Dec 16, 2024 · 3h 53m · acquired
Mars Inc. - The Chocolate Story (Audio) · Acquired
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In this deep dive, Acquired hosts Ben Gilbert and David Rosenthal trace the century-long history of Mars Incorporated, exploring how a bankrupt home-kitchen candy business evolved into a secretive, fifty-billion-dollar global snacking and pet care titan. Through relentless operational efficiency, intense family dynamics, and disciplined diversification, Mars outmaneuvered rival Hershey to master modern consumer packaged goods and industrial manufacturing.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ben and David hold 99.7% of the talking time here. How this is scored →
Ben and David as informed peer 7.7 Guest teaching 2.5 Guest disagreement 1.0 Ben and David pushing back 1.1
speaking balance: gold is Ben and David, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:08:45 Forrest's confrontation with Frank Mars
David quotes Forrest Mars' aggressive demand for one-third equity and his explicit profanity-laden parting words to his father.
Hardest push from Ben and David ▶ 3:18:45 Debating branding power in Seven PowersBen pushes back on strict definitions of brand pricing power, arguing brand strength manifests as lifetime volume rather than higher price points.
Biggest teaching moment ▶ 27:30 Condensed milk vs powdered milk originBen educates David on chocolate history, explaining Daniel Peter used condensed milk flakes rather than Nestle's baby formula powder.
Ben and David hold their own ▶ 19:40 Explaining the physics of chocolate temperingBen demonstrates technical depth by walking through the exact chemistry of crystal seeding, conching, and cooling required to stabilize chocolate.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ben and David as informed peer | Guest teaching | Guest disagreement | Ben and David pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Show Banter: Naming Modern M&M Varieties | 7 | 2 | 1 | 1 | Ben quizzes David on current M&M varieties and playfully corrects product classifications like plain being renamed to milk chocolate. | |
| Acquired Updates: Arm CEO Episode on ACQ2 and Survey Winners | 7 | 2 | 1 | 1 | The hosts introduce Mars Inc. revenue figures, comparing its scale to Coca-Cola, and establish the biographical backdrop of founder Frank Mars. | |
| The Rise of Chocolate and Milton Hershey's Vision | 8 | 3 | 1 | 1 | Ben details the complete bean-to-bar chocolate manufacturing workflow, including fermentation, conching, and tempering chemistry based on factory visits. | |
| Henri Nestlé, Daniel Peter, and the Invention of Milk Chocolate | 8 | 4 | 1 | 2 | Ben explains the origin of milk chocolate via Henri Nestle and Daniel Peter, correcting the misconception that powdered milk worked instead of condensed milk. | |
| World War I Rations, Prohibition, and the 1920s Candy Boom | 7 | 2 | 1 | 1 | David and Ben discuss how World War I military rations and Prohibition created an explosive national market for chocolate combination candy bars. | |
| Frank Mars' Fourth Venture: Victorian Buttercreams and the Morrow Bar | 7 | 2 | 1 | 1 | The hosts examine Frank Mars' early ventures and recount the dramatic lore behind the invention of the malted-milkshake-inspired Milky Way bar. | |
| Forrest Mars' Formative Years: Berkeley Hustles to Yale Mentorship | 8 | 3 | 1 | 1 | David details Forrest Mars' entrepreneurial hustle at UC Berkeley and his mentorship under Pierre S. du Pont while attending Yale. | |
| Chicago Expansion, Mass Manufacturing, and the Birth of Snickers | 8 | 2 | 1 | 1 | The hosts break down Mars' factory relocation to Chicago, high-throughput assembly line production, and the creation of Snickers. | |
