* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *

Mars Inc (US)

Profile subscribers click here for full profile

Still owned and controlled by its founding family, packaged foods giant Mars is one of the world's biggest private companies, with annual sales of around $33bn. In addition to its globe-spanning confectionery brands, which include Snickers, M&Ms, Starburst and Skittles, the company is one of the leading worldwide manufacturers of petfood, through Pedigree, Whiskas and other brands, and also manufactures Dolmio sauces and easy-cook rice-based meals under the Uncle Ben's umbrella. In 2008, in by far the biggest acquisition in the company's history, Mars acquired gum and mint giant Wrigley in a substantial $23bn deal which made it the world's largest overall confectioner. It was pushed back into second place two years later by the merger of Kraft and Cadbury. In chocolate, it still ranks behind Hershey in the US, although Mars has a far wider global spread. M&M's and Snickers are the world's best-selling confectionery brands.

Advertising

Click here for a listing of Mars Agency Account Assignments from Adbrands.net. In the US, Kantar (in Advertising Age) reported measured expenditure of $710m for Mars for 2016, out of an estimated total of $1.1bn. Biggest spending brands were Wrigley (measured media $121m), M&Ms ($105m), Snickers ($86m), Pedigree ($55m) and Skittles ($44m).

Competitors

See also Food, Confectionery and Petcare Sector indexes for other companies

Brands & Activities

Mars has a broad global footprint and a strong portfolio of established brands, but until very recently had been troubled by a reluctance to take risks either in new product innovation or acquisition. In that sense, the group's private ownership had disadvantages as well as advantages. Although Mars was able to operate without the restrictions of public scrutiny, it was also held back for many years by over-cautious and risk-averse family owners, nervous about "breaking" a company forged by their ruthless father Forrest Mars Sr. As a result, the group lagged behind its competitors in terms of strategic flexibility.

Since the retirement of the Mars brothers in the early 2000s, however, the Mars corporate personality has changed quite dramatically. The first sign of that metamorphosis under what was then the newly appointed company president Paul Michaels - a trained marketer - was an edgy, often controversial approach in its marketing, very different from what had come before. Advertising, especially for its confectionery products, set out to grab customers' attention, often with bizarre or even mildly risque humour. The daring Wrigley's deal, unthinkable a decade earlier, confirmed the company's aggressive new stance. There were also several deals in the petfood sector, not least the purchase of Iams and Eukanuba from P&G in North and Latin America.

The group operates in three main areas of confectionery, petfood and meal accompaniments. In chocolate confectionery, it is the #2 manufacturer worldwide with an estimated 14.1% share in 2013 (according to Euromonitor), narrowly behind what is now Mondelez at 14.5%. In the US the acquisition of Wrigley briefly gave it the #1 spot, but it has subsequently slipped back behind Hershey. According to Nielsen data for the year to July 2015, Hershey was once again the leading player in US confectionery with 31.4% market share, narrowly ahead of Mars' 29.2% share. Lindt, Mondelez and Nestle ranked far behind at 5.4% (including Russell Stover), 5.3% and 5.1% respectively. Hershey had almost 45% share of US chocolate (to Mars' 29%). Mars leads sugar confectionery with almost 18% to Hershey's 15%.

Confectionery

M&M's is the flagship of the global chocolate portfolio, supported by Snickers, Twix and Milky Way, as well as Dove, Bounty, bagged Maltesers (in selected markets), and boxed selection Celebrations. Skittles and Starburst lead the collection of sugar confectionery brands, now managed out of the group's Wrigley subsidiary. According to research from Euromonitor, Snickers overtook M&Ms during 2012 as the world's top-selling confectionery product with total sales estimated at almost $3.6bn. M&Ms is close behind at $3.5bn, while Dove (known as Galaxy in several international markets) ranked 5th with almost $2.6bn. Milky Way (known in the UK and some other markets as the Mars Bar) generates around $2.4bn, while Twix brings in $1.5bn. In the US, M&Ms remains the company's top brand with around 5.5% local share (approx $1.3bn), but it sits in second place overall behind Hershey's Reese's.

