Issue #11: Melting Mergers
Let's address the elephant in the room. This week we saw a massive merger that could rumble the status quo of the confectionery world. of course, we are talking about Mars acquiring Kellanova for roughly $35 Billion. There was some chatter in the rumour mill about this move but it carried momentum over the last few weeks and it got finally done. The Mars family is larger in terms of its portfolio and the confectionery industry gets more consolidated as we speak. This is a reminder that regardless of size, companies will always try to seize opportunities to drive more dominance in the market through the acquisition of synergies that cannot be replicated from within.
Kellogg's wanted to focus on its competencies and raise capital to do so. Mars wanted to expand its portfolio and acquire know-how on how to enter certain snack markets while amplifying their capabilities with distribution and promotional strength. This is a lesson of power and how markets can change so dynamically with small actions. I am excited to see what comes out of this!
Sweet Spotlights ??
Influencing Snacks
In the dynamic landscape of 2024, influencers have become pivotal in shaping the marketing strategies of food and beverage companies. With the pandemic accelerating the shift to e-commerce, brands have turned to social media platforms like Instagram and TikTok to engage with consumers. Influencers, with their constant online presence and significant follower counts, offer a trusted voice that can effectively sway public opinion and consumer behavior.
This is a year of pivotal importance as a turning point for brands in their social media approach. Influencers are no longer just an accessory to marketing; they are central to how brands connect with their audience. The authenticity and relatability of influencers make them ideal partners for brands looking to expand their reach and resonate with consumers on a personal level. They are amazing channels that if associated correctly, will return a lot of impressions and expand demand across the market.
One standout example is Poppi, a health-conscious soda brand that began as a farmers market favorite and has since become the top-selling soft drink on Amazon. The company’s organic social and influencer marketing strategies have generated over 204 million impressions and 2.3 million engagements in 2023 alone. This success has translated into Poppi entering 5 million new households monthly in 2024, cultivating a dedicated fan base. Influencer marketing has given Poppi a channel to market directly to its consumer base without having to outmuscle giant soda players in their traditional channels of advertising.
Poppi’s innovative marketing tactics, such as gifting influencers with unexpected items like matching sweat sets and bathrobes, have positioned the brand ahead of its competitors. This approach demonstrates the power of thinking outside traditional marketing confines, proving that food branding can extend beyond mere recipes and product showcases.
The article also highlights the experiences of Steven Vigilante, Director of Growth and Partnerships at Olipop, who notes the necessity for brands to adapt quickly to the digital realm during the pandemic. The inability to conduct in-person events or sampling forced companies to devise new strategies, with social media and influencer collaborations becoming essential tools for maintaining consumer engagement and driving sales.
The influencer boom has revolutionized the food and beverage industry’s marketing playbook. Brands that embrace this new paradigm, recognizing the value of influencer partnerships and creative social media campaigns, are poised to thrive in an increasingly digital marketplace. As the industry continues to evolve, the role of influencers will likely grow, solidifying their status as indispensable assets in the art of digital marketing.
However, influencer marketing can also be a double-edged sword. If influencer and brand ambassador strategies are done incorrectly, there can be a wave of negative output and brand dissonance across your existing market. A clear example of this occurred in 2023 when Bud Light tried its hands-on appeal to the LGBT community by signing Dylan Mulvaney as its brand ambassador which ended up in a massive backlash by their traditional and conservative consumer base.
Influencer marketing is here to stay and it can be a magnificent tool to generate demand if done correctly.
Mars <3 Kellanova
A hint in the rumor mill over the last few weeks has finally materialized into a full-on acquisition, perhaps one of the most important acquisitions in the modern confectionery era. The confectionery giant Mars has finally acquired Kellanova from the major food company Kellogg's. It is looking to divest its confectionery efforts to focus on cereal-related ventures over its long-term strategy.
The operation was finalized at $83.50 per share in cash, totaling a whopping $35.9 billion to acquire all of Kellanova's assets, IPs, and other capital. The share price has been set at a premium of 44% over the established share price to settle the transfer of ownership rights and to avoid underestimating the true value that Kellogg's has assigned to Kellanova's efforts and ventures.
Overall, this is a great acquisition by Mars to consolidate its competitive position in the confectionery market and widen its competitive spectrum across all of its varied portfolios. The acquisition allows it to capitalize on categories such as cereal bars, crackers, and frozen food to cover blind spots in its competitive offering.
