Italy has captured the Ice Cream Capital of the World.
The family owners of northwest Iowa-based Wells Enterprises, the ice cream maker best known for its Blue Bunny brand, announced Wednesday that they will sell the business to Italian-based Ferrero Group, one of the world's largest food manufacturers.
The deal gives Ferrero, which owns brands like Nerds, Butterfingers and Nutella, control of one of the biggest ice cream manufacturers in the United States. The sale, the terms of which neither privately held company disclosed, also marks the end of the Wells' family's 109-year-ownership of the company.
Through three generations, the family grew the business from a small, milk distribution operation to a massive ice cream manufacturer, with brand names like Bomb Pop and Halo Top and factories in Nevada and New York. The business has been vital to Wells' headquarters city, Le Mars, the rare Iowa micropolitan community that has not lost residents in recent years.
Wells Enterprises has its office as well as two factories in Le Mars. The company pledged to expand there as recently as May. In a sign of how important the business has been to the community, in 1994, the Iowa Legislature passed a bill to name Le Mars the "Ice Cream Capital of the World," and the city has become a frequent stop among presidential candidates during the Iowa caucuses. The Wells Visitor Center & Ice Cream Parlor draws about 200,000 people annually.
In an interview with the Des Moines Register, Wells Enterprises CEO Mike Wells said Wednesday that Ferrero executives are committed to northwest Iowa.
"They need all of our employees," he said. "They need all of our management. They need all of our assets."
Wells will step down as CEO, ending a run of family leadership that dates to his great uncle in 1913. He will remain involved as an advisor.
Company president Liam Killeen, who joined Wells Enterprises in 2014, will become the ice cream maker's new CEO. Killeen came to the company after running Ferrara Candy Co. of Minnesota, a business Ferrero bought in 2017.
"Ferrero's brands and reputation for world-class quality are a perfect match with what has made Wells so successful ― and we will be even better together going forward," Killeen said in a statement.
Giovanni Ferrero, the company's executive chairman, said in a statement: "I am delighted that Wells has agreed to join the Ferrero Group. This represents a win-win partnership, bringing together ice cream experts and confectionery champions."
Wells Enterprises began with a single wagon
The family business began modestly as Wells' Dairy in 1913, when Fred H. Wells Jr. bought a horse-drawn wagon and delivered milk in northwest Iowa. His brother Harry C. Wells joined the business, as did his sons.
They added an ice cream distribution company in the 1920s, a business they sold to a competitor. When the family re-joined the ice cream business the following decade, they no longer had the rights to their old business' name. They held a contest, offering $25 for the best idea. A Sioux City man successfully lobbied for Blue Bunny.
The company sold other dairy products, like milk, cottage cheese and sour cream. Wells' Dairy built a new ice cream factory in 1950, followed by a fluid milk processing factory in 1963, according to a history of the company in Family Business.
The company continued to expand in the 1980s, adding new corporate offices and a second factory in Le Mars. In 1985, City Administrator Jim Payne credited Wells and Harker's, a frozen foods processor, with keeping the town alive during the farm crisis.
"People understand what the industries are worth to Le Mars, that they help it prosper in spite of what has happened in other Iowa towns," Payne told the Register at the time.
In 1985, Wells employed 430 workers in Le Mars. As of April, according to the Iowa Economic Development Authority, Well's local employment had grown to about 2,500.
Likewise, the city's population has grown from about 8,000 people in 1985 to about 10,000 today. While the city's growth has been modest, Le Mars is in a better position than many communities around Iowa, especially similar-sized cities that have shed population over the last two decades as manufacturers leave.
On Wednesday, Mike Wells said he and his family were confident that local employees are in good hands.
“This was more about the opportunity to do the right thing for our community of employees and our families than it was an opportunistic transaction," Mike Wells said.
Wells Enterprises' growth made it harder for next generation to operate
Wells said he began to seriously contemplate the company's future when he attended its 100th anniversary event in 2013. In fact, according to the Financial Times, the family began soliciting offers for a purchase the year before. (Wells declined to comment on that report on Wednesday.)
Either way, Wells said he knew the company needed an outside suitor as it continued to expand. The family had agreed to a corporate restructuring in 2006, according to Family Business. Rather than a collection of cousins running various operations, as they had for decades, the family agreed to operate with only one leader.
Wells took the reins as CEO from his cousin, Doug Wells. The family committed to hiring more outside managers They also agreed to hire three board members outside of the family.
"We know the weaknesses of inbred family management," Doug Wells told Family Business.
In addition, company leaders decided to focus more narrowly on ice cream and other frozen desserts. The company sold a milk factory to Dean Foods and a yogurt factory to Grupu LALA in 2008.
More recently, it bought ice cream factories in Nevada and New York and purchased the low-calorie frozen dessert brand Halo Top in 2019. Though the main players in the ice cream industry, Like Wells, are privately held, making data hard to come by, Wells has previously stated the moves made the company the second-largest ice cream manufacturer in the country, behind Unilever. Wells announced yet another expansion in Le Mars in May.
Mike Wells said Wednesday that company's expansions posed challenge for the family's next generation of potential executives.
"Given the size and scale of the business and the unbelievable personal responsibility and time requirements, there just wasn’t anybody in the next generation that had an interest in being involved in the day-to-day business," he said. "That’s how we ended up here.”
Deal came together after Ferrero chairman visited Le Mars
He said his relationship with Ferrero managers began in 2019, when he toured Europe to observe new trends in the frozen desserts industry. He said his bankers at UBS Group AG put them in touch.
Ferrero owns 35 brands, including Kinder and Tic Tac. The company employs 38,000 workers in 170 countries, according to a news release. In North America, the company employs 8,000 workers and operates 18 factories.
Initially, Mike Wells said, the two sides discussed a potential partnership that would allow Wells' ice cream makers to use Ferrero's brands. Like Wells, Ferrero has been aggressive in recent years, buying U.S. candy, chocolate and cookie manufacturers.
Mike Wells said he became friends with Giovanni Ferrero, the company's executive chairman. Like Wells, Ferrero is the third generation owner of his family's company, which is based in the small city of Alba in northwest Italy. (According to Bloomberg, Giovanni Ferrero has a net worth of $41.8 billion, making him the 28th richest person in the world and the richest person in Italy.)
During a call in January, Wells said he invited Ferrero to Le Mars, an offer that the latter took him up on in June. During the visit, he said, Ferrero fell in love with the town.
He said the two sides have been negotiating a deal for the last six months. He said his family believed the Ferrero organization was the right fit for the brand's legacy.
“Collectively, our family decided the best thing we could do for our business was to set it up for the future," Wells said, "with an ownership group that could and would invest behind it.”
This article originally appeared on Des Moines Register: Italian company now owns Blue Bunny ice cream maker Wells Enterprises