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15 December 2024

Mars Inc. (the chocolate story)

2Frameworks
14Insights

Frameworks in this episode

Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 2

Myth Buster2:40:00

Why Hershey Bars Got Smaller Instead of Pricier for 70 Years

Hershey refused to raise its iconic nickel price for nearly 70 years, instead shrinking the bar's size, until a 1969 price hike backfired by exposing the shrinkage to consumers — a mistake Mars exploited by growing bar sizes while holding prices steady.

  • Hershey kept its bar priced at a nickel from 1900 to 1969, shrinking the bar to offset inflation
  • The 1969 price increase to a dime, paired with restoring bar size, backfired by revealing decades of shrinkage
  • Mars countered with a price-and-size war it consistently won due to lower-cost ingredients like nougat and peanuts

“they not once changed the price of the chocolate bar”

David Rosenthal · 2:40:00

“consumers don't care that the new gets cheaper consumers care about I mean truly that is why Snickers is the satisfied slogan consumers care about…”

Ben Gilbert · 2:41:30
#Hershey#pricing#shrinkflation#competitive strategy
Myth Buster3:14:00

Mars Is Actually a Pet Care Company That Also Makes Candy

Despite being famous for M&M's and Snickers, Mars's candy ('Mars Snacking') segment is less than half its revenue — Pet Care, including Royal Canin, Banfield, and VCA veterinary hospitals, makes up 59% of revenue and the vast majority of employees.

  • Mars Snacking (all the candy brands) does about $18B of Mars's roughly $50B in revenue
  • Pet Care is 59% of revenue and nearly 100,000 of Mars's 140,000 employees
  • Mars owns thousands of veterinary hospitals (Banfield, VCA) alongside pet food brands like Royal Canin, Pedigree, and Whiskas

“Mars snacking did $18 billion in Revenue that is a segment of their business that includes all the candy”

Ben Gilbert · 3:13:30

“Pet Care is actually the bigger business 59% of Revenue comes from the Pet Care segment”

David Rosenthal · 3:14:00
#Mars Inc#pet care#business segments#diversification

Hot Take· 1

Hot Take3:32:00

Climate Change Is Quietly Reshaping the Taste of Chocolate

Cacao trees are extremely climate-sensitive, and decades of genetic engineering to make them more resilient and productive amid climate change have come at the cost of the flavor complexity that historically defined great chocolate.

  • Cacao pods grow directly off the tree trunk and only produce usable fruit for about 25 of a tree's 100+ year lifespan
  • Rising global consumption plus climate change has pressured cacao-growing regions
  • Breeding for resilience and yield has diluted some of chocolate's traditional flavor complexity

“the cacao tree is a very very sensitive tree it's this bizarre plant”

Ben Gilbert · 3:33:00

“the taste of chocolate has changed a lot in the last few years as the plants themselves have been engineered and changed a lot to…”

David Rosenthal · 3:35:00
#climate change#cacao#chocolate industry#sustainability

Explainer· 3

Explainer24:30

How Milk Chocolate Was Invented: From Baby Formula to Candy Bars

Henri Nestlé's research into infant formula to fight infant mortality inadvertently produced the dehydrated milk technology that his neighbor Daniel Peter used, after years of failed attempts, to invent milk chocolate.

  • Nestlé invented a dehydrated baby formula in 1866-67 to combat high infant mortality
  • Neighbor Daniel Peter tried combining the formula with cocoa but the mixture was grainy and spoiled
  • Peter eventually succeeded using condensed milk (not powdered formula) plus a slow-drying process

“Nestle was a baby formula company that's how it started”

David Rosenthal · 25:30

“the issue that he kept running into this is Daniel Peter was that the mixture was grainy the water in the milk didn't blend well…”

David Rosenthal · 27:00
#Nestle#milk chocolate#food science history
Explainer17:30

The Wild Multi-Step Science of Turning Cacao Into Chocolate

A detailed walkthrough of chocolate production from cacao pod to finished bar — fermentation, drying, winnowing, grinding, conching, and tempering — showing why chocolate is far more complex to manufacture than coffee or wine.

