June 18, 2008
Hershey goes on the offensive to combat Mars / Wrigley merger
Hershey says its planning to spend more to promote its brands to better compete for candy buyers' when Mars buys Wrigley. More specifically, they'll up advertising spending by 20% in 2008 and 2009. In addition, they're also making changes to their supply chain and marketing to combat rising costs for cocoa, energy and milk, and losses of sales to Mars.
From Chicago Tribune and Forbes
May 28, 2008
Candy companies hoping "functional" health benefits help business
Candy companies are betting that the trend toward healthy foods will extend to their confections - Cadbury, Wrigley and Mars are all launching new gums and candies this summer designed to provide health benefits. The "functional" candy category has grown in 2006, up nearly 2% to $1.5 billion.
For Cadbury - a new gum line called Trident Xtra Care. Its made with recaldent, a form of calcium derived from milk that has been shown to strengthen tooth enamel by filling in crevices where cavities can form. FYI - recaldent is already being used in Trident White (also from Cadbury), but Xtra Care will 2x as much.
For Wrigley - a new line of its Eclipse gum and mints formulated with magnolia bark extract (MBE), a substance that is supposed to help bad breath.
For Mars - two new lines of vitamin-enriched Dove chocolates earlier this year - Dove Vitalize (with vitamin B and plant sterols) and Dove Beautiful (with vitamins C and E, biotin and zinc).
May 6, 2008
A Bittersweet Deal for Wrigley
Selling the family business wasn't William Wrigley Jr.'s plan, but the Mars offer was too good to refuse
That's what Business Week reported this week. Here are some key nuggets from the article:
Photo Illustration by Sean McCabe (Jerry Lai/AP Photo, Bloomberg, PA/Empics, PhotoLibrary)
- Wrigley had little choice but to sell. The industry is just too competitive, and the Mars/Wrigley combo would give them 14.5% market share and a distribution network in 180 countries. Cadbury, the bane of Wrigley's existence, would now be #2 with only a 10% share.
- The Mars offer represented a 28% premium over Wrigley's price
- Things might have been different if Hershey's had accepted Wrigley's offer to sell back in 2002.
- Under William Wrigley Jr.'s watch, sales climbed to more than $5 billion from $2 billion in 1999--driven by snapping up competitors, stoking product development, and expanding globally.
- At the press conference, Wrigley said, "It's a challenge because you always think of the generation before you," he said. "But you have to separate yourself from that to make the right decisions."
April 29, 2008
Hershey's, Cadbury Merger Rumors - Dogs & cats reported living together
More candy merger news - with Mars agreeing to buy Wrigley with Warren Buffett's Berkshire Hathaway - the rumors have cropped up about another merger between candy rivals - Cadbury Schweppes and Hershey Co.
People familiar with the matter said the two companies are not in talks now. But Hershey executives Monday were examining potential next steps, and the two could resume talks after Cadbury makes a previously planned move of separating its drinks business from its candy business on Friday, according to one of these people.
More at the WSJ
Image by Leanne Baily
April 28, 2008
Mars & Warren Buffett Looking to Buy Wrigley
Two icons of the U.S. candy business may become one. Chewing gum legend Wrigley and Mars (makers of Snickers and M&M's, in case you live under a rock). The deal is rumored to be at the $22 billion mark, financed by none other than Bershire Hathaway, Warren Buffet's team.
Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. were close to a pact to acquire Wm. Wrigley Jr. Co. for more than $22 billion, according to people familiar with the matter, in a deal that would remake the global confectionery landscape.
According to the WSJ, "a deal could spark further consolidation in the global candy business. Hershey Co. and Cadbury Schweppes PLC, for example, could be forced to merge."
In 2005, Wrigley bought Kraft's Altoids and LifeSavers, for about $1.5 billion, and has also recently purchased a Russian chocolate company.
More than just the impact this merger could have on the global confectionery landscape, this could mean the end to one of two notoriously private and independent companies.