Table of Contents
Mars Inc dominates global candy markets with M&M's and Snickers, but the $50 billion private company's true power lies in pet food—revealing a century of family drama, strategic brilliance, and business empire building.
Key Takeaways
- Mars Inc generates over $50 billion annually, making it larger than Coca-Cola, with pet care representing 59% of revenue versus 36% from candy
- Forest Mars pioneered modern business practices in the 1930s including open offices, performance-based compensation, and scientific management principles still used today
- The company's five core principles—Quality, Responsibility, Mutuality, Efficiency, and Freedom—have driven consistent 14% annual growth for over a century
- M&M's became America's top-selling candy through revolutionary marketing research and the "melts in your mouth, not in your hand" campaign targeting parents
- Mars controls chocolate production end-to-end, operates 24/7 factories, and uses commodity trading to turn market volatility into profit
- The family maintains complete privacy and control, never going public, with current ownership valued at approximately $117 billion
- Strategic acquisitions like Wrigley ($23 billion) and upcoming Kellanova ($35.9 billion) position Mars as a global CPG powerhouse competing with Nestle
- Forest Mars's European apprenticeship learning chocolate-making secrets enabled Mars to eventually surpass Hershey as America's top candy company
- The company pioneered impulse purchase strategies, lobbying retailers to place candy near cash registers starting in 1979
Timeline Overview
- 00:00–25:15 — Frank Mars's Candy Beginnings: How childhood polio led to kitchen apprenticeship, three failed businesses in Minneapolis and Seattle, and the evolution of American chocolate from drinking beverage to Milton Hershey's revolutionary milk chocolate bars
- 25:15–52:30 — Forest Mars's Rise: The dramatic jail reunion story, Yale education through DuPont connections, father-son partnership creating Milky Way's $800,000 first-year success, and the bitter split over growth versus lifestyle priorities
- 52:30–78:45 — European Empire Building: Forest's anonymous apprenticeship in Swiss chocolate factories, establishing Mars UK as third-largest British candy company, pioneering the pet food industry with Chappie Brothers acquisition, and developing the five principles of Mars management
- 78:45–105:20 — M&M's Masterpiece: Strategic partnership with Hershey's Murray family, World War II military contracts establishing production scale, post-war consumer marketing breakthrough with "melts in your mouth" campaign, and becoming America's top candy by 1956
- 105:20–132:00 — Corporate Conquest and Independence: Forest's patient takeover of father's company, vertical integration breaking Hershey dependence, price wars exploiting Hershey's nickel bar strategy, and Mars surpassing Hershey as America's leading candy company in 1973
The Candy Empire's Unlikely Origins
Frank Clarence Mars was born in 1883 to a flour mill operator, but childhood polio confined him to his mother's kitchen where he learned candy-making. This misfortune became fortune—while other children played outside, Frank mastered confectionery arts that would eventually create one of America's largest private companies.
Frank's early entrepreneurial ventures tell a story of persistence through failure. His first candy company in Minneapolis went bankrupt in 1910, leading to divorce and his six-year-old son Forest being sent to live with grandparents in rural Canada. Two more failed companies in Seattle and Tacoma followed before Frank finally succeeded with his fourth attempt in 1920.
The key difference in Frank's final venture was timing and product evolution. By 1920, Milton Hershey had established chocolate production in America, creating wholesale opportunities for candy entrepreneurs. Frank could now access milk chocolate—a revolutionary ingredient that transformed candy from simple sugar confections into the complex, satisfying products we know today.
Understanding chocolate production reveals why it became so transformative. The process involves fermenting cacao beans, drying, roasting, winnowing to remove shells, grinding into nibs, separating into cocoa powder and cocoa butter, conching for smoothness, and finally tempering for that perfect snap and shine. This complexity created significant barriers to entry, making Hershey's wholesale chocolate business incredibly valuable to smaller candy makers.
Forest Mars: The Genius Behind the Empire
Forest Mars emerged from his Canadian exile as a driven, brilliant entrepreneur who would revolutionize not just candy-making, but modern business practices. After winning a scholarship to UC Berkeley and transferring to Yale, Forest gained exposure to advanced business thinking through his roommate—Pierre S. duPont's nephew.
The legendary reunion between father and son supposedly occurred when Forest, working as a cigarette salesman, was arrested in Chicago for illegal advertising and called his estranged father for bail. Whether true or embellished, this meeting produced the Milky Way bar in 1924, generating $800,000 in first-year sales and establishing the Mars company as a serious player.
Forest's business philosophy centered on scale economics and operational efficiency. He pushed for 24/7 factory operations, state-of-the-art production lines designed by the same company that built Ford's assembly lines, and relentless focus on maximizing output. By 1929, Mars was producing 20 million Milky Way bars annually and had become Hershey's largest wholesale customer.
The father-son partnership ended dramatically when Frank chose lifestyle over growth. While Frank bought airplanes, horse ranches, and vacation homes, Forest demanded reinvestment for expansion. Their final confrontation in 1932 led Forest to leave America entirely, taking $50,000 and foreign rights to the Milky Way recipe to build his own empire in Europe.
European Exile and Chocolate Mastery
Forest's European strategy demonstrates extraordinary strategic thinking. Rather than simply licensing recipes abroad, he spent months working anonymously in Swiss chocolate factories—at Tobler and Nestle—learning the scientific principles behind chocolate production that American manufacturers like Hershey had achieved through trial and error.