  • Cacao beans must be fermented, dried, sorted, and 'winnowed' before they become usable nibs
  • Conching (discovered accidentally by Rodolphe Lindt in 1879) smooths chocolate's texture over hours or days
  • Tempering aligns cocoa butter crystals so chocolate has the right shine and snap

“chocolate is remarkably hard to make I think that is a huge takeaway”

Ben Gilbert · 23:00

“this is more complex than Wine this is more complex than coffee”

Ben Gilbert · 22:00
#chocolate production#conching#tempering#food manufacturing
Explainer2:58:00

How Warren Buffett Helped Mars Buy Wrigley for $23 Billion

In the middle of the 2008 financial crisis, Mars used a mix of its own cash, Goldman Sachs bank debt, and Berkshire Hathaway debt-and-equity financing to acquire Wrigley, with Buffett's involvement lending crucial credibility to close the deal and eventually earning Berkshire roughly double its investment.

  • Mars announced the $23B Wrigley deal in April 2008, closing right after Lehman's collapse in October 2008
  • Berkshire Hathaway provided both debt and preferred equity financing alongside Goldman Sachs bank debt
  • Berkshire roughly doubled its money across both the debt and equity portions over about eight years

“buy Commodities sell brands has long been formula for business success it has produced enormous and sustained profits for Coca-Cola since 1886 and Wrigley since…”

Warren Buffett (quoted) · 2:57:30

“so during the 5 years that it was outstanding Burkshire earned $2.5 billion just in interest”

Ben Gilbert · 3:00:30
#Wrigley acquisition#Warren Buffett#M&A financing#2008 financial crisis

Story· 7

Story05:00

From Bankrupt Candy Man to Chocolate Empire: Frank Mars's Four Tries

Frank Mars survives childhood polio, learns candy-making from his mother, and fails at three separate candy companies (Minneapolis, Seattle, Tacoma) before a fourth attempt in Chicago — built around chocolate rather than penny candy — finally succeeds and becomes the foundation of Mars Inc.

  • Frank Mars's childhood polio kept him home baking candy with his mother, sparking his interest
  • His first three candy companies (Minneapolis, Seattle, Tacoma) all went bankrupt due to perishable penny candy and thin margins
  • His fourth attempt in Minneapolis pivoted to chocolate-coated products and eventually the Milky Way bar

“so in 1910 Frank's now bankrupt his wife Ethel divorces him and takes their six-year-old son forest and sends Forest off to live with her…”

David Rosenthal · 11:00

“Frank sets up yet again another candy company candy company number uh four now in total if you're keeping track at home and Against All…”

David Rosenthal · 13:00
#origin story#Frank Mars#entrepreneurship#failure
Story45:00

The (Maybe Apocryphal) Jailhouse Origin of the Milky Way Bar

The company legend of how estranged son Forest Mars reunited with his father Frank after a Chicago jail stint, and pitched turning a malted milkshake into a candy bar over lunch — becoming the Milky Way, Mars's first massive hit.

  • Forest Mars, arrested for a marketing stunt in Chicago, called his estranged father Frank to bail him out after 13 years of no contact
  • Over lunch, Forest suggested turning a malted milkshake flavor into a candy bar
  • The Milky Way launched in 1924 and grew from $73,000 to $800,000 in sales in one year

“I'll be damned if a short time after our lunch the old man has a candy bar and it's a chocolate malted drink he put…”

Forest Mars (quoted) · 49:00

“with that the Milky Way bar was born with the marketing of a malted milkshake in a candy bar”

David Rosenthal · 48:30
#Forest Mars#Milky Way#family reunion#company legend
Story1:15:00

Forest Mars's Decade in Europe: Working Chocolate Factory Lines Incognito

After a bitter split from his father, Forest Mars moved his family to Switzerland and worked anonymously on chocolate factory lines at Tobler and Nestlé to learn the trade firsthand, before starting his own Mars Bar business in England.

  • Forest believed you must personally know how to make a product to get rich from it
  • He worked undisclosed factory jobs at Tobler and Nestlé rather than seeking management roles
  • This knowledge let him later launch the Mars Bar in England using Cadbury-supplied chocolate

“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…”

Forest Mars (quoted) · 1:15:30

“he doesn't tell anybody who he is his quote on this later is like well they never asked”

David Rosenthal · 1:16:30
#Forest Mars#Europe#chocolate manufacturing#self-reliance
Story1:56:00

The Handkerchief Pitch: How Forest Mars Convinced Hershey to Fund M&M's

Forest Mars anonymously toured the Hershey factory, then theatrically presented un-melted candy-coated chocolates to Hershey's president's son to strike an 80/20 joint venture that became M&M's — cleverly avoiding Hershey's own trust conflict-of-interest concerns.

