1892, the business opened a western branch in Chicago; that operation was later transferred to Bloomington, Illinois. A further factory was established in Reading, Pennsylvania, shortly after the western branch was created. The Lancaster Caramel Company was incorporated on February 8, 1894. That same year, the Hershey Chocolate Company was formally organized as a subsidiary. The arrangement reflected Hershey's growing interest in chocolate while the caramel business remained his principal successful operating company. Caramel products, rather than chocolate, were the basis of the company's early reputation and expansion. In 1900, Hershey concluded that caramels might be a temporary confectionery fashion and decided to concentrate on chocolate, which he believed offered a larger long-term market. He sold the caramel business's assets to the American Caramel Company for $1 million in cash. The transaction included the factories, machinery, confectionery formulas, inventory, and the Crystal A trademark. Hershey retained the Hershey Chocolate Company subsidiary and chocolate-making equipment. The sale ended the Lancaster Caramel Company's independent existence, while transferring its industrial assets and product knowledge into American Caramel's operations. The company's historical importance therefore extends beyond its own product line. It demonstrated Hershey's ability to build a large-scale candy manufacturing business, establish distribution beyond Pennsylvania, and operate multiple production facilities. Its sale supplied capital and strategic focus for Hershey's subsequent chocolate business. After the acquisition, American Caramel became a major force in the United States caramel market and later became known for distributing baseball and other cards with its confectionery products. The Lancaster Caramel Company is consequently remembered as both an early Pennsylvania candy manufacturer and a formative predecessor to the Hershey chocolate enterprise.

Milton S. Hershey founded the Lancaster Caramel Company in Lancaster, Pennsylvania, in 1886. The first facility was a warehouse near South Duke and Vine Streets, but it lacked the equipment required to cook caramel. Production soon moved to an older Church Street factory that had previously been used by the Edison Electric Plant. The company experienced a difficult start until a large order from a British candy importer improved its prospects. Financing support from a cashier at Lancaster County National Bank also enabled Hershey to obtain supplies and continue operating. The business expanded within the Church Street premises and became a substantial employer. By 1894, it had approximately 1,300 workers. Hershey broadened manufacturing in Pennsylvania by acquiring property and a small factory in Mount Joy in 1891. In 1892, the company opened a western branch in Chicago, which was subsequently relocated to Bloomington, Illinois. The Bloomington factory remained in operation until 1900, when it was sold to the Paul F. Beich Company. A third caramel factory was established in Reading, Pennsylvania, soon after the western branch was opened. The company was incorporated on February 8, 1894. The Hershey Chocolate Company was formally organized as a subsidiary during the same period, reflecting Hershey's developing interest in chocolate production. The Lancaster Caramel Company nevertheless remained the central successful business through which he built his reputation and accumulated the resources needed for future expansion. In the spring of 1900, Hershey sold the assets of the caramel business to the American Caramel Company for $1 million in cash. The transaction covered the factories, machinery, formulas, inventory, and the Crystal A trademark. Hershey retained the Hershey Chocolate Company subsidiary and chocolate-making equipment because he believed chocolate had a larger future market than caramel. This decision ended the Lancaster Caramel Company's independent operation and redirected Hershey's business toward chocolate. The American Caramel Company had been formed through the combination of Pennsylvania and Philadelphia caramel interests and became a major beneficiary of the Lancaster acquisition. With the added factories and assets, it reportedly controlled most of the American caramel market. It also became associated with the early distribution of baseball and other cards packaged with candy. The former Lancaster facilities and machinery were subsequently absorbed into the acquiring company's operations, while Hershey used the proceeds and retained chocolate assets to develop the enterprise that became the foundation of the modern Hershey business.

1. 1900Assets sold to American Caramel Company

   Milton Hershey sold the caramel business's assets, including factories, equipment, formulas, inventory, and the Crystal A trademark, to American Caramel Company for $1 million in cash.

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2. 1900Bloomington factory sold

   The Bloomington, Illinois, factory was sold to the Paul F. Beich Company, completing the transfer of that branch after the broader caramel-business sale.

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3. 1894Incorporation and peak early scale

   The company was incorporated on February 8, and by this period employed approximately 1,300 workers. The Hershey Chocolate Company was also organized as a subsidiary.

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4. 1892Western branch opened

   The company opened a western branch in Chicago, later moving the operation to Bloomington, Illinois.

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5. 1891Mount Joy expansion

   Hershey acquired three lots and a small factory in Mount Joy, Pennsylvania, adding another location for caramel production.

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6. 1886Company founded in Lancaster

   Milton S. Hershey established the Lancaster Caramel Company in Lancaster, Pennsylvania, beginning the first successful candy business of his career.

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A large-scale, industrial American caramel manufacturer whose early success established Milton S. Hershey in the confectionery business before he shifted his focus to chocolate.

• Caramel candiesConfectionery1886

  Caramel candy was the company's core product and the basis of its manufacturing growth. Production began in Lancaster and was later extended to facilities in Mount Joy, Reading, and the western branch that moved from Chicago to Bloomington. The business's success in caramel gave Milton S. Hershey the reputation and capital that later supported his move into chocolate.

• Crystal ACaramel trademark and product line

  Crystal A was a trademark associated with the Lancaster caramel business. It was included among the assets transferred to the American Caramel Company in the 1900 sale, together with the company's factories, machinery, formulas, and stock.

• 1900Sale of the caramel business to American Caramel CompanyM&A

  Milton S. Hershey believed caramel might be a passing confectionery trend and considered chocolate a product with greater long-term market potential.

  What changed. He sold the caramel business's factories, machinery, formulas, inventory, and Crystal A trademark to American Caramel Company for $1 million in cash, while retaining the Hershey Chocolate Company subsidiary and chocolate-making equipment.

  Aftermath. The Lancaster Caramel Company ceased to operate independently. The transaction enabled Hershey to focus on chocolate, while American Caramel absorbed the acquired assets and strengthened its position in the caramel market.

  Cash sale price. $1 million (Spring 1900)

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1. Lancaster Caramel Company
2. Hershey's official website