| Great Depression Resilience, Three Musketeers, and the Family Rift | 7 | 2 | 2 | 1 | David and Ben describe how Mars thrived during the Great Depression and unpack the bitter father-son conflict that exiled Forrest to Europe. | |
| Forrest's European Apprenticeship, Mars UK, and Pet Food Innovation | 8 | 3 | 1 | 1 | David explains how Forrest worked incognito on Swiss chocolate lines before establishing Mars UK and pioneering the commercial pet food market with Chappies. | |
| The Five Principles of Mars: Radical Efficiency and Cultural Norms | 8 | 3 | 1 | 2 | The hosts analyze the operational philosophy of Mars, focusing on Return on Total Assets (ROTA), extreme open-office equality, and quality control rules. | |
| World War II Outbreak, Return to the US, and the Dragée Inspiration | 7 | 2 | 1 | 1 | David and Ben discuss Forrest's return to the US ahead of World War II and his discovery of Spanish Civil War dragee hard-panned chocolate. | |
| Founding M&M Limited: Joint Venture with Hershey's Bruce Murrie | 8 | 2 | 1 | 1 | David recounts Forrest pitching Hershey executive William Murrie to form M&M Limited, locking in rationed chocolate supplies during wartime. | |
| Postwar Rice Innovation: The Creation of Uncle Ben's | 8 | 3 | 1 | 1 | The hosts detail the creation of Uncle Ben's parboiled rice, the aggressive ouster of Bruce Murrie, and Ted Bates' iconic 'melts in your mouth' ad campaign. | |
| Trademark Protection, Media Innovation, and Vending Machines | 7 | 2 | 1 | 1 | Ben and David discuss brand defenses including printing the 'M' on candies, TV animation, vending validator tech, and Forrest's boardroom coup in Chicago. | |
| Restructuring Chicago Mars and Vertical Integration of Chocolate | 8 | 2 | 1 | 1 | The hosts describe Forrest taking complete control of Mars Inc., tearing down executive perks, and vertically integrating chocolate production away from Hershey. | |
| The Nickel Bar Trap, Hershey's Shrinkflation, and Mars Taking #1 | 8 | 3 | 1 | 1 | David and Ben discuss how Hershey's 70-year adherence to the 5-cent bar led to shrinkflation backlash, allowing Mars to overtake Hershey as the #1 candy company in 1973. | |
| Forrest Mars Retires and Founds Ethel M Chocolates | 7 | 2 | 1 | 1 | The hosts cover Forrest's retirement, his transfer of the company to his children, and his founding of Ethel M Chocolates in Nevada. | |
| Massive Globalization Under the Mars Siblings | 8 | 3 | 1 | 1 | David and Ben analyze the explosive 25x revenue expansion under the Mars siblings, global brand consolidation, and the 2008 Wrigley buyout backed by Berkshire Hathaway. | |
| Pet Care Dominance and Recent Megadeals | 8 | 3 | 1 | 1 | The hosts chart Mars' acquisitions across veterinary care (Banfield, VCA), snacks (Kind), and the mega-acquisition of Kellanova. | |
| Mars Today: A Pet Care Giant Masquerading as a Candy Company | 8 | 3 | 1 | 2 | Ben reveals that pet care generates over half of Mars' revenue, and the hosts apply Hamilton Helmer's 7 Powers framework to Mars' scale and switching costs. | |
| Business Playbook: Marketing Campaigns and Cultural Touchstones | 8 | 2 | 1 | 1 | Ben reviews classic Mars marketing playbooks, including passing on E.T. product placement, 3D animated M&M characters, and the 1995 blue M&M vote. | |
| Business Playbook: Durability, Sugar Trends, and Climate Threats to Cacao | 8 | 3 | 1 | 1 | The hosts discuss recession-proof consumer durability, sugar addiction concerns, and climate change threats affecting cacao farming biology. | |
| The Quintessence of Mars and Milton Hershey School Trivia | 8 | 3 | 1 | 1 | Ben and David summarize their quintessence insights on path dependency and discuss the massive 17.4 billion dollar endowment of the Milton Hershey School. |
Statements from this episode (79)
Joël Glenn Brenner is the only journalist granted access to Mars
“She's the only journalist that ever got real access to the company.”
