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Mars UK

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Mars is a leading player in the UK pet food, confectionery and culinary foods sectors, with brands such as Whiskas, Pedigree, Galaxy, Maltesers, Uncle Ben's and Dolmio. It also now houses the Wrigley's gum and mints portfolio, following their acquisition in 2008. For many years, the group conducted business through three separate companies, Pedigree Petfoods, Mars Confectionery and Food Manufacturers, but these businesses were gradually consolidated between 1998 and 2002 to form a single business unit, known as Masterfoods. This was designed to streamline operations and strengthen the group's combined negotiating power with retailers. In 2006, however, Mars announced a reversal of this consolidation process, and said that individual operating units would be split out again as separate entities. The Masterfoods name was later dropped in favour of the umbrella Mars brand.

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Competitors

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Brands & Activities

The UK has long been one of the Mars group's most important territories, and was the starting point for much of the company's growth under the leadership of Forrest Mars between the 1930s and 1980s. More recently however, performance has been weaker, especially in the confectionery sector.

Mars UK was once the country's leading confectioner, with a dynamic portfolio of top-selling brands. Perhaps the most iconic of these was the Mars Bar - in Britain actually a version of the product known in the US as Milky Way. This was marketed for many years under the slogan "A Mars a day helps you work, rest and play". It was supported by other products conceived and developed in the UK, such as Galaxy, Bounty, Twix, Maltesers and the sugar confectionery product Opal Fruits ("Made to make your mouth water").

However globalisation of Mars during the 1980s and 1990s, and the unification of its US and international arms, led to a steady decline in local performance. Top British brands such as the Mars Bar were replaced in importance by global brands Snickers (previously marketed in the UK in a slightly different form as Marathon) and M&M's (formerly Treets). At the same time, British inventions such as Twix, Maltesers and Opal Fruits were rolled out into other European markets and the US. Opal Fruits launched in the US under new name Starburst in 1976, and that name was later adopted in the UK as well. (In retro marketing promotion in Spring 2008, the company reintroduced the Opal Fruits brand for a test period exclusively through supermarket Asda. All Asda's supplies of Starburst were repackaged under the Opal Fruits name.)

However the lack of any significant new products led to a slow erosion of performance. In 2002, Mars even dispensed with its "A Mars a day helps you work, rest and play" slogan in favour of the rather less compelling "Pleasure you can't measure". An aggressive repackaging of the rival Cadbury confectionery portfolio the same year led to Mars being relegated to 2nd place in the UK confectionery market. In 2010, the group announced plans to reformulate all its chocolate products by reducing the saturated far content by 15%, but this did not appear to have helped the gradual decline. More recently sales of the company's bar products have declined as a result of smaller sizing to stay in line with government recommendations not to exceed 250 calories per individual bar. Prices per bar were not reduced.

Mars has around 29% share of the total UK confectionery market, according to Datamonitor, and 26% of chocolate confectionery. The company's top-selling confectionery brand is Galaxy (the UK counterpart to the Dove chocolate brand marketed by Mars in other countries), with sales of £225m in 2014/15, according to IRi figures quoted by The Grocer (year to Jul 2015). The brand has been the subject of a considerable marketing boost in recent years, including the launch of several variants including Galaxy Cookie Crumble, Galaxy Caramel and bagged snack Galaxy Bubbles. Galaxy Duets, comprising twin bars with different flavours, were launched in 2015. Already established bagged snack Minstrels has also been incorporated into the Galaxy family. Maltesers was the next biggest brand, with sales of £121m (excluding its gift box variant). Its performance has been reinforced by a heavy marketing spend tied into Easter, as well as spin-offs including boxes and ice creams. In 2012 it became the company's first product to use only Fairtrade chocolate. A bar variant, Maltesers Teasers, launched in 2013.

M&Ms became the company's #3 brand in 2015 at £84m, overtaking former leader Mars Bar, which has suffered a disappointing few years. Sales slumped sharply in 2010, after a five-year endorsement partnership with the England football team at the end of 2009. That deal caused a lift in sales before the 2010 World Cup tournament began; but the subsequent dismal performance of the England team proved more of a liability than a bonus for Mars. The company has tried to turn this around by promoting local amateur games. For 2014/15, sales were £84m according to IRi. Spin-offs include sister brand Mars Delight, introduced in 2007, and Malteser-style Mars Planets bagged snack. Snickers was also among the Top Ten local chocolate brands with sales of £84m. Twix, Milky Way and Bounty were some way behind with between £35m and £56m each.

Other products include low-calorie Flyte, Topic and Tracker bars and bagged snack Revels. Celebrations is a boxed selection featuring miniature versions of key brands. It has performed well in recent years, with sales lifting to £81m in the year to 2012.

In 2017, Mars launched "good for you" snacking brand Goodness Knows in the UK, its first completely new local launch since Celebrations 20 years earlier. The pack carries no Mars branding, and 10% of profits go to charities.

