Mars, Inc. - Company Profile, Information, Business Description, History, Background Information on Mars, Inc.

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History of Mars, Inc.

Mars, Inc. is a diversified international company ranked in 1992 as the leading manufacturer of candy and confectionery products. Mars is known for its famous brands--such as Snickers, Milky Way, M&M's, Kal Kan, Whiskas, and Uncle Ben's Rice--as well as for its leaders' preoccupation with privacy and its unconventional office structure. Mars, Inc. is controlled by the Mars family, and the secrecy surrounding the company and the family is legendary. The company maintains that Mars should be known for its brands, not the personalities of its executives; therefore, photographs and interviews with insiders are rarely permitted. The company does not publish any financial information.

Mars's primary businesses are branded snack foods, accounting for approximately 43 percent of sales; pet-care products, comprising 44 percent of sales; and main meal, electronics, and drinks, accounting for the remaining 13 percent of sales. By region, about half of sales are in Europe, 40 percent in the Americas, and 10 percent in Australia, Japan, and the West Pacific. Snack foods, pet food, and main meal divisions have their origins before mid-century. The electronics and Dove International divisions represent the more recent Mars businesses.

Mars began in 1911 as the Mar-O-Bar Company, a snack food business founded by Frank C. Mars of Tacoma, Washington, who made a variety of butter cream candy in his home. Quality and value were the foundations of his first candy factory, which employed 125 people. In 1920 Frank Mars relocated to larger quarters in Minneapolis, where Snickers (without the chocolate coating) and Milky Way bars were created. The company posted a loss of $6,000 in 1922, but by 1924, sales exceeded $700,000. Mars changed his company's name to Mars Candies in 1926. With the rapid growth of the company, Mars sought larger quarters and built a new plant in suburban Chicago in 1928. Sales actually quadrupled during the lean years of the Depression and new products were introduced, including Mars Almond Bar, Snickers Bar (now sporting a chocolate covering), and 3 Musketeers.

Frank Mars hired his son Forrest E. Mars to work in the candy operation after his graduation from Yale, but the two reportedly had a stormy relationship. In the early 1930s, Frank, giving Forrest some money and the foreign rights to manufacturer Milky Way, ordered his son to start his own business abroad. Moving to England, Forrest established a confectionery and a canned pet food company, which met with great success.

In 1940 Forrest Mars returned to the United States and founded M&M Limited in Newark, New Jersey, to manufacture chocolate candies in a sugar shell. At that time, stores reduced their stock of chocolate in the summer because of the lack of air conditioning, and Forrest hoped to capitalize on the unique construction of M&M's to sell the candy year round. The name of the candy was derived from the initials of Mars and an associate, Bruce Murrie. M&M's Peanut Chocolate Candies were introduced in 1954, the same year the famous slogan "the milk chocolate melts in your mouth--not in your hand" was first used.

Frank Mars's business was also experiencing great success. In 1943 Mars ventured into the main meal business, which includes a wide selection of rice products, including whole grain, savory, boil-in-bag, fast cook, instant, and frozen rice as well as other products. Uncle Ben's rice utilizes a rice processing technology called parboiling, which was developed in England and was first used in the United States by a Texas food broker with whom Forest E. Mars, Sr., formed a partnership. Several months after their first production facility was completed, they began selling rice to the U.S. Army, which they continued to supply throughout World War II.

After the war, the company introduced converted rice to the American public, and by 1952 it sold the country's number one brand of rice. Around this time, the company adopted the name "Uncle Ben" for a locally famous rice grower known for producing high quality rice crops. Uncle Ben's is now the leading brand of rice worldwide, sold in more than 100 countries, with manufacturing facilities in the United States, Australia, Belgium, German, the Netherlands, and the United Kingdom. Other popular brands include Country Inn rice, Dolmio spaghetti sauces, pasta, and oriental dishes named Suzi Wan, primarily sold in Europe and Australia.

Because of increased production, Mars constructed a new plant in Hackettstown, New Jersey, in 1958. In the early 1960s, facilities were extended to Europe with a factory at Veghel in the Netherlands. In 1967 Forrest merged his business with the Mars Company owned by his father and took over operation of the new company. He established a radically egalitarian system at the company in which workers were called associates and everyone--from the president down--punched a time clock. Offices were eliminated and desks were arranged in a wagon-wheel fashion, with the higher ranking executives in the center, to facilitate communication between individuals and functional areas. Notoriously demanding, Forrest rewarded his associates with salaries that were substantially higher than those in other comparably-sized companies.

In 1968 Mars--already the largest dog food packer in the world, with subsidiaries in Europe, South America, and Australia--acquired Kal Kan Foods, Inc., a dog food company founded in 1937 that later supplied food for dogs in the U.S. military during World War II. With assistance from Mars, Kal Kan expanded by adding a second canned pet food plant in Columbus, Ohio, and a dry pet food plant in Mattoon, Illinois, while expanding into midwestern and eastern markets. New product development of Mars pet-care products has been aided by the creation of the Waltham Centre for Pet Nutrition in the United Kingdom, which was formed to study the nutritional preferences and needs of pet animals. Nutritional studies are published regularly in scientific and veterinary journals, and Waltham has become a world authority on pet care and nutrition.