Mars has grown into a $50 billion annual revenue private giant
“And against all odds, this candy company Would go on to become the globally famous, fifty billion dollar annual revenue, private family business, Mars Incorporated.”
Milton Hershey sold his caramel company for $1 million in 1900
“He sold it for a million dollars. In 1900, which is 36, thirty-seven million today with inflation.”
Rudolf Lindt discovered conching by accidentally grinding cocoa for three days
“Back in 1879 that Rudolf Lindt, which is another name you may recognize, the Swiss chocolatier, discovered it by accidentally leaving his cocoa in a roller grinder over the weekend instead of shutting the machine off, so it accidentally pressed the beans for t…”
Chocolate manufacturing is more complex than wine or coffee production
“This is more complex than wine. This is more complex than coffee.”
Nestlé was originally founded as a baby formula company
“Nestle was a baby formula company. That's how it started.”
Solid milk chocolate and conching vastly expanded the chocolate market
“Yeah, so by 1879, once you have milk chocolate in solid form, and then you have conching, you now go from Bars that are sort of really gritty and hard to bite to this kind of amazing mouthfeel that just massively increased the market. 10 X, it's hard to get a …”
Setting regional taste first is the most important factor in chocolate
“When it comes to candy, and specifically when it comes to chocolate, the most important thing in the business is being first to market, and setting the taste of a specific regional area.”
Adults eat 75% of candy and drive 90% of all purchases
“And actually today, 75% of candy is eaten by adults, and in fact, it accounts for 90% of total purchases.”
Hershey was the primary chocolate ration supplier for WWI US troops
“And the American military, as they have seen European armies do, they source chocolate as ration bars for the troops, and Hershey's is the big supplier.”
Over 40,000 different candy bars were manufactured in 1920s America
“So by the end of the 19 twenties, there are more than 40,000 different candy bars being made in America.”
Curtiss Candy marketed Baby Ruth bars by dropping them from airplanes
“The Curtis candy company, which made it chartered an airplane to fly over the city of Pittsburgh and drop bars down with little paper parachutes over the city.”
The term 'count lines' arose because candy bars were measured by units
“All chocolate before was measured by weight, and once somebody kind of rolls their first candy bar off the line, you know, what we now know today, the Snickers bar, the Milky Way, all these things, You couldn't really just measure it by weight because it's got…”
Mar-O-Bar revenue leaped from $73k to $793k in a single year
“The Marobar company went from 73,000 to 793,000 in one year.”
Mars first manufactured count-line candy mechanically at factory scale
“And effectively what they were doing was they were the first ones who said, wait a minute, if we're gonna make a count line, we should do it in a mechanical way. And so, even though all these other people are selling these one-offs locally to different stores …”
Iconic founders out-earned average heads of households during their youth
“You look at Ingvar, you look at Sam Walton, you look at Buffett. I mean, all these guys, it feels like it's a part of their childhood story that as a teenager or a college student or something, they were out earning the average head of household.”
Mars hired Ford plant designer Austin Company for its Chicago factory
“He contracts the Austin Company, which had built and designed all the Ford automobile plants and assembly lines to build the lines in the Mars factory.”
Mars produced 20 million Milky Way bars annually by 1929
“So, by 1929, which I think is the first year that the factory is up and running, they're producing twenty million Milky Way bars annually.”
Mars became Hershey's largest chocolate customer during the 1920s
“So very quickly, Mars becomes Hershey's biggest customer. They are buying millions of dollars of chocolate every year from Hershey.”
The 3 Musketeers originally contained chocolate, vanilla, and strawberry flavor bars
“It was actually sold as a package containing three separate bars, each with a different flavor, chocolate, vanilla, and strawberry, and due to restrictions during World War II, they had to cut production to just the chocolate version.”
Forrest Mars departed Mars with $50,000 and Milky Way's foreign rights
“He takes actually two things with him that his dad sort of gives him as he's heading out the door. One, 50,000 dollars, and two, the foreign rights to the Milky Way recipe.”