Several markets are also home to their own local products. The US portfolio, for example, also includes 3 Musketeers, Combos crunchy snacks and Kudos; Australia has Kenman sugar confectionery, acquired in 1997; Germany has Amicelli. The latter is marketed as Mars Delight in the UK, where the group has its largest collection of regional brands, including the Mars Bar, Maltesers, Minstrels, Revels and Galaxy. (See Mars UK profile).

In fact, for various historical reasons (see below) many of the company's British brands were originally launched as copies of popular American favourites, their formulations "borrowed" (often without permission) from Mars or other companies by estranged heir Forrest Mars in the 1950s. The UK Milky Bar is actually a version of Mars USA's 3 Musketeers; Maltesers were a version of Leaf Brands' Whoppers (now owned by Hershey); Bounty was a version of rival Peter Paul's Mounds Bar (also now owned by Hershey); medicated cough sweets Lockets and Tunes were versions of Luden's and Hall's. Snickers and M&Ms were originally launched in the UK as Marathon and Treets respectively, but were rebranded during the 1980s and 1990s, at the same time that another local brand, Opal Fruits, adopted the US name of Starburst. One of the last remaining products in the portfolio to have different names in different territories is Dove, marketed in the UK and a few other markets as Galaxy. In fact, the two products were originally entirely separate, but have gradually been aligned to share the same formula and positioning.

The group was for many years very slow to introduce new confectionery brands, preferring instead to develop variations or extensions to existing brands. There have however been a handful of launches, mainly in new market sectors. Few have lasted. In 2002, Mars took its first steps into the cookie sector, launching a range of biscuits in the US, based on its leading chocolate brands. These were named Cookies& in the US, and were later introduced in other markets including the UK as Bisc& ("Biscand"). These proved less successful than had been hoped, and were discontinued in several markets in 2006. In 2003 the group took a first step into the breath mint segment with the launch of AquaDrops "instant hydrating" sweets. They too have been phased out since the addition of Wrigley. Several new products were launched in 2004, including M-Azing chocolate bars containing embedded M&Ms, and its first move into the gum sector, Skittles BubbleGum. However it took until 2009 for the company to unveil a completely new chocolate product in the US. Fling, a low-calorie bar aimed at women, launched in April and was the company's first new launch in the US for almost 20 years, since the local roll-out of Twix in 1980. In fact, Fling was not really new at all, but merely a slightly altered version of the existing product sold in Germany as Amicelli and in the UK as Mars Delight.

In 2017, the group announced plans finally to launch Maltesers in the US, only its second chocolate launch in its domestic market in over 35 years. That brand was originally launched in Britain by Forrest Mars Sr in 1937, during his self-imposed exile from the US company founded by his father, and has been a household name there for most of the past 80 years. However, in that era before globalisation, a virtually identical malted milk ball product was introduced in the US two years later by another company under the name Whoppers. This product passed through several hands before ending up with Hershey, which also acquired US rights to the name "Malteser" in order to prevent Mars from launching its own product in America. A court battle ensued, eventually won by Mars in 2015, paving the way for the US launch.

In 2008, the company took probably the most daring strategic move in its history by agreeing to acquire the world's leading gum manufacturer Wrigley for a whopping $23bn, a sum roughly equivalent to its own annual revenues at the time. The gum company continues to operate as a separate unit, still based in Chicago. Mars acquired the business for cash, funded out of its own resources, supported by $5.7bn of debt finance from Goldman Sachs and $4.4bn from billionaire investor Warren Buffett. The latter's Berkshire Hathaway holding company ended up with a 19% shareholding in the Wrigley division, worth around $2bn. The deal completed towards the end of 2008, at which point control of Mars' sugar confectionery brands, including Skittles and Starburst, transferred to the Wrigley team. Mars bought out Berkshire Hathaway's shares in 2016 to take full ownership.

