Last week the FT carried an interview with John Reid, the outgoing CEO of Mars.
What few metrics are published by Mars (the company is one of the world’s largest, privately owned businesses), it seems that Reid’s tenure has been an unqualified success. Global revenues now exceed $45b and have leapt dramatically under Reid’s tenure.
Mars is also one of very few privately owned businesses that has not just survived, but thrived as a family business into the 5th or 6th generation. According to one study only 3% of family businesses last into the 4th generation.
I have never worked for Mars but it’s a company I know well. They have been a competitor for most of my business career. First when I started in the UK in Rowntree a leading confectionery business, later as an ice cream executive and most recently in pet care.
It is petcare rather than confectionery that has fuelled Mars’ growth, particularly in super-premium, high-tech functional foods and latterly pet clinics.
The company also is very profitable. It’s focused on narrow, high margin categories with low price elasticity. Unlike Nestlé and Unilever it doesn’t adapt formulas too much for local markets; its supply chain uses a smaller number of bigger plants; it has a slim portfolio of strong global brands.
The FT’s interview paints Mars in a warm halo; the emphasis on quality, one of 5 guiding principles. Recently sustainability has been given more focus, like many other FMCGs.
Mars’ unique culture is also well-known in the industry. Executives are called associates, everyone sits in open plan offices with the same size cubicle. The boss sits in the centre.
I have always found Mars to be very single minded and aggressive. They are a formidable competitor with deep pockets. There is a hint of this in the interview where Reid says that ‘delivering performance is exemplary.’ That is the Mars I know.
So the stakes are high for Reid’s successor Poul Weihrauch. Weihrauch comes from the pet care division and also worked in Nestlé and Stimorol chewing gum.
Is is interesting that whilst Mars is a US company, neither the current CEO nor his successor are Americans. Reid is from the UK and Weihrauch is Danish.
Given the new CEO’s background and his long history with Mars, I am sure the focus will be going deeper into pet care, possibly OTC products or services like pet insurance.
In confectionery the big bets are less obvious given the global swing against sugar. Mars does not have a strong healthy snack offer, signing an agreement with KIND in 2020.
Will Mars enter new categories? Beverages especially high value functional offers may be promising but it’s hard to see them delivering the scale or margin Mars wants. They are too wise to go head to head with a Coca Cola.
Remember too Mars’ people, who tend to have a long tenure (provided they deliver), are highly experienced in their core categories (pet & confectionery) but have less knowledge in other segments. Mars’ business units are largely autonomous, there is less cross-fertilisation than in other big MNCs.
Mars also prefers organic growth over acquisition, although this has shifted over the last decade. So far this year they’ve signed just 4 strategic deals.
There is more white space in geographic expansion. Yes Mars has a strong international presence but it could go much deeper in my view. In countries with large populations like China and India the business has nothing of the scale of Nestlé or Unilever.
What is in Weihrauch’s 100 day plan?