2007 Processor of the Year: Mars Inc.

Coming off a stellar year, Mars' U.S. Snackfood division is accelerating product development, mining dark chocolate for all is benefits and bringing custom-batch manufacturing to high-volume products such as M&M'S.

By Dave Fusaro, Editor in Chief

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Mars Inc. is the prototypical privately held company. With control largely in the hands of the Mars family, the $21 billion global company prefers to work quietly, grow its businesses organically and fight Hershey on the home front and Nestle on the global stage for leadership of the chocolate side of the candy business.

While the company was founded on candy - Frank and Ethel Mars started selling buttercream candies in Tacoma, Wash., in 1911 - the company has grown beyond candies and its U.S. foundation. Now, 60 percent of Mars sales come from outside of North and South America.

With the huge 2006 acquisition of Doane Pet Care, pet products now are one percentage point bigger in Mars North America sales than the Snackfoods division, which at the moment is synonymous with candy. There's also Uncle Ben's rice and a smattering of other food products.

Now, after the rebranding of the majority of the snackfood, petcare and food divisions back to the Mars name (after being called Masterfoods since 2002) and with its 100th birthday in sight, Mars opened its doors to Food Processing. With a stellar year behind it, Mars Snackfood division, specifically, is our Processor of the Year.

"All our associates have been working hard to become more nimble and accountable for their business unit's success," says Todd Lachman, president of Mars Snackfood U.S. "Being named Food Processing's Processor of the Year is an acknowledgement of the hard work, dedication and success of everyone associated with the Snackfood division."

 

 

Three years of transformation

Three years ago the company embarked on a journey of transformation when it acknowledged internally that its competitiveness had slipped. The goal was to restore what made this company great: empowered associates with clear roles and responsibilities, open communication and streamlined decision-making.

Since 2004, the company reorganized into segment-focused business units, generated efficiencies in overheads and supply costs and reinvested those savings into core brand support, new product launches, enhanced retail coverage and expanded production capacity.

One of the low points may have been the first half of 2006, when sales in the core Snackfood division dropped 2 percent. "The Snackfood division responded with decisive action, kicking into high gear and improving the speed and flexibility of decision-making," says Lachman, who came to Mars one year ago from Del Monte, where he was an executive vice president.

"The result was a phenomenal turnaround with growth in sales -- second half sales grew by 5.5 percent over 2005 -- earnings and market share," he continues. "And, more importantly, a stage was set for aggressively pursuing the No. 1 chocolate share position."

Here are some examples of what even a large organization can accomplish when it really wants to:

  • Snickers Dark Bar, M&M'S Dark Chocolate Candies and Snickers Nut 'n' Butter, all planned for 2007 launches, were moved up to 2006 to fuel the year's second-half growth.
  • Plant operations across the snack food division delivered almost $40 million in real savings.
  • The commercial (purchasing) team saved $40 million in prime costs.
  • And generally the division cut non-quality costs by $30 million.

All those savings were reinvested to drive additional growth.

There's still a ways to go to reach the ultimate goal. Hershey still holds the top market share in the chocolate category, but Mars has been adding points, bringing Mars to 29.0 percent market share (according to IRI data for the period ending Nov. 4). The Dove brand grew by 42.1 percent, 3 Musketeers by 18.2 percent, M&M'S by 8.3 percent and Twix by 11.8 percent. Snickers, the No. 1 candy single, grew by 8.7 percent.

"We have experienced great growth this year," says Lachman. "We have also seen an upswing in the growth of the sugar category in the last 12 weeks [ending Nov. 4]."

Dark chocolate and premium chocolate products currently are driving growth of the overall chocolate category. To the call for dark chocolate, Mars responds with several dark versions of familiar brands - such as M&M'S Dark Chocolate, Milky Way Midnight Dark, Snickers Dark, Dove Dark - as well as its 18-month-old CocoaVia brand, with the emphasis on the flavanols.

The Dove brand is an interesting story. Twenty-five years ago it was a popular line of ice cream bars that was available only in Chicago. Even then, what made the ice cream novelty stand out was the rich chocolate coating. Mars acquired Dove in 1986 from the founding family and continues to manufacture the ice cream bars at a suburban Chicago plant. More importantly, since the acquisition, Mars developed Dove as a premium chocolate brand.

"It was not that great a leap, but it was a great opportunity," Ralph Jerome, Mars Snackfood U.S. vice president of R&D, says in hindsight. "Before Dove, we didn't have a pure, solid chocolate bar. And we had a lot of premium chocolate expertise that was not being leveraged."

Dove also has two high-cacao products, at 63 and 71 percent cacao, as well as the Dove Origins line, naming Ecuador, Dominican Republic and Ghana as the sources of its cacao. The same personalized message technology that's being used in My M&M'S is being used to print custom messages on the inside of the foil of My Dove chocolates.

The Dove line will be further extended next year with Dove Beautiful.
The Dove line will be further extended next year with Dove Beautiful. (click to enlarge)

The Dove line will be further extended next year with Dove Beautiful ("with skin-nourishing vitamins C and E, biotin and zinc") and Dove Vitalize ("with energy-releasing B vitamins, plus the natural goodness of cocoa flavanols").

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