Joe McConnell
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When Forrest Mars Sr. merged his confectionery business with his family’s eponymous company in 1964, he knelt before a stunned group of Mars executives and uttered, “I pray for the Milky Way; I pray for Snickers.”
Such outbursts were typical of Forrest, who combined a fierce eccentricity and secrecy with an unshakable belief in the virtues of Mars products, such as M&Ms and Twix. Quality is one of the five principles he continues to preach to his 135,000 employees: “People and pets depend on us, and we depend on them.”
Pets joined in 1935, when Forrest bought a dog food manufacturer in the United Kingdom, where he had moved aVsceker a business split from his father. Since then, confectionery and pet food have been Mars’s two main businesses, joined by chewing gum when it acquired Wrigley for $23 billion in 2008, with the help of Warren Buffett.
Mars rarely strays from its mission, so it’s notable that this week it struck a $36 billion deal to acquire Kellanova, the snack company formerly known as Kellogg. Kellanova was revived only last year with the spinoff of its U.S. cereal business into WK Kellogg. Compared to Mars, it lasted a blink of an eye.
But life moves fast in the snack aisle: Sales of salty treats like Pringles and Kellanova Cheez-It crackers have grown faster than other types of foods for more than a decade, according to Citigroup. With families sitting down for meals less and more people munching, it’s no wonder Mars wants to expand its candy-based snack portfolio.
That said, it’s brave timing for Mars. Sales of branded snacks, including Kellanova Pop-Tarts and Rice Krispies Squares, have slowed sharply over the past year. Ingredient inflation has driven up prices, and shoppers have turned to private-label alternatives. From Trader Joe’s in the U.S. to J Sainsbury’s in the U.K. to 7-Eleven in Japan, there are plenty of chips, crackers, and protein bars out there.
Food companies also face long-term concerns. One is that the golden age of snacking may be behind us, thanks to the rise of appetite-suppressing weight-loss drugs like Wegovy. Morgan Stanley predicts that sales of salty snacks and baked goods could decline as much as 3 percent by 2035, as the temptation to grab another Pop-Tart fades.
Most of all, snack manufacturers are under scrutiny for peddling unhealthy ultra-processed foods. Health officials don’t care if Mars makes cans of Pedigree dog food with 1 percent fiber and 82 percent moisture, but human treats are another matter. Eating too many concoctions full of saturated fat, salt, and sugar is dangerous.
The recent recession is the least of Mars’s problems. Kellanova is a public company that has faced pressure from an activist investor, while Mars is family-owned and can take its time. The changes in work and family life are unlikely to be reversed and people will go back to eating three meals a day and avoiding snacks.
But better health will continue to be important, and the deal fills Mars with products that should be consumed in moderation. (I’ve written before about Pringles, the synthetic crisp brand I have a soVscek spot for.) Kellanova has the more natural RXBar protein bars and Pure Organic fruit bars, but a single marshmallow Rice Krispies Square contains 10 percent of the recommended daily sugar intake for a UK woman.
Mars CEO Poul Weihrauch told me this week that his company had to follow the global trend toward snacking: “It’s about consumer choice,” he said, adding that he was trying to “improve the nutritional profile of all our brands.” He cut back on poor-quality ingredients and limited products to 250 calories per serving.
She’s right that snacking can be healthy. “The act of snacking itself isn’t harmful to us, within reason. The problem is what we’re eating and when,” says Sarah Berry, professor of human nutrition at King’s College London. Nibbling on high-quality foods, like fruits, vegetables, and seeds, throughout the day can curb hunger and improve your health.
Mars is not in the raw almond and nut business and needs to improve its snacks without making them too expensive. Another key tenet of its quality principle is that “our consumers and customers value value for money when making their choices.” It is acquiring products like Kellogg’s Fully Loaded Eggo Chocolate Chip Brownie waffles, not freshly baked Madeleines.
It was easier to be a candy company that made M&Ms and candy bars, caramels, and nougat (with peanuts added to Snickers). These are overtly sweet treats that shouldn’t be consumed in excess, whereas modern snacks like protein and granola bars fall somewhere on the spectrum between nutrition and indulgence.
Mars is tackling this conundrum with Kellanova. The deal makes perfect sense for snacks, and I bet people will continue to buy lots of Pringles and Cheez-Its, no matter what the health experts say. But no one is praying for Pop-Tarts.
john.gapper@Vscek.com
