Three-generation family confectionery’s recipe for a sweet succession

Mariel Morden-Miller had just set up an e-commerce-focused website for her family’s confectionery Mordens’ of Winnipeg when the 2020 pandemic hit, posing an existential threat to the beloved Manitoba institution.

With its storefront shuttered, its dozen employees locked down and tens of thousands of dollars in business suddenly gone, the chocolate and candy maker’s recently improved online presence and new virtual payment system proved crucial to its survival.

“If we didn’t have that during COVID, our sales would have taken a pretty big blow,” says Ms. Morden-Miller’s father Fred Morden, the business’s second-generation owner. “Everything sort of snowballed from that decision, and it worked out perfectly.”

During the crisis Mordens’ fell back on its founding principle of “grow from within:” working longer, harder and smarter to navigate troubling times or expansion, rather than taking on a loan to do so.

That approach has kept the enterprise largely debt-free over its nearly 70 years of operation and proved particularly advantageous during the lockdowns. For many weeks and months, only the immediate family bubble worked at the shop to fill online and phone orders, roast nuts, operate the chocolate enrobing machine, hand cut marshmallows, deliver items and serve curbside pickups.

Unlike many other small businesses that accepted government loans to keep operating, Mordens’ leaned into the family working more to produce more, especially as sales rebounded and later grew as isolated Manitobans sought sweet distraction.

“It’s a philosophy that every square foot of business has got to make you money,” Fred, 67, explains.

That attitude is common with successful small family businesses, says Danielle Walsh, a partner in Ottawa with national financial and business advisory firm MNP. “There’s an interesting dynamic where a lot of my small family businesses I work with don’t have debt,” she says. “It’s almost the founder was debt-averse, and so then the next generation also tends to be.”

That aptly describes the Winnipeg confectionery, which Fred’s father Blake Morden purchased in 1959 in cash with a $1,800 severance after being laid off as a railway worker just before Christmas.

Blake quickly had to learn to make fudge and peanut brittle from scratch. In 1961, he moved operations to the current location west of downtown, where six decades later the family business successfully navigated the pandemic – all without borrowing.

Fred started working at Mordens’ as a teen, slowly assuming more responsibility. He gradually bought shares beginning in the early 1980s, including with a significant amount of “sweat equity” that took into consideration his years of underpaid labour for the business. He largely assumed ownership a decade later. Since then, sales have quadrupled, driven by new initiatives including forging partnerships with grocers and other retailers to sell Mordens’ wares provincewide.

Today, it produces several tonnes of chocolates, roasted nuts and other delights annually. That’s despite the postpandemic inflation surge, which saw the price of the raw ingredient in chocolate soar.

“It was difficult because you can’t go, ‘Now this box of Russian mints is going to be 60 bucks,’” Fred says. Mordens’ purchased inputs at spot prices that reflected real-time supply and demand, figuring costs would eventually settle.

True to its “grow from within” mindset, the company kept what it charged customers steady and instead aimed to sell more. Raising prices might have sparked a revolt among Manitobans: during the holidays they buy more than 14,000 boxes of Mordens’ famous mint chocolates, which won top prize at the 1984 New Orleans World’s Fair.

Although Ms. Morden-Miller, 32, and her sister Hilary Morden, 34, had only recently taken more substantial roles at the business when the pandemic hit, their involvement began – much like their father – with part-time jobs in their teens.

“We were always encouraged to get experience outside of working here,” Ms. Morden-Miller says, but adds that the confectionery “was constantly talked about around the dinner table” and was always an important part of their lives.

By 2020, she assumed Mordens’ financial and administrative management while her sister started leading operations.

Ms. Walsh says the transition exemplifies an ideal succession in many ways because both Fred’s daughters want to be part of the business. For families where some kids want to be involved and others don’t, more structured succession planning is required to define how the company will be owned and operated in future and how each member will be compensated depending on their involvement.

“Having active and inactive family members can really create havoc because family members’ goals are not well aligned,” Ms. Walsh says.

Fundamentally, it’s a question of whether the enterprise is a career path or an inherited asset and source of personal income for future family members. “Most other decisions around succession will naturally flow from that decision,” she adds.

For Mordens’, that issue is largely resolved as the sisters increasingly run the business. Fred says he expects his daughters will eventually buy the company – much of it paid through sweat equity like he did.

Still, there are other critical considerations, Ms. Walsh says, such as if the daughters, as future co-owners, face challenges where they may not agree on the solution. “That’s where having a formalized decision-making structure can help ensure ongoing success,” she explains.

Addressing risks such as potential incapacitation or death of a key family member and navigating the process for participation and ownership of future generations are also important, Ms. Walsh adds.

But for the foreseeable future, Fred and his daughters still work hand-in-hand on major business decisions. As owner, dad has final say, but Fred says he is always open to his daughters’ ideas, understanding that their perspectives add value.

One decision on the horizon is whether to expand Mordens’ reach nationally, which may require debt financing to expand its physical footprint, Fred adds.

That is likely a call for its future owners to make, he says. “If that’s what my daughters decide eventually, I’ll certainly help them with that.”