Even in the rapidly evolving candy industry, the competition will have a hard time gumming up the works—or the profits—for leading food industry titan Mars, Incorporated. The company recently made the bullish decision to combine its chocolate business with its subsidiary Wrigley to form Mars Wrigley Confectionery, which will be headquartered in Chicago.
Anyone who has perused the candy counter adjacent to their local supermarket’s checkout aisle can attest that Mars’ chocolate business is stocked with some of the most popular brands in the industry: Snickers, M&M’s, and Twix. Wrigley’s brand recognition is equally impressive with the likes of Skittles, Starburst, and Orbit gum, just to name a few.
It’s not surprising then that privately-owned Mars is already the nation’s largest confectionery company based on sales. Combining companies will allow Mars to accelerate its growth in the rapidly changing and challenging candy market. The decision comes on the heels of Mars’ announcement that it would acquire Berkshire Hathaway’s reported 19% share in Wrigley to take full control of the subsidiary. Mars has owned a majority stake in Wrigley since the original acquisition in 2008. The combination of the Mount Olive, NJ-based chocolate company with Chicago-based Wrigley is expected to be phased-in gradually during 2017. For the moment, the units will remain separate.
Based on Packaged Facts’ market analysis in the August 2016 report Chocolate Candy Market in the U.S., 11th Edition, there’s no question such strategy is shrewd considering the candy market terrain shows a broad array of players that have a significant presence in the U.S. market. And as in many markets today, there is an influential group of disruptors, especially the superpremium gourmet producers and the craft producers. Therefore, even candy behemoths such as Mars and its rival Hershey can’t afford complacency or stagnation for very long.
For some astute industry experts, the creation of Mars Wrigley Confectionery likely has been mildly anticipated as the companies had already been collaborating for a while. As discussed in Chocolate Candy Market in the U.S., 11th Edition, the companies especially ramped up collaboration in the last year, joining forces to deliver shopper marketing insights to key retailers. Last year, they brought together decades of “impulse leadership” to create insights on “transaction zones,” which are emerging impulse areas of the store such as the in-store pharmacy, the café, mobile phones, or the “buy online, pick-up in store” area where shoppers are making purchases beyond just the front end of the store. They also collaborated on their first “joint-selling program,” which was tied to last year’s Super Bowl and included the Snickers (Mars) and Skittles (Wrigley) brands.
It’s quite likely Mars just put the rest of the candy industry on notice. Your move Hershey…