Mars Inc., every mention
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Verbatim, from the transcripts: the passages where Mars Inc. comes up
Trader Joe’s: Hawaiian shirts and counter positioning (Audio) · Acquired
- ▶ 3:15:28 Ben Gilbert And on our Mars episode, we said it's really important.
Rolex (Audio) · Acquired
- ▶ 2:12 Ben Gilbert I think they're even more secretive than Ikea or Mars.
Mars Inc. - The Chocolate Story (Audio) · Acquired
- ▶ 2:11 Ben Gilbert But as we dug into Mars Incorporated, the parent company, we realized that the story is totally thrilling.
- ▶ 2:24 Ben Gilbert And their corporate strategy over the years is just as clever as companies like LVMH, Walmart, and Costco.
- ▶ 2:53 Ben Gilbert Mars also owns way more than you think.
- ▶ 2:56 Ben Gilbert You may know that they own the world's most popular candy, Snickers, in addition to M&M's.
- ▶ 3:01 Ben Gilbert Or perhaps you know they're in the pet food business.
- ▶ 3:03 Ben Gilbert But they also own everything from Ben's Original Rice to now Kind Bars, and they have one massive deal in the works that we will talk about later on this episode.
- ▶ 3:12 Ben Gilbert David, here's one crazy stat to illustrate their sheer size.
- ▶ 3:15 Ben Gilbert Do you know Mars now does more revenue than the Coca-Cola Company?
- ▶ 3:22 Ben Gilbert Mars crossed fifty billion dollars in sales last year, and they're still completely privately owned by the Mars family, making it one of the top five largest private companies in America.
- ▶ 14:09 David Rosenthal So we gotta rewind a little bit and tell the Hershey story, because A, it's also crazy, and B, it is deeply, deeply intertwined with the Mars story.
- ▶ 28:10 Ben Gilbert I got this from, um, there's a descendant of the Cadbury family, Deborah Cadbury, who wrote this book called Chocolate Wars, and two chapters out of 20 or something are about Mars, but it was this great primer on the history of the…
- ▶ 1:05:37 David Rosenthal Mars revenue goes up to twenty five million dollars in 1932.
- ▶ 1:06:17 Ben Gilbert And at this point in time, between Mars and Hershey, both were laser-focused on keeping the price low to get as wide a distribution as possible.
- ▶ 1:07:49 David Rosenthal As evidenced by the fact that, you know, here we are today eating the most popular candies in the world that Mars makes, and it's still Snickers, Milky Way, Three Musketeers, M&Ms, which we will get into.
- ▶ 1:10:11 David Rosenthal America entirely goes off to a new continent to build his own business, his own way, leave Mars Incorporated totally behind him, leave him in the dust.
- ▶ 1:20:04 Ben Gilbert And this, you have the rights to the recipe, but not the marketing, is the way that the world works today, even though they are, spoiler alert, one company now.
- ▶ 1:20:21 Ben Gilbert They never unified the brand.
- ▶ 1:24:28 David Rosenthal He will come back and he will retake over Mars Inc in America.
- ▶ 1:26:18 Ben Gilbert Mars isn't gonna tell you.
- ▶ 1:27:08 Ben Gilbert Interestingly enough, like, I learned this, and the fact that this happened in 1935 completely blew my mind, because I knew that Mars was in the pet food business, much like Nestle Purina is in the pet food business.
- ▶ 1:27:20 Ben Gilbert I thought this was like a recent diversification hedge, but here it is effectively at the founding of Mars, or at least Forrest's modern Mars, and he's in the first, second year of business buying
- ▶ 1:28:06 David Rosenthal And this here in Slough in England is really where the principles, you know, literally the principles, Mars calls them the five principles of the company today, but just the culture of Mars gets set.
- ▶ 1:46:16 David Rosenthal And so he would also claim that he believed that it was Cadbury's and Roundtree's that actually lobbied Parliament to implement this tax expressly to run him and Mars out of town because they were threatening their business.
- ▶ 1:47:39 David Rosenthal So he moves back to America, and of course he has his sights set back on Chicago and Chicago Mars.
- ▶ 1:47:49 David Rosenthal Remember, Frank had died a few years before, and at this point, Chicago Mars is being run by Forrest's widowed stepmother, the other Ethel, and her half-brother, who is the president and CEO of the business, and they
- ▶ 1:49:13 David Rosenthal On the other hand, he's battling the old Mars at every step of the way.
- ▶ 2:21:04 Ben Gilbert 1955, Mars also gets into the vending machine business.
