Secret Marzipan Recipe Key to German Candymaker’s Profit

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JG Niederegger GmbH owner Holger Strait has a 200-year-old secret and he’s not sharing.

He’s one of only five people who know the recipe for the marzipan that shoppers buy this time of year in high-end stores around the world. While Niederegger prides itself on using more almonds and less sugar than competitors, the exact roasting method and the composition of the third ingredient, which resembles rose water, is locked in a safe.

Focusing on producing top-quality marzipan has helped the family-owned company in the northern German town of Luebeck to find a niche in the market and post a profit every year for the last three decades. Niederegger’s focus on one specific segment is a prime example of why Germany’s Mittelstand -- the about 3 million small and medium-sized companies that account for more than half the country’s economic output -- has continued to thrive in a globally competitive environment.

“As a family business, we have the great advantage that we have acted in a sustainable way for the past 200 years,” Strait, dressed in a smart navy-blue suit, said in an interview. “We didn’t chase short-term success but did things that are good for the brand and the company in the long term. We don’t get nervous when we have two average years.”

Champagne Filling

Right now is busiest time of year for Niederegger, founded by Strait’s ancestor Johann Niederegger in 1806. One morning in December, half a dozen men in white T-shirts and blue jeans paced to and fro between pots that roasted marzipan over an open gas flame. In another room, the paste was pressed into heart shapes, injected with champagne filling and covered with chocolate.

At the end of the line, women wearing white robes and caps put ten hearts each in a golden packaging tray. They’re part of the permanent staff of 500 and about 250 seasonal workers needed to meet demand during the pre-Christmas rush. Karin Ventur, a Luebeck native, joined the company 30 years ago for what she thought was one season to earn extra cash. She’s been with Niederegger ever since.

“It’s like a family here,” she said as she hand-painted black eyes onto pink marzipan piglets. “Of course the family has become much bigger and things have changed, but the marzipan still tastes the same.”

Strait and his wife Angelika bought into the company in 1986 after his uncle emigrated to Canada. They invested in new machines, increased the product line to about 350 items and expanded into new markets such as eastern Europe. The company’s biggest export markets are the U.K. and the U.S., Strait said.

International Expansion

Niederegger, which can produce as much as 30 tons of marzipan a day, expects to lift revenue 3 percent this year on rising exports to about 40 countries, with demand in the four months leading up to Christmas generating 60 percent of sales, Strait said. The company doesn’t sell in discounters such as Aldi to keep prices stable, Strait said.

German newspapers estimate the company’s annual sales at more than 100 million euros ($123 million). The owner himself is mum on the company’s results.

“Family businesses are of key importance to Germany’s economy and society,” said Peter Bartels, who heads the family business and Mittelstand unit at PricewaterhouseCoopers in Germany. “They’re on a growth course despite the difficult economic situation of the past years -- in Germany as well as in international markets.”

Royal Favorite

Marzipan probably originated in ancient Persia, and it’s believed to have made its way to Europe in the backpacks of crusaders and via land and sea trade. Until the 19th century, it was a luxury product bought mainly by the rich and royals including French Louis XIV. Luebeck became a marzipan hot spot when sugar could be extracted from sugar beet, lowering the price of the product and drawing confectioners to the city including Johann Niederegger.

Strait has been involved in the family business since birth -- literally.

“Marzipan and Christmas -- they just belong together,” said Strait, who was born a few days before Christmas in 1949 in the factory he would later own -- next to the roasting pots. “The workers were singing Christmas carols when suddenly, the head of production said: ‘Be quiet, a baby’s being born.’”

Today, the company faces challenges including competition from food giants including Ferrero SpA and Mondelez International Inc. that don’t specialize in marzipan yet sell products containing it, said Julia Buech, a food and drink analyst at research firm Mintel Group Ltd.

Luebeck Ambassador

“One of Niederegger’s main advantages is the universally accepted very high quality of its marzipan,” Buech said. The company’s targeted growth of 3 percent is “a very good number,” given that the German chocolate market is expected to decline in the next five years, she said.

Niederegger’s success has benefited Luebeck. The town’s marzipan, like lebkuchen gingerbread from Nuremberg and Italian ham from Parma, is protected by the European Union. The city, which in medieval times headed the Hanseatic League that dominated trade across the Baltic, markets itself as a Christmas destination with an old town that dates to the 12th century and is listed by UNESCO as a World Heritage Site.

“If you think of Luebeck, you also think of marzipan,” Mayor Bernd Saxe said in an e-mail. “Niederegger’s sweet treats are an excellent ambassador.”

Strait, 65, says he’ll eventually hand over the company to his two daughters, who will be the eighth generation of the family to run Niederegger.

“I’ll be at the company’s disposal until I’m 67,” he said, then added with a smile: “If Picasso dropped his brush at 65, it would have been too bad for all the nice pictures.”