Several of Mars's brands have also successfully been extended into ice cream. The most significant market is the UK where Mars ice creams are the UK's #2 brand behind Unilever's Wall's. The two companies have been at war for years over Unilever's attempts to shut Mars out of many retail outlets by supplying retailers with Wall's-branded freezer cabinets and prohibiting any other brands from being stocked. The case first arose in 1989 and has run on ever since. A European Court ruled against Unilever in 2004. Globally, Mars is the 5th largest ice cream manufacturer with 1.3% share by value. The company also launched a range of chilled chocolate milk drinks in the UK, based on its main brands.

In North America, the group has a line in gourmet boxed chocolates, marketed under the Ethel M brand (named after the former Mars matriarch). It has also expanded its global footprint with selective international acquisitions. In 2015, the group acquired Grupo Turin, the Mexican premium chocolatier, which is also local distributor in that country of Lindt products.

Pet Care

Mars is also the world's biggest petfood manufacturer, offering a wide variety of foods and treats for dogs, cats and even birds. In 2012, Euromonitor estimated global sales of $16.5bn, equivalent to 23.4% share, narrowly ahead of Nestle. Although it leads most international markets, Mars still sits some way behind Nestle in North America. The group has attempted to build its position through acquisition. In the US, for example, Mars absorbed Greenie's pet snacks in 2006 and independent manufacturer Nutro Products in 2007. It continues to market that company's Natural Choice and Max dog and cat food products under the Nutro brand. WholeMeals is a new line of nutritionally balanced chews for dogs launched in 2008. In April 2014, Mars agreed to pay $2.9bn for the majority of Procter & Gamble's Iams petcare business, including subsidiary brands Eukanuba and Natura. The deal includes all operations in North and Latin America, but not European Union markets. The addition of P&G Petcare increased Mars' global share to between 27% and 28%.

Mars was already the global market leader in the wet petfoods segment, where Whiskas and Pedigree are respectively the best-selling cat and dog brands worldwide. Euromonitor estimated sales of $4.7bn worldwide for Pedigree in 2012 and $2.75bn for Whiskas. However the US is primarily a dry foods market, with the result that Mars ranks #2 behind Nestle Purina. It is the market leader in the comparatively small wet dog food segment, with 46% share and sales of $642m (IRI, 52 weeks to Jan 2014, Grocery HQ) and also in cat snacks (58%, $241m), but trails Nestle and Big Heart Pet Brands in most other segments. The addition of P&G's brands lifted it to #2 in dry dog food, but it's in third place among branded products in wet and dry cat food and dog snacks.

In most other territories, however, Mars dominates the market - in Europe it has overall 44% share, and as much as 80% in Germany. Sheba, Cesar, KitEKat and Waltham are also all global brands, as is Trill bird food. Royal Canin, which the group acquired in 2001, is a leading dry petfood manufacturer in Continental Europe with global sales over $1.5bn and owns brands including Sensible Choice, Excel and Kasco, and Wellbeloved in the UK. In the UK, Whiskas is the leading catfood brand, Pedigree the best-selling food for dogs, and the company had an overall share of 32% in 2011 (Euromonitor), well ahead of Nestle (22%). The group also markets Catsan cat litter in several European territories including the UK and Germany.

In addition to its food products, Mars controls Banfield Pet Hospital, the world's largest veterinary practice with more 1,100 locations in North America and the UK under the Banfield, Bluepearl and Pet Partners banners. In 2017 it agreed to expand this business dramatically with the acquisition of US veterinary group VCA for $7.7bn, or $9.1bn including debt. That company runs around 800 animal hospitals across the US as well as 60 large diagnostic labs and a chain of doggy daycare centres under the Camp Bow Wow brand. Sales were around $2bn in 2016. VCA will continue to operate as a separate division under the umbrella of Mars Petcare, and will take over management of Mars's existing vet division. The deal will make petcare the single biggest business within Mars, ahead of confectionery.

