M&M’s have come a long way since their launch in New Jersey way back in 1941, when they were packaged in a non-descript brown and cream coloured tube. Yes, they were a near-instant success but who could have predicted their billion-dollar status today?
Fast-forward to the 1980s and M&M’s achieved the accolade of being the first candy in space when they were chosen as a snack for space shuttle astronauts.
And today they are entering the Marvel Universe as Mars and The Walt Disney Company launch a global campaign that will see the M&M’s “Spokescandies” audition for their Marvel dream roles. The collaboration will also come to life in stores with character mashups featured on seven limited-edition M&M’S x Marvel packs.
These mashups include Yellow as Wolverine, Red as Deadpool, Blue as Daredevil, Purple as Elektra, Green as She-Hulk, Brown as Yelena and Orange as Red Guardian. Packs will be rolled out globally – across more than 65 markets – throughout the year at major retailers, MMS.com and in M&M’S stores.
All this for M&M’s, while Mars Inc has many more billion-dollar brands to promote too.
Mars is one of the strongest players in global confectionery, and a big reason is their portfolio of brands that people buy over and over again,” says Daniel M McCarthy, associate professor of marketing at the Robert H Smith School of Business, University of Maryland.
“When you have brands like M&M’s, Snickers and Skittles generating that kind of repeat purchase behaviour across dozens of markets, it creates an incredibly durable revenue base. That consistency is what makes them so formidable. What I admire most is their long-term orientation. Being privately held lets them invest in brand building and make acquisitions without the quarterly earnings pressure that public companies face. That’s a real advantage when you’re playing the long game.”
Much is made of the fact that Mars Inc is family owned, although it is managed by non-family members.
Victoria B Mars, a member of the family who is on the board of directors says: “As a family we are passionate about having a positive impact on the world and we believe the best way to do that is through our business. That’s why we reinvest more than 90% of profits back into Mars Inc. This allows us to deliver against our ambitions to have a positive impact on the planet, society and the communities in which we operate.”
The company is guided by its Five Principles – quality, responsibility, mutuality, efficiency and freedom – and says it “firmly believes what has made us successful is more than just thinking about the bottom line”. It believes a business model that focuses exclusively on financial performance is not sustainable or desirable.
However, a company valued at $137bn (Bloomberg) can probably afford to say that.
According to SP Global, debt levels are relatively high for Mars. The financial intelligence company says Mars Inc’s deleveraging path is delayed compared with its prior expectations because of the later-than-expected closing of the recent Kellanova acquisition.
The $35bn deal went through in December after being held up by the EU regulator’s investigation. It gives Mars even more household names (Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, RXBAR and Kellogg’s cereals) and a much firmer footing in the competitive snacks market.
SP Global Market Intelligence believes Mars’ profitability will continue to lag behind its prior expectations this year because of the “delayed realisation of acquisition synergies” and higher-than-anticipated cocoa costs.
At the same time, it expects its margins to improve compared to 2025 levels due to easing cocoa prices, higher pricing on chocolate and productivity savings.
Mars has a track record of quickly deleveraging following large acquisitions, says SP Global, and the Mars family has historically taken a relatively modest dividend and typically reinvests 90% of its cash flow back into the business, primarily through ongoing tuck-in acquisitions – such as the purchase of Kellanova. The financial firm expects that Mars will effectively integrate Kellanova, manage through cocoa cost volatility, and prioritise debt reduction over the next couple of years.
The confectionery category relies heavily on frequency and impulse, and both of those are vulnerable to appetite suppression
Daniel M McCarthy, University of Maryland
There are many variables that could affect Mars’ success and SP Global says it could lower its rating for Mars if cocoa costs go back to their previous highs, if the company undertakes a large acquisition without debt repayment to restore leverage, if Kellanova underperforms or Mars does not integrate it effectively into its business or if its base business’s performance worsens due to market share losses or unfavourable consumer demand trends.
On the other hand, SP Global could raise its rating for Mars if it reduces leverage to below 3x and improves and sustains DCF (discounted cash flow) to debt above 15%. This could occur if Mars successfully integrates Kellanova and improves its profitability by realising expected synergies and if the remainder of the company’s portfolio rebounds to historical performance levels.