  • Forest showed up unannounced at Hershey and demanded to see president William Murray
  • He demonstrated Dragée-style chocolates that hadn't melted despite a hot train ride and factory tour
  • The resulting M&M Limited partnership was 80% Forest, 20% Murray's son Bruce, giving Mars access to rationed wartime chocolate

“to which Forest replies just tell him Mars is here that's all he needs to know”

Ben Gilbert · 1:55:30

“I've even got the name for it we're going to call it Mars and Murray M&M's and it's a new company”

David Rosenthal · 1:57:30
#M&M's#Hershey#joint venture#dealmaking
Story2:24:00

Forest Mars Finally Retakes His Father's Company

Two decades after being cut out of Frank Mars's will, Forest maneuvers his way back into Chicago Mars, waits out a mismanaged CEO tenure by his half-sister's husband, and finally buys full control in 1964, immediately imposing his open-office, no-perks culture.

  • Forest spent 20 years after his father's death slowly positioning himself to retake Chicago Mars
  • Revenue dropped 20% under his half-sister's husband's leadership, creating pressure to sell
  • Once in control, Forest immediately ripped out offices, sold the company jet and art, and instituted time cards for everyone

“I read this story and I thought of the Darth Vader quote I am altering the deal pray I don't alter it any further”

Ben Gilbert · 2:30:30

“once he takes control he comes to Chicago he immediately rips out all the office walls in the building open floor plan for everybody”

Ben Gilbert · 2:30:00
#Forest Mars#corporate control#family business#takeover
Story3:23:00

The Marketing Deal M&M's Passed On: E.T. and Reese's Pieces

M&M's declined to pay for product placement in Steven Spielberg's E.T., letting Hershey's Reese's Pieces take the role instead — a decision that tripled Reese's Pieces sales and cemented the candy's lasting spot in movie theater concessions.

  • M&M's passed on requiring a guaranteed $1M co-marketing commitment for E.T. placement
  • Hershey nearly passed too, but ultimately committed the budget
  • The placement reportedly tripled Reese's Pieces sales and gave it a lasting theater-concession niche

“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 ET”

David Rosenthal · 3:23:30

“multiple sources cite that it 3x the sales of Reese's Pieces when this came out”

Ben Gilbert · 3:24:30
#marketing#product placement#Reese's Pieces#missed opportunity
Story3:28:00

The 1995 Stunt That Got Millions to Vote for a New M&M Color

In 1995, Mars ran a national vote asking consumers to choose a replacement color for the boring tan M&M, driving massive engagement via a call-in hotline and celebrating blue's win by lighting up the Empire State Building.

  • Mars replaced the tan M&M with a nationwide public color vote via a call-in hotline
  • Blue won and Mars marked the moment by lighting the Empire State Building blue
  • The stunt created consumer ownership over a purely cosmetic product change

“they needed to spice it up because basically it was boring”

Ben Gilbert · 3:28:30

“they lit up the Empire State Building after announcing it was blue with blue genius”

David Rosenthal · 3:29:30
#M&M's#marketing stunt#brand engagement

Takeaway· 1

Takeaway3:10:30

Mars's $36 Billion Bet on Kellanova and the Path to Becoming Nestlé

Mars's announced $35.9 billion acquisition of Kellanova — Kellogg's global snacks and international cereal business — would be the largest CPG deal since Kraft-Heinz, pushing Mars toward a Nestlé-like scale and diversification.

  • Kellanova includes Pringles, Pop-Tarts, Rice Krispies Treats, RXBar, and international cereal, minus Kellogg's US cereal business
  • At $35.9B it would be the largest CPG transaction since Kraft-Heinz in 2015
  • The deal would make Mars look increasingly like a diversified giant similar to Nestlé

“Mars announced that they have entered a definitive agreement with Kellen NOA to purchase the company for $ 35.9 billion”

David Rosenthal · 3:10:30

“it also basically makes them look like Nestle”

Ben Gilbert · 3:12:30
#Kellanova#M&A#CPG consolidation#Mars strategy