Foods

The group's main meals arm markets a range of side-dishes. This is led by Uncle Ben's, which encompasses a wide variety of rice-based dishes, as well as sauces and other other products. Global sales were around $1.6bn in 2012. Dolmio is the group's Italian sauce line, a best-seller in several markets including the UK where it outsells all rival sauces by a considerable margin; Ebly is a range of wheat-alternative side dishes, mainly marketed in continental Europe; the Suzi Wan Chinese food range is also mostly available in mainland Europe. In 1997, the company acquired American organic sauces marketer Seeds of Change, now marketed worldwide alongside Dolmio. In 2017, the group agreed to acquire ethnic snacks and meal kits brand Tasty Bite for an undisclosed sum.

Australia and New Zealand are different from the group's other international markets in that the local business still operates under the MasterFoods branner, and sells an extensive range of additional products including table sauces, spreads, marinades, mustards and spices. That business was originally established by the Lewis family in the 1920s. It became the local importer of Mars' Uncle Ben's brand in the 1950s and was acquired by the group in 1967. MasterFoodServices is a subsidiary division marketing group food products to retailers.

A separate unit, Mars Drinks, made the Café Flavia and Klix office drinks systems. That business was sold to Italian coffee group Luigi Lavazza in 2018 for an estimated $650m. Another group subsidiary, Mars Electronics International, was the first company to develop (in 1970) automatic coin recognition systems for use in vending machines. It was sold to private investors in 2006.

The group's newest division is Mars Symbioscience, run by Frank Mars, a grandson of Forrest Mars. This is described as the group's global health and life sciences incubator, involved in several different fields of biological research including the development of botanical derivatives for healthier food, veterinary studies and plant care. Its products include Seramis plant foods, and low calorie cocoa derivatives CocoaVia and Cirku.

For many years, Mars Inc served only as the holding company for operating division Masterfoods, which was umbrella for virtually all of the group's consumer brands. That name, which had actually originated in the company's Australian subsidiary, was adopted globally during the 1980s and 1990s for what was then a patchwork of separately branded businesses including M&M/Mars in the US, and Effem (named after founder Forrest Mars' initials) in Latin America and Canada. During 2007, however, the Masterfoods brand was phased out in favour of the main Mars name.

The group does not declare its financial results. However it confirmed revenues of $33bn in 2014, making it the 3rd largest private company in the US after Cargill and Koch Industries. For 2016, revenues were estimated at $35bn.

Mars commands fierce and long-lasting loyalty among its staff despite - or perhaps even because of - working practices which were put in place by Forrest Mars Sr and have remained in operation ever since. The group is famed for an extraordinary degree of corporate secrecy. Senior managers almost never give interviews: former president Paul Michaels gave only one (to Fortune) in the decade before he retired, preferring to let the brands speak for themselves, so to speak. All "Martians" (as they informally call themselves), from the president down to the lowest employee, punch in factory-style on a time clock every day, and persistent lateness can cost employees 10% of their salary. There are very few private offices throughout the organisation, and meeting rooms are named after the group's five guiding principles: Quality, Responsibility, Mutuality, Efficiency, Freedom. These are enshrined in prominent display in every office building throughout the world, and are adhered to strictly. Although there are no stock options or other public company perks, salaries are high. The company spends its money on its employees not on lavish treats or expensive architecture, and as a result, it has one of the lowest staff turnover rates of any packaged goods company.

Although they still own 100% of the business, the Mars family retired from direct daily management control in 2003. Forrest Mars Sr, who created the company as it exists today, died in July 1999, aged 95. That same year, his elder son Forrest Mars Jr retired from the Mars business. He died in 2016. Younger brother John Mars retired in 2003. He and sister Jacqueline Badger Mars are each thought to control a third of the group's equity. The remaining third is divided between the children of Forrest Mars Jr. The family's combined wealth was estimated by Forbes in 2018 at $71bn.

The three siblings each have a number of children and grand-children who hold middle-ranking positions within the group, and also comprise the board of directors. The most outgoing member of the family is Forrest Mars Jr's daughter Victoria B Mars, who became company chairman in 2014. John's son Frank Mars heads up Mars Symbioscience; Valerie Mars is head of corporate development.