- ▶ 2:21:08 Ben Gilbert Interestingly, over in England, they start this business called VendPak, which created the earliest vending machines.
- ▶ 2:21:14 Ben Gilbert They eventually sold this off in 2006, but they had built coin mechanisms and bill validators.
- ▶ 2:21:20 Ben Gilbert I think they were like the market share leader in how to read bills in vending machines all across the world.
- ▶ 2:21:27 David Rosenthal Yeah, they also got into change makers, like, you know, you put bills in and you get coins out.
- ▶ 2:21:45 David Rosenthal Mars' European operations have become very, very large in and of themselves.
- ▶ 2:21:50 Ben Gilbert I think they had started making their own chocolate instead of buying from Cadbury by this point.
- ▶ 2:21:55 David Rosenthal I think they had
- ▶ 2:22:34 David Rosenthal One, of course, is his father's company, Mars Inc., Chicago Mars.
- ▶ 2:22:42 David Rosenthal But he doesn't control the company.
- ▶ 2:47:58 David Rosenthal Mars passes Hershey to become the number one candy company in America.
- ▶ 2:48:14 Ben Gilbert And concurrently with him deciding that's it, this is basically when the company stops communicating with the outside world.
- ▶ 2:48:20 Ben Gilbert So everything we're about to share from here on out is short, is basically just headlines that happen from news articles, and the company gets way, way, way more private after this.
- ▶ 2:48:33 David Rosenthal End of 1973, he's built up this whole empire, gone to Europe, built the Europe business, built the pep business, come back to America, built M&Ms, retaken over Mars Inc., battled Hershey, beat them at their own game.
- ▶ 2:48:50 David Rosenthal He gives the company to his three children, a third each to Forrest Jr., John Mars, and Jackie Mars, and totally walks away and retires.
- ▶ 2:50:17 Ben Gilbert It's extremely different than the rest of Mars products.
- ▶ 2:52:04 David Rosenthal Now, as you said, Ben, it's not competing with Mars in any way, it's competing with seas, but the business gets so big and Mars and Forrest's children decide that they want to own this business.
- ▶ 2:52:18 David Rosenthal After Forrest has been running it for seven, eight years, Mars acquires Ethylem for an undisclosed amount.
- ▶ 2:52:36 Ben Gilbert He's already given all of Mars to the kids, so what's he gonna do after the sale completes?
- ▶ 2:52:50 David Rosenthal So shortly after the FLM acquisition is when Forrest Jr. and John Mars, the brothers who are running Mars now as co-CEOs, this is when they give Joelle Brenner access and the Washington Post access to write the piece about the company.
- ▶ 2:53:11 Ben Gilbert And today, their CEO does speak publicly, like, does give quotes and statements.
- ▶ 2:53:17 Ben Gilbert They do release press releases.
- ▶ 2:53:19 Ben Gilbert They have a website.
- ▶ 2:53:20 Ben Gilbert They, as a company, have recognized that times have changed, that consumers are not willing to go buy a product off the shelf when they know nothing about the company.
- ▶ 2:53:29 Ben Gilbert In this era of people wondering about, what is Mars doing with sustainability?
- ▶ 2:53:39 Ben Gilbert And obviously they make a lot of products that contribute to that.
- ▶ 2:53:42 Ben Gilbert They want to have a voice in that conversation too.
- ▶ 2:53:44 Ben Gilbert And so they do say more now than they used to because they've kind of realized we can't be a fifty billion dollar company that doesn't ever say anything ever.
- ▶ 2:53:55 David Rosenthal But what they don't do is allow books to be written about them, or any sort of in-depth piece.
- ▶ 2:54:02 Ben Gilbert No one knows what their balance sheet looks like, including their bankers.
- ▶ 2:54:06 Ben Gilbert They don't produce financial statements for their bankers.
- ▶ 2:54:11 Ben Gilbert In 1974, they start producing Skittles in the United States after it becomes a success in the UK.
- ▶ 2:54:17 David Rosenthal They bring Twix over from the UK.
- ▶ 2:54:19 David Rosenthal They bring Starburst over, which was Opal Fruits in the UK.
- ▶ 2:54:23 Ben Gilbert 1986, Mars acquires Calcan Foods in Los Angeles and begins its association in America with dogs, cats, and their owners.
- ▶ 2:54:33 Ben Gilbert They've had the British business for a long time.
- ▶ 2:54:40 David Rosenthal Also in 1986, they acquire Dove, Dove Bars, Dove Chocolate.
- ▶ 2:54:46 Ben Gilbert They enter the frozen snack business.
