Mars, Incorporated History
McLean, Virginia 22101
Telephone: (703) 821-4900
Fax: (703) 448-9678
Incorporated: 1911 as Mar-O-Bar Co.
Sales: $14 billion (2000 est.)
NAIC: 31132 Chocolate and Confectionery Manufacturing from Cacao Beans; 31134 Nonchocolate Confectionery Manufacturing; 31152 Ice Cream and Frozen Dessert Manufacturing; 311111 Dog and Cat Food Manufacturing; 311212 Rice Milling; 311919 Other Snack Food Manufacturing; 311991 Perishable Prepared Food Manufacturing; 311999 All Other Miscellaneous Food Manufacturing; 333311 Automatic Vending Machine Manufacturing
'Good products plus good people makes a good business' was one of Forrest Mars, Sr.'s guidelines for running the company he founded. It is a formula to which Mars has always adhered. Key Dates:
- Frank C. Mars starts a candy factory in Tacoma, Washington.
- Mars relocates to Minneapolis; company begins selling Snickers and Milky Way bars.
- Business is renamed Mars Candies.
- A new plant in Chicago is built.
- After starting operations in Europe, son Forrest brings M & M's to United States.
- Mars begins making parboiled (instant) rice for the U.S. Army.
- Peanut M & M's debuts.
- Mars builds a new plant in New Jersey; facilities soon extend to the Netherlands.
- Frank and Forrest Mars merge their respective businesses.
- Mars, already a leading dog food maker, buys and expands Kal Kan.
- Mars Electronics International begins developing high-tech vending machines.
- Forrest Mars retires; elder Mars children become co-presidents.
- Mars enters frozen snack business with purchase of Dove International.
- Numerous new candy and pet food brands are added.
- Founder Frank Mars dies.
- Cocoapro.com web site celebrates the magic of chocolate.
From its origins in candy and confectionary products, Mars, Incorporated has diversified to become a world leader in several other markets, including snack foods, pet care products, main meal foods, electronic automated payment systems, and soft drink vending. In spite of its large size and geographic reach, the company remains privately owned. It has fostered an ostensibly egalitarian corporate culture since the 1960s. The company is notoriously secretive despite the millions it spends to promote its products. Although lagging behind rival chocolatier Hershey domestically, Mars has stronger global operations and controls 15 percent of the world candy business.
Origins in 1911
Mars began in 1911 as the Mar-O-Bar Co., a snack food business founded by Frank C. Mars of Tacoma, Washington, who made a variety of buttercream 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 the 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 manufacture 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 included 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 utilized 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 Forrest 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 eventually became 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 included Country Inn rice, Dolmio spaghetti sauces, pasta, and oriental dishes named Suzi Wan, primarily sold in Europe and Australia.
United in 1967
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&mdashquired 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 was 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 were published regularly in scientific and veterinary journals, and Waltham became 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. 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 provided products for use in pay phones and amusement parks. MEI's electronics technology had 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 had 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 took 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.
Sweet Battle in the 1970s and 1980s
Despite its unorthodox corporate culture, the Mars company thrived. Hershey Foods and Mars historically fought a battle to hold the number one spot in the U.S. candy market, an honor which passed 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 brand introductions 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; it appeared in selected U.S. markets during the early 1980s. Doveurope was established in 1988. Other Mars frozen treats included Dove miniatures and ice-cream versions of 3 Musketeers, Milky Way, and Snickers bars.
In 1988 Hershey Foods Corporation 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 suffered 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.
More Brands for the 1990s
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 super-premium dog and cat food line meant as an alternative to Hill's Science Diet and Iams, which was 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 was the fifth largest pet food manufacturer in the United States. Other top sellers in Australia, Europe, and the United States included 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 Procter & 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 was not subject to Food and Drug Administration approval as were fat substitutes. Some of the sugar in Milky Way II was replaced with polydextrose, a low-calorie carbohydrate. The resulting candy bar was 25 percent lower in total calories and had 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 included 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 was relatively expensive, with a small box of eight truffles costing almost $4 and a 50-gram chocolate bar selling for more than $1.
Analysts questioned Mars's future stability, particularly in light of the Mars brothers' reputed inability to share power with top managers who did not carry the family name, and it remained unclear who would assume control of the company when they retired. In the early 1990s, though, the company rested 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 enjoyed a unique recipe for success.
John and Forrest Mars, Jr., had trouble through three presidents in the first four years in the early 1990s. Demanding taskmasters, they often paid double the going rate for management talent. In the middle of 1993, as its competitors downsized, the company offered voluntary separation agreements to its U.S. employees.
'Waking Up' in the Mid-1990s
Market share in several categories slipped in the early 1990s; the overall European market was shrinking. Mars suffered a conspicuous lack of successful new products, an area in which archrival Hershey excelled. However, reported Fortune, the Mars brothers seemed unfazed, likely more focused on long-term concerns than momentary fluctuations in sales. Fortune questioned the effectiveness of the company's 'one world, one brand' policy, maintaining regional differences were still an important factor in marketing. Mars, however, still beat Hershey's overseas; it was estimated to have shipped 100,000 tons of chocolate to Russia alone in 1993.
Mars dumped its ad agency, Bates Worldwide, in favor of BBDO in 1995. Mars wanted a more image-building approach such as had been successful for Visa and Pepsi. The company did hire former Bates executives to head its European marketing.
Mars tried several new tricks in the late 1990s. It acquired a small organic foods marketer, Seeds of Change, in late 1997. The reportedly foul-tasting VO2 Max Energy Bar, Mars's shot at a $300 million a year market, was launched but quickly pulled due to poor sales. A version of M & M's with crisped rice added to the chocolate center was much more successful; it began shipping in late 1998.
Forrest Mars, Sr., died in Miami in July 1999 at the age of 95. His children had been legally barred from selling the company without his consent until his death, leading to speculation that the company would go public or change hands within a few years. After its founder's death, the company began to consolidate several divisions and agencies. It planned to merge its candy, pet care, and food businesses in continental Europe into a single unit.
Forbes believed Mars, Incorporated had already become sluggish and, being private, inattentive to the quarterly profit demands of Wall Street. Its chocolates trailed ten points behind those of its rival from Pennsylvania. The Uncle Ben's division, once the leading rice producer in the United States, let market share fall to Quaker Oats' Rice-A-Roni and Carolina and Mahatma rice from Riviana Foods until it actually lost money in 1998. In 1999, after terminating 100 of its 540 'associates,' the division found a hit in frozen dinners--microwaveable bowls of rice topped with meat, vegetables, and sauce.
In early 2000, Mars launched a web site, Cocoapro.com, dedicated to celebrating recent research claiming health benefits for certain of chocolate's plant-derived components. The company's extensive process for manufacturing chocolate was also presented.
In spite of its market share setbacks, Mars, Incorporated was still a serious marketing force around the world. At the beginning of the millennium, the company had facilities in more than 60 countries and sold products in more than 150. It was spending $850 million a year advertising brands such as M & M's candies, Snickers candy bars, Uncle Ben's rice, and Pedigree dog food.
Principal Subsidiaries: Ceipa France; Dolma Italy; Kal Kan Foods.
Principal Divisions: Snack Foods; Pet Care; Main Meals; Electronics; Drinks.
Principal Competitors: Cadbury Schweppes; Hershey Foods Corporation; Nestlé S.A.; Ralston Purina Company.
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Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.