Forrest Mars believed building wealth requires knowing how to manufacture a product
“You can hire lawyers. You can hire accountants. You can hire advertising men or financial types. But if you want to get rich, you got to know how to make a product. And you aren't going to hire anybody to make a product for you to make you rich. They'll only m…”
Mars UK became Britain's third-largest candy company by 1939
“So, by 1939, five years-ish after they get production up and running, Mars UK has become the third largest candy company in Britain behind Cadbury and Roundtree's.”
Mars's 1930s pet food business generated cash to fund candy expansion
“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. I thought this was like a recent diversification hedge, but here it is effectively at the f…”
Mars UK workers could halt entire production lines for quality defects
“Any employee in the factory could stop the line for any reason at any time.
If there's anything that's out of place, anything that could impact quality, you know, anything is dirty, anything is not perfect, every single worker in the entire facility can stop t…”
Mars maintains an open-office layout with zero private offices globally
“There are no offices period to this day at Mars.”
Mars historically targeted an 18% return on total assets across divisions
“Supposedly, Forest had, and Mars has, or at least used to have, a specific target of 18% return on total assets for every division and every factory, which means essentially that every investment needs to pay for itself in less than five years.”
Mars generated $429,000 in revenue per employee in 1990, doubling Hershey
“In 1990, for example, Mars' revenue averaged 429,000 for employee compared to 228,000 at Hershey.”
Mars paid $20,000 to suppress newspaper photos of the founders' sons
“Mars didn't like the Washington Post article, like, didn't like the way it came out, so not only did they then fire their PR consultant, they went and found the newspaper's freelance photographer and paid off 20,000 dollars for the rights to the photos to be s…”
Complete ownership enables suboptimizing short-term results for long-term horizons
“Complete ownership, or at least board control in Meta's case, is freedom. You can do things like invest for 10 years from now when it's gonna be a super lumpy period between now and 10 years from now. If you believe in the long-term vision, you can suboptimize…”
Forrest Mars discovered dragée candy among Spanish Civil War soldiers
“Before Forrest leaves Europe, he had spied a new, to him at least, type of chocolate candy that had become popular with soldiers in the Spanish Civil War called Draguet.”
M&Ms was founded as a joint venture between Mars and Hershey executives
“So Forrest and William Murray work out a deal to start a new joint venture candy company that will be 80% owned by Forrest and 20% owned by Murray's son, Bruce.”
M&M Limited formed in 1940 and began production in 1941
“In the spring of 1940, Forrest and Bruce Murray, the son, set up M&M Limited as a partnership. They build a factory in Newark, New Jersey, and they start production in 1941.”
Hershey rationed WWII chocolate to all wholesale customers except M&M Limited
“They limit their chocolate supply to all of their wholesale enterprise customers except for one. M&M Limited Partnership. Because of course, it's Bruce Murray's company.”
Rowntree's introduced Smarties in Britain years before M&Ms launched in America
“One thing that is undeniably true Is that Roundtree's introduced Smarties to the British market in 1937. So three to four years before M&M's startup in the U.S. And two years before Forrest even leaves the U.K.”
Uncle Ben's was the first branded rice product sold in America
“There were no brands in the rice category before Uncle Ben's.”
Ben's Original generates over $1 billion in annual revenue
“Today, Ben's original does over a billion dollars in revenue annually.”
The Hershey Company did not do any advertising whatsoever until 1970
“Hershey had a strict policy of not advertising at all. No advertising whatsoever. They did not do any advertising until 1970.”
Post-1950 chocolate industry winners were decided by marketing and distribution
“Who won chocolate between 1950 and 2024 is a story of marketing and distribution.”