Several of the company's brands have also been reborn as ice cream snacks. Mars Ice Cream is #2 in the impulse sector, and #4 in take-home. The group has rolled out a similar collection of branded milkshakes and powdered beverage mixes under the Mars Consumer Drinks umbrella.

There was also one very significant development in 2008. In April that year, parent company Mars agreed to acquire chewing gum giant Wrigley. Following completion of that deal, Wrigley's UK subsidiary in Devon, now controlled by Mars, assumed management of the parent company's existing sugar confectionery brands including Skittles (UK sales of £44m in ye 2015) and Starburst (£26m), and the medicated sweets Tunes and Lockets. These are now marketed alongside the Wrigley's portfolio of gums and mints (see separate profile). Despite competition from Cadbury's Trident, Wrigley's dominates the UK gum market with around 90% market share. Lead brand is Extra. It alone has just over 65% of the UK gum market, with sales of just under £214m in 2014 according to IRi.

Mars's performance in other sectors has been more resilient than confectionery despite equally intense competition. In culinary foods, Dolmio is the UK's best-selling pasta sauce range by far, with sales of £129m in the year to Oct 2015 Nielsen for The Grocer), outselling own-label sauces as well as all its branded competitors combined. It is now accompanied by the premium-priced Seeds of Change organic range, sales of which were only around £5m. Combined share of the shelf-stabel pasta sector was approx 40%. Uncle Ben's remains the country's best-selling branded rice, and is also the umbrella for a wide range of cooking sauces. Sales are around £150m (year to May 2015, IRi for The Grocer).

Mars remains the leading player in the UK pet food sector, despite rapid growth by Nestle Purina. Whiskas has slipped to second place in the cat food sector, with sales of £196m according to IRi estimates (ye Aug 2016, The Grocer), behind Nestle's Felix (£251m). It is supported by Sheba (£64m), Kitekat and others. The company has around a third of the dog market, with market leader Pedigree (sales of £201m ye Aug 16), supported by Cesar (£38m) and Chappie. Royal Canin operates as a separate entity, marketing a range of premium foods for cats and dogs (against rivals such as Hill's and Iams). Mars also sells leading cat litter brand Catsan, Aquarian food flakes for fish, and even a range of nutritional products for horses including Spillers Feeds and Winergy. All of these products are underpinned by the company's dedicated pet nutrition research & development centre, Waltham.

The group operates several factories in the UK, making confectionery (in Slough), culinary foods (in King's Lynn, Norfolk), and petfoods in Melton Mowbray. Peterborough and Birstall. Mars ice cream is produced in France and imported. Mars Drinks conducts Mars' other global businesses in vending and beverage systems.

The group operates a number of sponsorship deals in the UK. In 2009 it agreed a four-year sponsorship of the England football team and of the Football League. The deal was renewed for a further four years in 2014.

Financials

Legally the group operates via a multitude of separate companies under the umbrella of Effem Holdings Ltd. That entity reported turnover of £2.74bn for 2015, down 1%, but net profit up 15% to £447m. Figures include contributions from selected operating companies in the Netherlands and the Czech Republic.

Mars Chocolate UK filed accounts showing turnover of £852m in 2015, up 3%, and net profits up 7% to £90m. Mars Petcare showed revenue of £518m and net profits of £33m. Mars Food reported £236m in revenue and net profit of £33m.

Background

Mars was first established in the UK by American-born Forrest Mars, the estranged son of company founder Franklin Mars (see Mars Inc profile for more). A brilliant but difficult young man, Forrest Mars fell out with his father in the early 1930s, and ran off to Europe. He had been given the recipe for Franklin's Milky Bar snack, and in 1933 he set up in business in Slough near London, under the name Food Manufacturers Ltd. He launched the product, with a slightly sweeter taste, as the Mars Bar.

A year later he diversified into petfood, buying Chappel Brothers, a company which had carved out a small niche for itself repackaging meat by-products as dogfood under the brandname Chappie. At the time, Chappel was virtually the only company in the UK which sold food specifically for pets. Generally, household animals were fed table scraps. Mars spotted an opportunity, launching a second brand, Pedigree, and managed to increase sales in his new venture to £100,000 over the next five years.

In 1939, following the death of Franklin Mars, Forrest went back to the US, leaving Food Manufacturers in the hands of managers. He then set about wresting control of his father's company from Franklin's heirs, a task which he completed in 1964, at which point Food Manufacturers was merged with Forrest's US-based M&Ms company and the original Mars business. The company has continued to play an important role in the group as a whole ever since.

In 2007, Mars UK was forced to back down on plans to use enzymes derived from animals in its snack food products after angry protests from vegetarians. Later in the year it was reported to have opened discussions with other manufacturers for licensing of its brandnames for a range of cakes and desserts.

Last full revision 11th September 2015

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