Cynthia Tice started Lily's Sweets at the age of 60 and sold it to Hersey's 11 years later for $400 Million. Wow!

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 to The Empire Builders Podcast. I'm Dave Young, that guy next to me is Stephen Semple, and we're talking about empires. We're talking about businesses that started with nothing and grew to be huge, as we say. And today, Stephen whispered in my ear the topic and I've never heard of it. No idea.

Stephen Semple:

Yay, finally stumped. It doesn't stump Dave very often.

Dave Young:

Thanks for listening to The Empire Builders Podcast. That's all we've got for you today. Oh, no, wait.

Stephen Semple:

Because clearly if Dave-

Dave Young:

Oh, wait.

Stephen Semple:

Because clearly if Dave's not heard about it, it's not interesting.

Dave Young:

Wait a minute. I forgot to have you tell me about them, so go ahead. Go ahead with your little story there, Stephen.

Stephen Semple:

Yeah, so it's a company called Lily's Sweets. Now, they're a chocolate company and they make sugar-free chocolate. And I'm not surprised that you haven't heard of them, but here's the reason why I think they're worth talking about, is 11 years after the business started by Cynthia Tice, it was sold to Hershey's for $400 million.

Dave Young:

That's a nice little getaway.

Stephen Semple:

Yeah, that's worth talking about. Don't you think?

Dave Young:

So it's owned by Hershey's now.

Stephen Semple:

It's owned by Hershey's now.

Dave Young:

Do they still operate under the name Lily's Sweets or is it all just a-

Stephen Semple:

Yes, they do.

Dave Young:

... Hershey's conglomerated candy corporation.

Stephen Semple:

The bar is called Lily's Sweets, so you can still get Lily's Sweets bars. They're made by Hershey's. And as I said, Cynthia sold it to the company after 11 years for-

Dave Young:

11 years?

Stephen Semple:

... $400 million. Yes.

Dave Young:

That's brilliant.

Stephen Semple:

Now, here's the other thing is she started the company at the fine young age of 60.

Dave Young:

I love this story.

Stephen Semple:

Right? Now you understand why I wanted to share this story.

Dave Young:

There may yet be hope.

Stephen Semple:

And so they do these sugar-free chocolates, and the goal for her was always to make a good, enjoyable chocolate product. Because we go back to early days of the sugar-free products, they were marketed to people who are diabetic and who are trying to lose weight, and they really didn't taste good. But the anti-sugar movement triggered something that was bigger because people started to discover that sugar's tied in inflammation, and there's been this explosion in these products. To give you an idea, in 2024, the no-sugar chocolate area as a category doubled. That's how much the growth is.

Dave Young:

2004?

Stephen Semple:

2024. So still even today-

Dave Young:

2024. Doubled in '24?

Stephen Semple:

Still even today, yes, the growth is really rapid. But this is what Cynthia saw, so let's go back to 2008 in Philadelphia. Cynthia Tice is a food consultant and a graduate of Temple University. And Temple University is actually a big presence in Philadelphia. I had a chance to speak at Temple and it's in downtown Philly, and downtown Philly's pretty neat. And look, if you're ever in Philadelphia, you have to go do the Rocky statue, right?

Dave Young:

Oh, yeah.

Stephen Semple:

And it's amazing today that there's still a lineup to take a picture at that statue.

Dave Young:

My dad went to Temple.

Stephen Semple:

Oh, did he really? Cool.

Dave Young:

He didn't go to college there. After World War II, he had dropped out to join the Navy. And so after World War II, he got his GED at Temple before heading off to University of Wyoming.

Stephen Semple:

Oh, that's cool.

Dave Young:

He's a South Jersey guy, so Temple's just a few miles away.

Stephen Semple:

Yeah, that's cool.

Dave Young:

Yeah.

Stephen Semple:

Cool.

Dave Young:

So I love that personal connection to Temple.

Stephen Semple:

There you are.