Background

During the early years of the 20th century, company founder Franklin Mars had tried his hand at a number of different confectionery businesses. All of them failed and in 1910 his first wife Ethel, also the mother of his infant son Forrest, divorced him. He married again and eventually set up business in Minneapolis in the early 1920s, with a company which he named Mar-O-Bar. His new product, launched in 1923, was a chocolate-covered nougat bar which he named Milky Way. Against all the odds, it proved a huge success, generating sales of almost $1m in its first year and finally making Franklin Mars a wealthy man.

Franklin had had little contact with his son over the previous 20 years, but in 1930 persuaded Forrest to come and work for the company, now renamed Mars Inc. That same year, Frank developed another new nougat bar, which he named Snickers after a favourite horse he owned. Two years later this was followed by 3 Musketeers, by which time the company's sales had grown to $25m. Ironically, although the Mars factory made the nougat filling for its products, all of the chocolate used to coat them was supplied under contract by Hershey, already firmly established as the country's #1 confectioner.

Despite Frank's attempts to patch up relations with Forrest, the two argued constantly, and Mars Jr also regularly vented his evil temper on employees. In 1932, the head-strong and confrontational young man tried to persuade his father to expand the business into Canada. Frank Mars refused, preferring to rest on his hard-won laurels as the #2 US candy maker. This led to their most bitter row yet, and Forrest left the company. As a parting gift, his father gave him $50,000 and foreign rights to Milky Way and then wrote Forrest out of his will.

Forrest Mars ran off to Europe. His first stop was Switzerland, where he took jobs as a production line worker at Tobler and Nestlé in order to learn more about chocolate manufacturing. He ended up in the UK where he started his own business, Food Manufacturers Ltd in the town of Slough, west of London. In 1933 he launched a slightly sweeter version of his father's Milky Way, which he named 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, it was virtually the only company in the UK which sold food specially made 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 the same year that Forrest Mars launched himself into the petfood business, Franklin Mars died, leaving his business to his second wife and their daughter Patricia. With his father now out of the way, Forrest was strongly tempted to try his hand building his own rival empire back in the US. In 1939, he returned home, leaving the UK business in the hands of senior managers. Just before he left he reportedly made an agreement with rival British confectioner Rowntree Mackintosh to license a process they had developed for hard-coating chocolate beans with a candy shell, which they introduced in the UK as Smarties. On his return to the US, Forrest recruited Bruce Murrie, son of the president of Hershey, as his business partner and launched his own version of Smarties in 1940 under the name M&M's (which stood for Mars & Murrie's). Like Mars Inc, M&M's bought its chocolate under contract from Hershey, but that relationship soured rapidly after Forrest kicked out Murrie in 1949. Fearing the introduction of a competitive product, Mars began stamping a letter M on his M&Ms from 1950.

Forrest Mars was also experimenting in other areas. During the early 1940s he acquired rights to a process for parboiling rice for commercial sale, and he launched the product in 1945 under the brand name Uncle Ben's. Like his earlier invention of packaged petfood, this was another ground-breaking step. Rice was a common enough commodity, but no one had tried to brand it before. Ad agency pioneer Leo Burnett, who specialised in character-led branding, was tasked with inventing a name for the product. According to company legend, the resulting "Uncle Ben" character was inspired by a waiter in a Chicago restaurant where Burnett and Forrest Mars met for lunch.

Now Forrest turned his attention to his father's old business, still controlled by his stepmother and her family. Mars Inc had launched several new products since Frank Mars's death, including its own Mars Bar in 1936 (bearing no similarity to Forrest's British Mars Bar). But none of the new products had come close to matching the success of Milky Way, 3 Musketeers and Snickers. In 1945, Franklin Mars' second wife died, leaving a small part of her shareholding to Forrest as a gesture of reconciliation. He used this gift to wage war on the company's executive team. Arguing that the business was being managed poorly, he attempted to persuade the board to let him take full control. Little by little he began to increase his influence over the company. Finally, after almost twenty years of badgering, he managed to persuade his half-sister Patricia to sell her stake to him. In 1964, he finally took control of Mars Inc in the US, merging it with his existing businesses M&M's Inc in the US and Food Manufacturers in the UK.