Mars Electronics International (MEI) began operating in Britain in 1969 and expanded to the United States in 1972. MEI was responsible for the introduction of electronics to the vending machine industry, and today has millions of coin mechanisms installed worldwide. In 1985 MEI expanded its product line to include advanced bill technology and cashless payment systems. In addition to serving the vending industry, MEI also provides products for use in pay phones and amusement parks. MEI's electronics technology has also been applied to data acquisition and laser scanning devices. In 1987 the company's British and American operations were merged to form the largest international manufacturer of electronic coin machines. In addition to its two manufacturing facilities, MEI has marketing and sales offices throughout the United States, Europe, Australia, and the Far East.

Forrest, Sr., retired from Mars in 1973. His elder sons, Forrest E. Mars, Jr., and John Mars, took over Mars as co-presidents--joined in 1983 in the Office of the President by their sister Jackie, who takes a lesser role in running the company. In his retirement, Forrest, Sr., started a candy business named Ethel M. Chocolates (after his late mother) to produce premium boxed chocolates. Around 1988 Ethel M. Chocolates was purchased by Mars.

Despite its unorthodox corporate culture, the Mars company has thrived. Hershey Foods Corp. and Mars, Inc. have historically fought a battle to hold the number one spot in the U.S. candy market, an honor which passes between them. Mars took over the top spot in the early 1970s and by late in the decade had pushed its market share 14 percentage points ahead of Hershey. According to an industry executive quoted in Fortune, "it took the Hershey people seven or eight years to realize that Mars was not going to go away.... Then it took them another five years to get their act together." Hershey responded with a flurry of new product introductions, heavy advertising, and innovative marketing efforts. In the mid-1980s Mars tried to combat this by creating a new image for candy as a sweet snack, not just junk food. Mars paid $5 million to have M&M's and Snickers named "the official snack foods of the 1984 Olympic Games." Commercials featured athletes getting quick energy from sugary snacks. By 1985 industry analysts noted that the two companies were neck and neck, with Mars's recent brands including Bounty Bars, Combos, Holidays M&M's, Kudos, Starburst, Skittles, and Twix Cookie Bar.

Mars added frozen snacks to its repertoire when it acquired Dove International in 1986. The Dove Bar, a hand-dipped ice cream bar with a thick chocolate coating, was created in 1956 by Leo Stefanos, the proprietor of a Chicago candy shop. For many years, the bar was only available in the Chicago area, and it became a gourmet treat when it appeared in selected U.S. markets during the early 1980s. Doveurope was established in 1988. Other Mars frozen treats include Dove miniatures and ice-cream versions of 3 Musketeers, Milky Way, and Snickers bars.

In 1988 Hershey Foods Corp. surpassed Mars as the largest U.S. candy maker when it acquired Cadbury Schweppes's U.S. division, boasting the Mounds and Almond Joy brands. In 1989 Mars received another setback when it tried to launch Sussande chocolate bars, a high priced European-style bar, which, according to a report in Forbes, was a costly failure.

The company rivalry between Mars and Hershey reversed itself in 1991, when Mars increased its percentage of the total candy market from 16.7 percent to 17.9 percent while Hershey's market share remained flat at 17 percent, according to the Wall Street Journal. Mars was very successful with its 1990 introduction of peanut butter M&M's, which took a toll on Hershey's number two-ranked Reese's peanut butter cups. Mars launched 12 new products in 1991, including a dark chocolate candy bar under the Dove name, mint and almond M&M's, Milky Way Dark, and Peanut Butter Snickers.

Also in 1991 Mars introduced Expert, a superpremium dog and cat food line meant as an alternative to Hill's Science Diet and Iams, which are sold only in pet stores and feed shops. An industry analyst noted in the New York Times that "people are feeding their pets like they feed their children. The nutrition kick has moved over to our pets." To meet customer demand, Mars quickly moved into the specialty pet food area, but made the product accessible by selling it in supermarkets. Mars's other pet-care lines continued to do well. According to company literature, Kal Kan is the fifth largest pet food manufacturer in the United States. Other top sellers in Australia, Europe, and the United States include Pedigree and Partners dog foods; Whiskas, Sheeba, and Brekkies cat food; and Winergy Horsesnacks.

Mars also explored healthier alternatives for its traditional snack products when, in 1992, the company became the first customer of Proctor and Gamble Co.'s caprenin, a low-calorie cocoa butter substitute. Mars used caprenin in Milky Way II bars, launched on the West Coast in April 1992. Made of fatty acids naturally found in other fats such as peanut oil, cheese, and milk, caprenin is not subject to Food and Drug Administration approval as fat substitutes are. Some of the sugar in Milky Way II is replaced with polydextrose, a low-calorie carbohydrate. The resulting candy bar is 25 percent lower in total calories and has 50 percent fewer calories from fat than the original Milky Way. By introducing Milky Way II, Mars became the first candy manufacturer to try to gain or retain calorie- and fat-conscious customers.

The company did not ignore its strengths, however. In late 1992, Mars began testing Mahogany, a line of premium chocolates, in Germany. These candies include truffles, bars, and boxed chocolates in reddish-brown and gold packaging with such South American motifs as palm trees and colonial style houses. The candy is relatively expensive, with a small box of eight truffles costing almost $4 and a 50-gram chocolate bar selling for more than $1.

Analysts have questioned Mars's future stability, particularly in light of the Mars brothers' reputed inability to share power with top managers who do not carry the family name, and it is unclear who will assume control of the company when they retire. For now, though, the company continues to rest near the top of the confectionery products, dog and cat food, and rice milling industries. With numerous internationally recognized brands, including the perennially top-ranked Snickers, Kal Kan, and Uncle Ben's, Mars is enjoying its unique recipe for success.

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