The vagaries of climate change will continue to affect the cocoa market. While prices have dropped since the highs of 2024, they are still above pre-2023 levels and any changes in demand or the weather will leave their mark.
Mars has tried to mitigate the cocoa risk by joining forces with biotech firm Pairwise to develop more resilient cocoa using gene-editing tech called CRISPR. Mars says that by leveraging tools like CRISPR and working with world-class innovators like Pairwise it is addressing critical agricultural challenges; aiming to build more resilient and productive farms to secure the future of cocoa.
At the same time, Mars has invested $10m to develop the “perfect peanut”. It hopes to achieve high oleic peanut varieties through the Peanut Genome Initiative. It says such peanuts provide better shelf life, improved health profiles and greater stability, benefiting both farmers and consumers. “Our efforts have led to 100% high oleic peanut varieties in Argentina and Brazil, and 35% in the U.S, with 50% projected in the next year.”
Mars has not been afraid to try and tackle key high-risk supply chain problems. It has created a deforestation-free palm supply chain by reducing its mill partners to fewer than 100 – instead of 1,500.
It is also improving traceability and empowering farmers to find more sustainable methods for growing cocoa.
The company has expanded its coverage of child labour monitoring and remediation systems in its cocoa supply chain and it proudly notes that it is the first chocolate company to support the Living Income Differential (LID) fee enacted by Côte d’Ivoire and Ghana.
“We have consistently purchased cocoa with the LID to support farmers while urging others to do the same. We also support traceability of the cocoa supply chain so that we can work toward fairer compensation for smallholder cocoa farmers,” it says.
Meanwhile, Mars has invested more than €1.5bn in EU manufacturing over the past five years, modernising facilities, increasing production capacity and accelerating efforts to decarbonise its value chain. These investments support the company’s 24 factories across 10 EU countries and the 25,000 people it employs in its direct operations. Some 85% of Mars products sold in the EU are produced locally within the EU, which is also an export hub to over 100 markets around the world.
An example of the investment is the €250m spend on its chocolate factory in Janaszówek, Poland, to bring state-of-the-art automation to operations there and increase site capacity by 63%.
The investment in the EU pales into significance when you see that some $6bn has been spent in the past five years on its manufacturing in the US. However, that makes sense when you consider that over 50% of its sales are generated in the Americas, nearly 20% in Europe, and the remainder in Asia-Pacific, the Middle East, Turkey and Africa.
When it comes to whether Mars’ confectionery brands are still relevant to today’s consumers, you’ve got to admire the company’s ability to reinvent and refresh to ensure their relevance.
This year Mars is launching new flavour-changing gum (5 Evolution) and candy with a bold sweet and spicy flavour (Skittles Gummies Fuego). In the US consumers can currently vote for their favourite M&M’s bakery collection flavour (cherry chocolate cupcake, lemon meringue pie or peanut butter cinnamon roll). Plus there’s the new M&M’S Honey Roasted Peanut variety: which combines crunchy roasted peanuts and classic milk chocolate with a touch of honey.
But it’s not just about flavours, it’s about textures too. Also new is M&M’s Pop’d Caramel, the brand’s first ever freeze-dried candy with a light, crispy, airy texture.
Daniel M McCarthy at the University of Maryland believes the question we should be asking is not whether Mars’ brands are still relevant, but the bigger question of whether the purchase occasions those brands depend on are changing. “The rise of GLP-1 drugs like Ozempic and Wegovy is a real factor here. Research is showing that households with GLP-1 users are spending roughly 5-6% less on groceries overall, with sharper drops in impulse and indulgence categories like confectionery and savoury snacks. Hershey’s CEO has already acknowledged a mild impact.
“The confectionery category relies heavily on frequency and impulse, and both of those are vulnerable to appetite suppression. That said, there’s been a lot of concern but the actual financial impact so far has been pretty modest. The bigger risk is probably a few years out as adoption grows.”
While many consumers’ appetites are shrinking, that does not seem the case for confectionery sales – just yet!