So back to Cynthia. So around this time, Stevia got approved and she had set up this consulting business to help companies find organic products because she had always had an interest in more organic foods. And growing up, she felt sick all the time. One day when she was eating lunch, a random person told her, "Look, if you're not feeling well, it's probably what you're eating and how you're eating." And this hit her to the bone.

So in the last year of college, she graduated in '74, she got into natural foods and she became a real zealot to the degree where she would take her own food to family dinners. And she wanted to do a natural food store, and her dad lent her the money. She found a location. She started up this 400-square-foot store. And her dad helping her out was a big deal because growing up, her dad had some clothing stores in the area, and her younger brother went into the business, but the belief in the family was women should not do business. And she was also the first woman in her family to get an education, so this was a big deal.

Dave Young:

This is.

Stephen Semple:

So she opens a store, and then a friend has a store, they join, they make this bigger store, and they never really made any money. She was single. She lived in a little place in the bad part of town, but she didn't really care about money. She was on this mission. She was happy. She was able to support herself. She loved helping other people because she really wanted to bring this idea of healthier food.

Then in 1989, there was a real turning point in the food space, but still it was very, very niche. And it was this whole idea of Alar on apples. It became a big deal. Meryl Streep spoke about it.

Dave Young:

Yeah, I remember that.

Stephen Semple:

Right. And when Meryl Streep spoke about it, all of a sudden it put things very much more mainstream. And this drove a lot of first timers into organic stores, and this created an opportunity to turn people. And what started to happen is more larger format, organic stores started to pop up and traditional stores started to take a look at organics.

But while this growth was happening, she was starting to get burned out. She had been at this for 20 years and not really making-

Dave Young:

Oh, wow.

Stephen Semple:

... a lot of money at it. And at the same time that she started to see consumers looking for organic products, she was at a conference at the Food Marketing Institute, and presenting was Whole Foods.

Dave Young:

Oh, wow. Okay.

Stephen Semple:

Now, this was in the infancy of Whole Foods. Now, the supermarket retailers in the audience asked Whole Foods this question. "Is your customer base large enough?" Whole Foods' reply was, "We're after your customers." This was a light bulb moment for Cynthia. Traditional retailers are now worried, and she realized there was an opportunity to help stores make the transition.

And now, she made a lot of money. She opened up this consulting business that helped traditional stores do the transition to organics-

Dave Young:

Oh, wow.

Stephen Semple:

... and all this other stuff. And lots of people approached her saying, "Hey, you should create a brand around this." And she didn't want to do it because she understood what it would actually take to build a brand, even though she had all these relationships with these buyers.

But she met this woman, Elizabeth Fisher, and they started to work on a product together, and the idea was a natural soda in 2007. Now, right around the time they're ready to launch the soda, Coke and Pepsi announced they're entering the space with a natural soda and they went, "Oh my god, there's no way we can compete with Coke and Pepsi." So they decide to do chocolate because, again, they were wanting to avoid sugar and they wanted to build a product, because what they're finding is companies were using used momenta, variations of it, and the chocolate did not taste good. Then Stevia entered and it was approved. Now, Stevia is natural. It's from a leaf. It doesn't spike blood sugar. And they tried several recipes and nothing worked. And they even tried contacting some chocolatiers and it didn't work, and it was terrible in chocolate. And during that time, they had a falling out, so Cynthia went out on her own.

But Cynthia then discovered someone who had developed a bulk chocolate that actually worked, that actually tasted good, and it came in these wafers and it tasted great. And what they did was they used other sweeteners to mitigate the flavor issues. So she reached out, asked for some modifications, and started to build a chocolate bar. And also around 2011, diets like paleo were becoming a vogue, and there was still no chocolate in this space. And she really wanted to believe that there was people who would want a sugar-free chocolate and would want something that tasted good.

So, she ended up bringing on a partner, Chuck Gennardi, who also owned a little store and hated it. And he shut his store and he had a little bit of money that he could finance the development of this chocolate. And they worked together, developing it and creating the packaging. They found a manufacturer, because here's things she was good at.