By 1956, M&M's generated over $40 million as America's top-selling candy
“By 1956, so they start this campaign and call it fifty-fifty-one, so five years later, M&M's have become the biggest selling candy in all of America, doing over forty million dollars in annual sales and growing super fast. Bigger than Snickers, bigger than Mil…”
Forrest Mars' independent empire reached $200 million, quadrupling Chicago Mars' revenue
“Like I said, at this point, Forrest's empire is doing, call it, 200 million-ish of revenue annually around the world, and Chicago Mars had about fifty million of revenue, so Forrest is, call it, four times the size of Chicago Mars.”
Forrest Mars demolished executive dining rooms and instituted open floor plans
“So once he takes control, he comes to Chicago, he immediately rips out all the office walls in the building, open floor plan for everybody. He demolishes the executive dining room. He sells the company art collection and the company helicopter, and he hands ev…”
Mars reduced Snickers manufacturing time from a day to under an hour
“They used to make a Snickers bar in a day, and now they can do it in under an hour.”
Ninety percent of all candy purchases are impulse buys
“90%, nine-zero, of all candy purchases are impulse purchases. Only 10% of candy purchases are planned purchases.”
Mars lobbied retailers to place candy displays at supermarket checkout registers
“And what they did with that information was they launched an all-out initiative to lobby merchants to put candy displays near the cash registers, which didn't happen until that point in history and is now ubiquitous.”
The controlling interest in the Hershey Company is owned by its trust
“The controlling interest is owned by the trust.”
Hershey kept its standard chocolate bar priced at five cents until 1969
“They kept the price at a nickel from 1900 until November, 1969.”
Mars surpassed Hershey as America's top candy maker in 1973
“And as a result, in 1973, the combined Mars, which is all of the legacy Mars Inc. Products, Snickers, Milky Way, Three Musketeers, et cetera, plus M&M's, passes all of Hershey to become the number one candy company in America.”
Mars lowers COGS using multi-ingredient bars while maintaining perceived consumer value
“Mars just has a durable competitive advantage in that they're selling something to consumers that they value at the same price, but the cost of goods sold is way lower.”
Mars has generated billions in profit from commodity trading operations
“Rumors are, these are rumors, but heard from multiple places, Mars has actually made Many billions of dollars of profit from commodity trading over the years.”
Mars generated roughly $800 million in revenue when Forrest Mars retired
“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. At this point, the Empire is doing about eight hundred million in annual revenue, and he's just done.”
Ethel M Chocolates reached $150 million in revenue within a few years
“Within a couple of years, FLM is doing a hundred and fifty million dollars in revenue.”
Mars is so private it does not produce financial statements for bankers
“No one knows what their balance sheet looks like, including their bankers. They don't produce financial statements for their bankers.”
Mars grew from $800 million to $20 billion revenue by 2001
“So during their tenure, by the time they hand the business over to professional management in 2001, they've grown it from, you know, that eight hundred million when Forrest left to twenty billion in revenue.”
Mars financed its $23B Wrigley buyout using cash, Goldman, and Berkshire capital
“Mars pays eleven billion dollars itself, they get 5.7 billion dollars in bank debt from Goldman Sachs, and then Berkshire comes in with the rest of the financing, about six and a half billion dollars total.”
Berkshire Hathaway earned $2.5 billion in interest on its Mars-Wrigley debt
“So the 4.4 billion in debt that Berkshire invested Had an 11.45% interest rate. So during the five years that it was outstanding, Berkshire earned two and a half billion dollars just in interest.”
Mars bought out Berkshire's Wrigley equity stake for $4.6 billion in 2016
“In 2016, Mars buys out Berkshire, so Buffett sells Mars his entire stake back for 4.6 billion dollars versus the 2.1 that he originally invested.”
Mars could not have bought Wrigley without Berkshire Hathaway providing confidence
“I suspect there's no way the deal gets done if Berkshire doesn't get involved.”
Wrigley achieved roughly 50% gross margins and 20% net margins pre-acquisition
“Wrigley, I went back and looked at their old 10 K's before Mars acquired them. They had about 50% gross margins and 20% net income margins in the last, you know, sort of decade of the company.”