The next step was to terminate the relationship with Hershey's, which had continued to supply coating to Mars. In fact that contract accounted for 30% of Hershey's sales by 1964. Mars then mounted a brutally aggressive marketing strategy against the larger company, overtaking it as the #1 US confectioner by the mid-1970s. He also extended his petfood business, buying US manufacturer KalKan in 1968, as well as Masterfoods, a small business based in Australia which was the local importer of Uncle Ben's. Over the following years, the Masterfoods name was gradually adopted by the food businesses elsewhere in the group. At the same time, Mars expanded its range, launching several of his US brands in the UK. Snickers was introduced in 1968 as Marathon; M&Ms were introduced as Treets. (Both brands were brought into line with the US branding in 1990s, at the same time as Opal Fruits were renamed Starburst).

In 1976, having achieved his ambition to become the leading confectioner in the US, Forrest abruptly decided to give up the business. He handed over all his shares in Mars Inc to sons Forrest Jr and John and daughter Jacqueline, and went off to dabble in another small operation of his own, Ethel M liqueur chocolates, named after his mother. (This too was inherited by Forrest Jr and John in 1986). The brothers had inherited their father's hot temper, as well as his rigorous control of the minutiae of the business. To set an example to his employees, Forrest Mars Sr had insisted on punching a time-clock every day when he arrived at work, and the same rules applied under his sons. Staff were obliged to work long hours, usually in the most sparsely furnished corporate offices, and perfection was demanded at every stage of the manufacturing process. In compensation, however, the company was renowned for its exceptional salaries - managers could earn as much as twice the amount paid by competing companies, provided they performed well.

However Forrest Jr and John Mars lacked their father's uniquely obsessive entrepreneurial zeal, and adopted a highly conservative approach to the business. Rather than invent new products of their own, the brothers instead chose to launch tried and tested European brands such as Twix or Starburst in the US. These were only modestly successful, and gradually the company's lead as #1 confectioner began to be whittled away. Famously, the brothers made a huge blunder in the mid-1980s, when they refused permission for M&Ms to be used in the film E.T. as the candy used to lure the extra-terrestrial out of the woods. Instead director Steven Spielberg approached arch-rival Hershey for their lesser known Reese's Pieces. After the film's release, sales of Reese's Pieces tripled. The company missed another huge opportunity when it turned down a chance to buy Peter Paul, the US confectionery business of Cadbury. Instead Hershey bought the company in 1988, finally pushing Mars back into the #2 slot.

The company did however buy ice cream maker Dove Bar International, which became the core of a new line of Mars-branded impulse ice creams, later introduced into the UK. In 1995, Mars also played a key part in the establishment of agency M&C Saatchi when it withdrew its £230m Whiskas account from Saatchi & Saatchi after Maurice and Charles were ousted in a boardroom coup. In 2001 the group agreed to buy Royal Canin, Continental Europe's leading pet food company, for about €1.5bn. It was the group's first major acquisition since 1986. The deal was cleared by European regulators in early 2002 on condition that Mars sell off certain brands to avoid a potential monopoly in the French and German markets. Mars divested its own Brekkies and Advance petfood brands, as well as Royal Canin's Royal Chien, Premium and Playdog products.

In 2002 the company launched an outrageously cheeky assault on the long-running slogan used by arch-rival Nestle's Kit Kat, announcing plans to launch a rival product, Have A Break. Nestle was unable to prove in court that its "Have a break - have a Kit Kat" catchphrase constituted a trademark, but in fact the Mars Have A Break bar has yet to see light of day.

John Mars followed his brother into retirement in 2003, handing over day-to-day running of the business to professional managers, principally CEO Paul Michaels. Although this led to a growth in confidence and a greater willingness to try out new ideas, some of the old habits continued, not least the intense secrecy surrounding all aspects of the business. Gradually, however, those old attitudes changed and the group began to demonstrate new daring in both its marketing and its corporate strategy from 2006 onwards.

Last full revision 20th September 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


All rights reserved © Mind Advertising Ltd 1998-2019