The deal will allow Mars to tap into very valuable brand and IP power that is already settled in the market, such as:
-Pop Tarts
-Pringles
-Eggo
-Rice Krispie Treats
-Nutrigrain
-Cheez-it
In today's market,, we sometimes downplay acquisitions like this, but we must take into consideration the fact that this is no small feat. Kellanova managed $13 billion in sales in 2023, with a presence in over 180 countries and roughly 23,000 employees... So yeah, this is a massive operation and perhaps one of the biggest news stories in confectionery this year.
Besides bringing massive star power to Mars' brand power, Kellanova will provide valuable know-how and assets to penetrate categories in which Mars lacks expertise. Meanwhile, Kellanova will enjoy a larger distribution network, a massive capital injection that will allow them to become a more efficient operation, and, of course, a boost in promotion, marketing, and sales investment that will see their brands get more exposure over the long term thanks to Mars' capabilities in this sector.
-In the acquisition report, Mars, along with Kellanova, highlighted some key points and synergies that the acquisition will offer to both companies:
-Accelerated ambition to double Mars Snacking in the next decade, in alignment with global consumer demand trends.
-Enhanced portfolio with the addition of unique, category-leading, and growing brands.
-Deliver a stronger, differentiated portfolio and distribution platform for priority international markets.
-Combine complementary capabilities to unlock growth and consumer-centric innovation.
-Enhance the positive societal impact of strong sustainability efforts.
I am very excited to see what this Acquisition will offer in the long term in the confectionery market
Cocoa Culture ??
Cocoa Price as of 14/08/2024
Status of cocoa from Ghana
Ghana, the world’s second-largest cocoa producer, is facing a significant decline in cocoa output, with the latest figures indicating a drop to less than 55% of its average seasonal production. As of July 16, the reported output was 429,323 metric tonnes, a stark contrast to the country’s usual average of 800,000 metric tons and a peak production of 1,047 thousand tonnes in the 2020/2021 season. This reduction is part of a worrying trend over the last three seasons, with outputs of 683,269 tonnes and 656,140 tonnes in the 2021/22 and 2022/23 seasons, respectively.
The decline in production is attributed to several factors, including climate change-induced weather disruptions, diseases affecting crops, and socio-economic challenges such as mining and smuggling. Swollen shoot disease (CSSVD), in particular, has devastated major cocoa-producing regions in Ghana, with about 81% of the Western North region’s cocoa farms impacted. This disease has led to a significant drop in production in the Ashanti and Western South regions, which are traditionally major contributors to Ghana’s cocoa output.
The crisis has far-reaching implications for the global chocolate industry, as Ghana, along with the Ivory Coast, accounts for approximately 60% of the world’s cocoa supply. The shortage of cocoa beans is causing disruptions in chocolate manufacturing and raising concerns about the livelihoods of farmers.
In response to the crisis, Cocobod, Ghana’s government-led cocoa board, has partnered with Mars Wrigley to develop a kit for early CSSVD detection. This initiative underscores the importance of investing in cocoa research to address the challenges faced by farmers in cocoa production.
The situation in Ghana is a reflection of the broader issues facing the cocoa industry, including the need for sustainable practices and innovation to mitigate the effects of climate change and diseases on crop yields.
领英推荐
Nestle + Cocoa: Yielding Success
Nestlé has made significant strides in increasing cocoa yields through its innovative income accelerator program. The company’s half-year results for 2024, released on July 25, highlighted the success of this initiative, which has seen a 32% increase in cocoa yields among participating farmers. This boost is largely attributed to the adoption of sustainable farming strategies, particularly pruning practices.
The income accelerator program, part of the Nestlé Cocoa Plan, aims to improve the livelihoods of cocoa-farming families by closing the living income gap and reducing child labor risks. It has already supported over 10,000 families in C?te d’Ivoire and is set to expand to Ghana later this year. The program encourages positive practices in areas such as school enrollment, good agricultural practices, agroforestry activities, and diversified incomes.
Practical measures include regular pruning of cocoa trees, which not only improves pod yields but also helps control crop diseases. Nestlé also promotes shade and fruit tree planting, enhancing the resilience of cocoa crops. The company believes that incentivizing such practices will lead to long-term resilience at both the farm and household levels.
The program’s impact is evident in the substantial improvement of cocoa productivity and net income for farmers. A study by the Kit Institute showed that the net income of income accelerator communities rose by 38%, with a growing proportion of households achieving a living income. Nestlé’s approach involves direct cash incentives, decoupled from the amount of cocoa produced, which are particularly beneficial to smallholder farmers.
Overall, Nestlé’s income accelerator program has proven to be a transformative force in cocoa farming, promoting sustainable practices and improving the economic well-being of cocoa-farming families. So kudos to Nestle for this amazing initiative and the positive outcomes it has yielded this month!
