In 2015, the brand behind Snickers and Maltesers invested $100m in its first new US confectionery plant for 35 years © FT montage / Getty
Mars has spent more than a century quietly building an empire. Starting from making chocolate in a kitchen in 1911, the family built a household brand that expanded worldwide, taking up nearly half of Chinese chocolate sales and making the Mars among the richest families in America, all in relative secrecy.
“As you found when you came to the door, we’re still a very private company,” quipped chief executive Grant Reid, during an interview at the nondescript Virginia building that is global headquarters to the world’s largest chocolate maker.
But in 2017, as more health-conscious shoppers turn away from sugary foods and governments talk about a “war on sugar” — and as consumers have unprecedented ability to broadcast their views on Twitter and elsewhere — the company known for being fiercely private is becoming less shy.
“Being under the radar was a big advantage for many years. Nobody really knew what we were doing, and we grew all over the world,” said Mr Reid. But now, “with social media . . . you can google almost anything. If you don’t tell your own story, somebody else will tell it.”
Mars built its empire on chocolate but is now shifting. Sales growth of chocolate has stalled in the past few years and at the same time, Mars has made some big bets.
In 2015, the brand behind M&Ms and Snickers invested $100m in its first new US confectionery plant for 35 years. It also increased its advertising. In January this year, Mars bought VCA, a veterinary services company, for $9.1bn, pushing further into the fast growing pet care business — it already owns pet food brands including Pedigree, Whiskas and Sheba. Two months later, it introduced Maltesers as its first new chocolate brand in the US for 20 years.
“Mars is making a comeback,” said analysts at UBS, having ceded ground to life-long rival Hershey in the US. Mars, which makes about $35bn a year in sales, lost more than 1 percentage point of US market share between 2011 and 2016, to 27.3 per cent, against Hershey’s 31.6 per cent, according to Euromonitor.
Mars, like rivals across the food industry, has been jolted by the trend for consumers to seek healthier options. UBS projects chocolate sales in the developed world, which makes up two-thirds of the market, will slow in 2017-2018, from long-term growth of 2 to 3 per cent a year.
The sector has also consolidated and the top five manufacturers, including Mars, Mondelez and Nestlé, now account for more than 65 per cent of total confectionery sales.
During its heyday of the 1970s and 80s, Mars was known for its advertising tagline: “A Mars a day helps you work, rest and play.” But now, governments across the world are advising consumers to limit daily intake of indulgences such as chocolate bars to combat growing obesity rates.
In response, “we are doing all the things you would expect us to do”, said Mr Reid. Mars has reduced the size of a standard Mars bar to 51g, compared with 65g in the 1990s, so that its chocolate bars do not contain more than 250 calories. “The more you can take out of salt, sugar, fat, the better,” he said, adding that Mars is also working on healthier snacks, such as “Goodness Knows”, a fruit and nut bar laced with dark chocolate, and bite-sized chocolate bars, which are growing 10 times faster than the US chocolate market as a whole.
Mars is also looking to catch up with the rising popularity of local “craft” chocolatiers, similar to the trend seen for beer and coffee.
Despite losses in its home country, Mars has preserved its market share globally through strength in emerging markets such as China. It also benefits from private ownership, insulating the company from pressures to cut costs that have ravaged consumer goods groups through the past decade.
Hershey this year unveiled a new cost savings programme targeting 22 to 23 per cent profit margins, after rejecting a takeover bid from Mondelez.
Mars may also focus more on its second-largest business: pet care. US pet care spending is outperforming other food categories, having risen 4.1 per cent to $62.8bn last year, according to the American Pet Products Association.
Mars is already the second-biggest seller of pet food and products in the US after Nestlé and paid a 41 per cent premium on VCA’s share price to buy the company.
Despite the challenges, chocolate is still selling better than most other food categories, Mr Reid said. In the US, total sales of chocolate rose 3.5 per cent to $18.8bn last year, according to Euromonitor data.
Chocolate has also been shielded so far from the brunt of disruption from ecommerce. But as the industry looks to the future of shopping, analysts say that could change.
Brittany Weissman, analyst at Edward Jones, notes that people are spending less time in food shops, with their large displays of chocolate and sweets. “A lot of candy and chocolate tends to be an impulse purchase at the checkout line,” she said. “How do you replicate that online?”
