A candy chain’s sweet success

Jeff Rubin had his epiphany in the candy aisle at CVS.
Photo: David Yellen

Jeff Rubin , the founder and CEO of It’Sugar, the fastest-growing retail candy store in the world, is holding a box of sour bubblegum depicting the derrière of a cartoon dromedary. Printed on the box in bright cartoon letters are the words CAMEL BALLS. “This is just the right amount of camel and right amount of ball,” Rubin says, giggling. The Justin Timberlake song “SexyBack” is playing. This shop, one of 45 worldwide (along with another 30 outposts inside department stores), is on Manhattan’s Upper West Side. The Camel Balls, like the 27-pound anaconda-size gummy worm ($150) and the Laffy Taffy leather jacket bedecked in Swarovski crystals ($2,499) and the entire section of edible underwear, are not typical of candy emporiums. None of these products is for children — and that’s exactly the point.

About eight years ago, just as he was running a white-hot chain called Dylan’s Candy Bar (his co-founder was Dylan Lauren, Ralph’s daughter), Rubin realized that much of his work — the kaleidoscopic displays, the lollipop lamps, the peppermint-patterned barstools — mattered not a whit to his target audience. He was taking his twin boys, then 5, to CVS. Rubin noticed they were just as thrilled about a visit to the drugstore chain’s drab candy aisle as they were going to Dylan’s. It was deflating but revelatory: Kids love candy; older consumers crave experience. And older consumers have money to burn. The moment led Rubin to what is the secret ingredient in It’Sugar’s sugar: the relentless pursuit of the 19-year-old female.

“Everyone else builds candy stores on taste. I’m building on attitude,” says Rubin, 49, whose business card reads CHIEF GUMMY BEAR. He defines the attitude as “rebellion. We’re saying it’s okay to have fun, to indulge in something you’re going to enjoy. I can’t think of a demographic who appreciates that more than young independent women.” The demographic is a sweet spot for other retailers too, most notably Victoria’s Secret, a chain Rubin admires for its ability to “be everywhere yet still be cool.”

Targeting young women pulls in their boyfriends, along with the teens and preteens who want to look older, and older women who want to look younger, as well as all the men who follow them. But one company sells bras and trades in body image; the other sells mega-calorie confections. The trick: Don’t try to conceal the vice — revel in it. Hence the Camel Balls. Just look at the name of the store, plastered in bright pink above the entrance. Everything in here is bad for you, it screams, and isn’t it wonderful?

It’Sugar is a candy store the way Liberace was a piano player. To focus on the sweets is to miss the point. It’s everything around them that counts. Rubin gestures toward a very large Nerds box (the World’s Largest Box of Nerds, in fact), a wall of Hello Kitty gear, and another featuring Marilyn Monroe T-shirts, lunch boxes, and even chocolate bars with her face on the wrapper (the company recently bought the exclusive candy rights to her likeness). There’s even a display featuring Maria Sharapova-branded products called Sugarpova. (The real-life tennis star presumably didn’t obtain her toned, world-class physique by gorging on sugary treats, but why quibble?) Sugarpova hints at Rubin’s latest expansionary scheme: It’Sugar has an informal partnership with Creative Artists Agency (CAA) to develop more candy brands built around stars, thereby bringing together two things Americans cannot get enough of: celebrity and sugar.

It helps Rubin’s target customer to see images of beautiful young women (one an icon, the other an athlete) attached to the sweets. As Rubin puts it, “Doesn’t everyone want to be young and do all the things we aren’t supposed to do?” Apparently, yes.

Customers worldwide are flocking to the stores. A 2,000-square-foot shop in the Mall of Emirates in Dubai generates about $1,000 in annual revenues per square foot. (Were it replicated chainwide, that figure would put the company in the top 10 nationally.) It’Sugar’s Coney Island store rang up $25,000 in sales its first weekend — and that was before Memorial Day, the start of the summer rush, Rubin points out.

Last year the company’s revenue was $44 million. Rubin expects it to top $60 million in 2013, as It’Sugar adds 29 stores. The company is “very profitable,” he says, without divulging specifics. “We’re very healthy,” Rubin adds. “That’s a good candy word.” He recently wrapped up a new round of funding with more than $10 million from Star Avenue Capital, a joint venture between CAA and Irving Place Capital.

But this, Rubin says, is just the beginning. He won’t stop until It’Sugar has become the Victoria’s Secret of candy stores. Will the world’s sweet tooth propel the chain to similar heights in the face of powerful competition from ubiquitous candy sellers, not least of which is that drab but effective candy aisle at CVS? Perhaps not. On the other hand, it’s never wise to bet against the power of 19-year-old women.

This story is from the July 1, 2013 issue of Fortune.

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