Flavor Fusion ??
Fruity Strips
Welch's seems to be a little quiet now and then in terms of innovation, but this is usually because they are cooking something big within their R&D and manufacturing departments. Such is the case with their new lines of fruit strips made out of whole fruit to satisfy indulgence whilst also offering a healthier alternative to snacking. The strips will originally come in 3 flavors: Mango, Strawberry, and Berry medley, all very popular flavor choices and charges with a big dose of vitamin C to infuse your day with energy.
Fruit strips come at a great time to come up as a healthier and relatively cheap alternative to fruity artificial confections like Fruit rolls or other sugary candies that try to emulate the real flavor of the fruit.
Snap Patch
Mondelez is going hard again on its collaborations, this time in the gummy category by pairing up with the tea brand Snapple which is owned by the Keurig Dr. Pepper group. The main idea for this is to introduce new and exciting flavors while also appealing to several demographics in order to boost sales temporarily.
It will be a combination of the original but always trusty experience of "Sour then sweet" combined with Snapple's traditional flavors which will surely impress some palates of loyal fans out there waiting to try this delight.
The product will also be an interesting chance to promote augmented reality via the packaging of the product by using Snapple's famous cap sweepstakes and connecting them via a mutual landing page for the chance of winning cash prices.
More and more Collabs
There are strong movements in the market to boost co-branding opportunities, as we have seen entering the last quarter of 2024. A lot of companies are combating stagnating sales or at least starting Q4 with strong sales by partnering up with other brands from the same industry or even from non-competing industries in an attempt to reach out to consumers from other markets. Here are the latest examples of this:
Utz X Mikes Hot Honey Sauce
Sparkling Ice X Starburst
Jack Link's X Dr. Pepper
This openness to collaborate is bringing several joyful combinations and new products to our shelves that we must try. Brands will also create a buzz from unlikely combinations as they pair this up with social media and influencer marketing to raise the hype on these new products.
Sugar Rush (Facts and Stories about your favorite snacks and candies)??
In a Pringle
In the mid-20th century, Procter & Gamble (P&G) embarked on a quest to revolutionize the humble potato chip. Their mission? To create a snack that defied the usual pitfalls: no more broken chips, no more greasy fingers, and certainly no more stale disappointments. Enter Fredric J. Baur, an organic chemist with a penchant for culinary innovation.
Baur’s laboratory became a playground of flavors and shapes. He experimented tirelessly, frying up countless iterations of potato slices. And then, like a culinary alchemist, he struck gold: the saddle-shaped chip. These chips, resembling miniature Pringle saddles, promised durability and uniformity. Intent with just the perfect chip; he had grander visions.
Then it came, the tubular can! Baur designed it meticulously, considering every detail. This can wasn’t your run-of-the-mill cylindrical container. No, it was a marvel of engineering—a fortress for Pringles. Its purpose? To protect those delicate chips during their journey from factory to pantry. The can’s curves cradled each chip, preventing crushing and ensuring they arrived intact. And thus, the iconic Pringles can be born.
In 1968, P&G unveiled their creation to the world: Pringle’s Newfangled Potato Chips. The name was a nod to their unconventional shape and promise of flavor consistency. Yet, behind the scenes, another player emerged: Alexander Liepa. While Baur had engineered the chip, Liepa fine-tuned the taste, transforming Pringles into a snack sensation.
Pringles marched into snack aisles across the globe—each chip, a hyperbolic paraboloid in disguise, nestled within its tubular sanctuary. The name “Pringles” itself carries mystery. Was it inspired by Mark Pringle, whose 1937 patent dealt with potato processing?
Regardless of its origins, Pringles became more than a snack; it became a cultural icon. From movie nights to road trips, that satisfying pop when you open the can is a universal delight. And as the years rolled on, Pringles changed hands, from P&G to Kellogg’s and eventually to Mars Inc.—a cosmic journey for a humble chip.
So next time you savor a Pringle, remember the chemists, the mathematicians, and the flavor whisperers who conspired to make that singular crunch possible.
Well, it does not get more exciting than this. A lot of stuff is covered in this week's headlines and a lot more to come next week. I hope you enjoyed this issue and I would love to hear your thoughts on the Kellanova acquisition. Do you think it is a good strategic move from Mars? Will this create long-term synergies for both companies? Was Kellogg's too quick to dismiss it's treat and snack portfolio?
It is always good to interact with readers so never hesitate to write some comments or send me some dm's about the newsletter and your overall opinions!