- ▶ 2:54:54 David Rosenthal So Dove was a ice cream bar company when they bought it, and then they launched the chocolate bars and chocolate pieces after having acquired the company.
- ▶ 2:55:06 Ben Gilbert It's not a huge business for them, but.
- ▶ 2:55:08 David Rosenthal It's their direct Hershey bar competitor now, of like a direct competitor to Kisses and to the chocolate bar.
- ▶ 3:05:22 David Rosenthal Yes, that partnership has now ended, and Mars now owns Banfield outright, a hundred percent.
- ▶ 3:05:29 David Rosenthal And I believe in 2007 they took a large stake, and then in 2015 they fully bought out PetSmart for a hundred percent ownership.
- ▶ 3:05:59 David Rosenthal This really is the big story about Mars of the last 10 years.
- ▶ 3:06:03 David Rosenthal So after they fully acquired Banfield in 2017, they acquired VCA.
- ▶ 3:06:43 David Rosenthal 2002 Mars had bought a French pet food company called Royal Canin, or I've also heard it pronounced Royal Canin.
- ▶ 3:07:14 David Rosenthal So I think Royal Canin was like a grand slam acquisition for the company.
- ▶ 3:07:19 David Rosenthal And I think that's partially what led them to then get involved with Banfield and BCA of like, oh, well,
- ▶ 3:07:33 Ben Gilbert I mean, it's a very different business, but they run so decentralized that it's probably ok that it's a services business, and you're not having people who are making candy trying to run a veterinary clinic.
- ▶ 3:08:00 Ben Gilbert I'll pull a playbook theme forward, which is that this company obviously grows through inorganic acquisitions.
- ▶ 3:08:12 David Rosenthal Mars itself.
- ▶ 3:08:13 Ben Gilbert Mars itself.
- ▶ 3:08:26 Ben Gilbert But if you kind of think about, especially with Banfield Pets Hospitals, they really understood what they were buying.
- ▶ 3:08:32 Ben Gilbert So they were able to underwrite better than anyone else.
- ▶ 3:08:58 Ben Gilbert So when they want to come in over the top at a 35 X for Wrigley, maybe they know more about Wrigley than other bidders do.
- ▶ 3:09:17 Ben Gilbert Arvin from Worldly Partners had a good comment to me about this, that they shoot bullets, not cannonballs, and when you sort of see that in an acquisition strategy, you should be careful not to judge too harshly when people overpay for…
- ▶ 3:09:36 David Rosenthal Speaking of, they ran this playbook, again,
- ▶ 3:10:04 Ben Gilbert And Mars took it global.
- ▶ 3:10:05 David Rosenthal And Mars took it global.
- ▶ 3:10:06 David Rosenthal So I think that has been a big success for the company as well.
- ▶ 3:10:35 Ben Gilbert So I think as far as Mars thinking about, geez, we want some sort of diversification hedge if people stop eating candy bars, they're on a good trend there.
- ▶ 3:10:51 David Rosenthal Which is the biggest deal that the company has ever done.
- ▶ 3:10:57 Ben Gilbert So in August, Mars announced that they have entered a definitive agreement with Kelanova to purchase the company for 35.9 billion dollars.
- ▶ 3:11:10 David Rosenthal As we were researching this and getting into this, I was like, Mars is paying thirty six billion dollars.
- ▶ 3:11:34 Ben Gilbert So the snacks are like Rice Krispie Treats, Pringles, eggs, Pop-Tarts, RX Bar, which is gonna be interesting if they'll own RX Bar and Kind Bar.
- ▶ 3:11:53 Ben Gilbert I mean, if you think about it, the family is worth one hundred and seventeen billion today, which essentially means the company's worth one hundred and seventeen billion, which is kind of interesting.
- ▶ 3:12:02 Ben Gilbert It's a fifty billion dollar company that at least Forbes, I think it's Forbes, pegs it at one hundred and seventeen billion of enterprise value.
- ▶ 3:12:19 David Rosenthal So they have started reporting in recent years, or at least alluding to what the top line revenue number is.
- ▶ 3:12:26 Ben Gilbert They're gonna get a lot bigger, I guess, is the takeaway from this.
- ▶ 3:12:46 David Rosenthal It also basically makes them look like Nestle.
- ▶ 3:13:03 David Rosenthal Which, obviously, again, Mars has always been diversified, but nowhere near the extent that Nestle is, and now with the Kelanova acquisition, they're gonna look a lot more like Nestle.
- ▶ 3:13:13 Ben Gilbert And Mars is gonna be selling, uh, I just looked it up, investment grade bonds to help with its planned sale of Kelanova.
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