Mars acquired VCA Animal Hospitals for $9 billion in 2017
“They were the largest independent vet hospital operator in America for nine billion dollars.”
Deep operational knowledge enables superior underwriting compared to blunt valuation multiples
“Multiples are kind of a blunt instrument used for valuation when you don't actually deeply know and understand the business, and when you do, you can just underwrite better than everyone else, and you have more margin of safety in the price that you are willin…”
Kind generated $1.5 billion in domestic revenue before its Mars acquisition
“Kind was doing one and a half billion in revenue. I believe almost completely domestically in America.”
Mars's $35.9 billion Kellanova buyout is the largest CPG deal since Kraft-Heinz
“It is the largest CPG transaction since the merger between Kraft and Heinz in twenty-fifteen.”
Mars's snacking segment, which includes all candy, generated $18 billion in revenue
“Mars snacking Did eighteen billion dollars in revenue. That is a segment of their business that includes all the candy.”
Pet care generates 59% of Mars revenue and employs nearly 100,000 staff
“59% of revenue comes from the pet care segment, and of their 140,000 employees, almost a 100,000 work in pet care.”
Mars owns 3,000 veterinary clinic locations, representing 8% of US clinics
“Mars owns 3000 locations out of 35 to 40,000 vets in the US. So that's like eight percent of vets.”
Mars and Hershey each hold approximately 24% of US candy market share
“Looking at the market, at least in the U.S., Mars and Hershey each have about 24% market share of candy and confections, and no one else even comes close.”
Mars leads the highly fragmented international candy market with 11% share
“Internationally, it's kind of a different story. It is a very fragmented industry. Mars is the whale with 11%, but the next highest are seven percent and five percent, and only a third of the market is made up by the top five companies. Mars, Mondelez, Ferrero…”
Brand power accrues via lifetime margin dollars rather than high margin percentages
“Essentially, if you trust the brand more, and the prices are the same, you just buy more of it over time. So you give more absolute margin dollars to that company over time, especially in a reoccurring purchase business like this. That's the way that brand pow…”
Mars routinely kept manufacturing improvements as unpatented trade secrets
“There's actually great stories about Forrest, perhaps both himself, but also through Employees and outside firms he'd hire would come up with all these technical improvements to the manufacturing equipment, but they would never patent it because he didn't want…”
Mars passed on E.T. product placement over a $1M co-marketing requirement
“And M&M's passed on the opportunity, because it had to come with a guaranteed million dollars of co-marketing, consumer promotion, trade promotions, displays, featuring E.T. Mars was not down to do that with the M&M's characters, and passed on the opportunity.”
Product placement in E.T. tripled sales of Reese's Pieces
“Multiple sources cite that it three X'd the sales of Reese's Pieces when this came out.”
Established iconic candy brands are virtually impossible to kill
“I think the candy industry is much like the luxury industry in that once you have an established product and product brand, it is impossible to kill it. You just can't.”
98% of households purchase candy an average of 35 times annually
“A survey done by the Food Institute says that 98% of households buy candy every year, and of those, 97% are reoccurring purchases at an average of 35 times a year.”
Chocolate sales will not decline despite widespread adoption of GLP-1 weight-loss drugs
“Even if everyone starts taking Ozempic, I don't actually think chocolate sales are gonna fall.”
Mars has completed 30 acquisitions since the 1990s and divested only two
“I think they've made 30 acquisitions since the nineties, and they've only sold two things since 2015.”
Mars has grown its revenue at a 14% CAGR over a century
“If you look at them over the last hundred years, they have grown revenue at a compound annual growth rate of 14% for a century.”
Forrest Mars Sr. belongs alongside Henry Ford among top American entrepreneurs
“And because the company is so private, like, nobody knows about him, you know, like, but he should be right up there With Sam Walton, Henry Ford, with the very, very greatest American entrepreneurs of all time. He was truly a genius.”