Tag Archives: Mars

What can You do when you’re a Candy Oligopoly?

Well if you’re the Mars Company, it means that you can cut off candy resellers from their supply of Colorworks M&M’s.

What does this mean? As Cybele writes:

…when it comes to smaller quantities (one pound or less), buying directly from M&Ms means at least a 20% premium. (Yes, youâ??d think buying direct would mean youâ??d pay less, wouldnâ??t you?) When you knock out the middleman, I can imagine that M&Ms profits on these are pretty high. Even with economies of scale itâ??s clear that the ColorWorks are a huge moneymaker for Mars. A half pound of ColorWorks (whether part of a color blend or a single color) are $4.69 for eight ounces ($.59 an ounce). M&Ms cost about $3.50 for a 12 ounce bag (not on sale) at your local grocer ($.29 an ounce).

Basic Econ 101 – When you’re the single distributor for a product in demand, you control the price. I think it’s time for a road trip to Canada to stock up on some Smarties.

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A Tale of Two…no, Three…Candy Companies

One of the several reasons why I don’t get along with corporations is that they tend to stifle a great amount of innovation. Once a “new” idea is presented to the corporation, it has to be run by the manufacturing department (to see if they can make it), and then the marketing department (to see if they can sell it). Afterwards, focus groups and test markets become involved to see how much interest and profits can be had. By the time a “new” product is introduced, the uniqueness is long gone, battered by the development process.

Not all corporations and companies do this, but enough of them.

I bring up this generalization, as I want to introduce you all to two new products, to illustrate the above point.

Somewhere in Hershey, Pennsylvania, it was decided that the corporation needed to make more money, and that a new product should be introduced. After running through the above process, and after an extended period of time, a product was released to the general public. Called Kissables, They are “miniature candy-coated versions of one of the world’s most recognizable brands. These colorful, fun-able candies, blue, red, yellow, green, and orange, come in convenient, single-serve packaging.”

What you have is a corporation that has spent thousands, if not millions, of dollars on a product which sounds eerily like M&M’s.

Now people may run to the defence of Hershey’s, saying that there’s precious little one can do in the field of chocolate. Once you’ve dealt with caramel, nuts, shredded coconut, marshallows, maybe a little peanut butter in your products, you’ve covered about 80% of all chocolate products already out there.

But then you look at Jelly Bellys. They take up a far smaller segment of the candy market. As a company, they wish to increase how much money they make. So what do they come up with? A product called JBz. As their product page states, JBz’s are “chocolate centers with candy shells with twelve delectable flavors such as Chocolate Cappuccino JBz and Chocolate Caramel JBz, as well as classically delightful pairings of chocolate in Chocolate Coconut, Chocolate Vanilla, and Chocolate Fudge Brownie.”

Sounds like M&M’s, but with a new twist, doesn’t it? Granted, it probably wasn’t a stretch for the Folks at Jelly Belly’s to go “Hey, let’s add flavors to an M&M style candy!”, as they have already done this with their Jelly Bean line. But they have added to the diversity of the candy marketplace, something Hershey’s didn’t do with their Kissable line.

Why Marketing people are very silly people indeed.

Typically I’d not post on items like the new release of the Mega-sized M & M’s, but there was a line in the reporting that made me shake my head.

The new M&M’s are available in milk chocolate and peanut varieties and come with an “adult-oriented” color scheme that includes teal, beige, maroon, gold, brown and blue-gray.

What a very odd idea that there are “adult-oriented” colors. Are these colors not to be viewed by children under the age of 18? And why Teal or Maroon? Personally, I thought the color scheme of the old Good n Plenty was very adult, what with their pink and white shells and black insides.

What’s amazing to me is that there was an experiment somewhere which resulted in someone recieving a very decent paycheck to write an e-mail/memo/report stating that adults respond enthusiastically to blue-gray colors.

The Problem with Candy

candy bar I’ve been reading “CandyFreak” (By Steve Almond) of late, and aside from finding it both a nostalgic look at candy…I too, remember the long hauls carried around Halloween, and then separating the goods into piles based on quality. Anything deemed less than an A could be traded to anyone else. Raisins were feed to my sister’s pet gerbil…aside from that, it has an undercurrent on the sorry state of the candy industry.

It boils down to this: There are three major candy companies in the world.

  • Hersheys: Maker of Hershey bars, but also of Reese’s Peanut butter cups, York Peppermint Patties as well as others. They have no problem in purchasing smaller candy companies in order to corner an aspect of the candy market. This is best evidenced by their pursuit of the chocolate covered toffee bar. First they created their own version of the Toffee bar, then when that didn’t overtake the Heath Bar, they bought the company who made the Heath Bar.
  • Mars: Maker of Snickers, M&M’s, Milky Way and Three Muskateers. Not above petty marketing to increase their bottom line. As evidence: Retired the Mars bar, and then soon afterwards, introduced the Almond Snickers bar, which bears a striking resemblence to, you guessed it, the Mars bar.
  • Nestle: Used to make the Nestle Crunch bar, but later bought out the maker of Butterfingers, Baby Ruth and others.

These three make up the bulk of candy sellers found on the shelfs of most supermarkets, Wal-Marts and convenience stores. Is it because they are of better quality? Well, you’d have a hard time convincing me that a butterfinger is better than a Clark Bar (not made by one of the top three by the way), so it’s not likely that. In reality, it’s most likely because the big three can afford slotting fees charged by the supermarkets, Wal-Marts and convenience stores.

What’s a slotting fee? It’s a fee that the supermarkets, Wal-Marts and convenience stores charge companies in order to stock their shelves. The more money a compnay spends, the more pull they have over where they are placed on the shelves (eye level, or more specifically childs eye level being the most coveted) or even which competitors can be put on the shelves next to their product (“I’ve spent $45,000 on your slotting fees, so you can damn well remove the local chocolate bar below me who paid little or no fee at all”).

It was very disheartening to learn this activity was going on, and I found myself torn. The free market capitalist i me hates this arrangement as it pushes out the little guy and prevents innovation and choices based on quality. But then again, I just discovered teh joys of a double chocolate Almond Joy and have aquired a taste for Violet Crumbles. I am quite torn.

I’ll probably end up shopping at locations that allow room for the little company on their candy shelves. Bartell Drug Stores here in the PacNW do a good job in their candy selections. And if I find myself buying something from teh big three, I’ll make it a point to buy soemthing from the smaller companies as well. It’s nto a perfect solution, but it’s a good start.

Plus, it means that I’ll get to eat more candy. And there’s nothing wrong with that.