This apprenticeship enabled Forest to establish Mars UK in Slough, England, where he introduced the Mars Bar (the British version of Milky Way) and began building what would become the third-largest candy company in Britain. More importantly, he diversified immediately into pet food by acquiring Chappie Brothers' canned dog food business in 1934.
The pet food acquisition proved prescient. At the time, pets ate table scraps—dedicated pet food was a new concept. Forest correctly anticipated that post-Depression prosperity would change the human-pet relationship, creating an entirely new market category. This business generated immediate cash flow to fund candy expansion while establishing Mars in what would eventually become their largest revenue segment.
Forest's time in Europe also established the management principles that still govern Mars today. The five principles—Quality, Responsibility, Mutuality, Efficiency, and Freedom—weren't abstract concepts but practical guidelines for building a scale business. Quality meant stopping production lines for any defect; Responsibility meant paying employees 3-4 times market rates tied to company performance; Mutuality meant ensuring all partners in the value chain prospered; Efficiency meant maximizing return on total assets; Freedom meant maintaining private ownership to enable long-term thinking.
The M&M's Masterpiece
Forest's return to America in 1939 coincided with World War II, creating the perfect opportunity for his most brilliant business maneuver. He had observed candy-coated chocolates called dragées in Europe and recognized their military potential—chocolate that wouldn't melt in soldiers' hands or hot weather.
The partnership with Hershey's Bruce Murray was strategic genius. William Murray, Hershey's president, had no ownership stake to pass to his son. Forest offered Murray's son Bruce a legacy business while securing access to Hershey's chocolate, military contracts, and capital. The 80-20 partnership (favoring Forest) launched M&M's Limited in 1940.
World War II provided the perfect launching pad. The U.S. military became M&M's primary customer, with Air Force and Army contracts establishing production scale and brand recognition among millions of servicemen. When the war ended, these veterans would drive civilian demand for familiar comfort foods.
However, initial civilian sales disappointed. The breakthrough came when Forest hired Ted Bates advertising agency to conduct comprehensive market research—revolutionary in the candy industry. The research revealed that children loved M&M's, but parents made purchase decisions. The solution was the iconic slogan: "The milk chocolate melts in your mouth, not in your hand."
This marketing message solved parents' core problem—giving children chocolate without creating household chaos. Combined with sponsorship of children's television shows like Mickey Mouse Club and strategic retail placement, M&M's became America's best-selling candy by 1956, just five years after launching the consumer campaign.
Corporate Conquest and Chocolate Independence
After acquiring 100% of M&M's by pushing out Bruce Murray, Forest turned his attention to reclaiming his father's company. Frank had died in 1933, leaving Mars Incorporated under control of his second wife and her relatives. Through patient maneuvering, office politics, and financial pressure, Forest gradually acquired shares until gaining control in 1964.
His first acts as CEO revealed the depth of his operational obsession. He immediately implemented open office policies, eliminated executive perks, installed time clocks for all employees including himself, and began modernizing production. Most importantly, he declared independence from Hershey's chocolate supply, building Mars's own chocolate production facilities despite Hershey's warnings about the massive capital requirements.
This vertical integration proved transformational. Hershey had kept candy bar prices artificially low through their famous nickel bar strategy—maintaining a 5-cent price from 1900 to 1969 by gradually shrinking bar sizes. When Hershey finally doubled prices and restored original sizes in 1969, consumers revolted at the obvious manipulation. Forest launched an aggressive response, increasing Mars bar sizes while maintaining prices and launching the first major advertising campaigns in candy industry history.
The strategy worked brilliantly. Mars surpassed Hershey as America's top candy company in 1973, a position achieved through superior cost structure (combination bars with cheaper fillings), advertising sophistication, and vertical integration enabling better margins and quality control.
Modern Mars: The Hidden Pet Food Giant
Forest's retirement in 1973 marked the beginning of Mars's transformation into a global conglomerate under his children John, Forest Jr., and Jackie. Their 28-year tenure expanded revenue from $800 million to $20 billion through systematic globalization and strategic acquisitions.
The most significant revelation about modern Mars is the dominance of pet care over candy. Pet care generates 59% of revenue ($29.5 billion) versus candy's 36% ($18 billion), employing nearly 100,000 of Mars's 140,000 workers. This includes not just pet food brands like Pedigree and Whiskas, but veterinary services through Banfield Pet Hospitals and VCA Animal Hospitals—over 3,000 locations representing 8% of all U.S. veterinary practices.
Major acquisitions reshaped the company's portfolio. The $23 billion Wrigley purchase in 2008, financed partially by Warren Buffett during the financial crisis, added gum and mints. Buffett's investment terms—11.45% interest on debt and preferred equity returns—demonstrated both Mars's quality and Berkshire's crisis-era advantages. The upcoming $35.9 billion Kellanova acquisition (Kellogg's snack and international cereal business) will add brands like Pringles and Pop-Tarts, positioning Mars to compete directly with Nestle's scale and diversification.
Strategic Principles and Competitive Advantages
Mars's enduring success stems from several sustainable competitive advantages. Scale economies dominate their business model—from manufacturing efficiency to retail shelf space control. With 90% of candy purchases being impulse decisions, premium shelf placement near cash registers (a Mars innovation from 1979) directly drives sales.
The company maintains strict operational discipline through their return on total assets (ROA) metric, targeting 18% annually across all divisions. Unlike traditional accounting measures, Mars revalues assets at replacement cost, ensuring real efficiency rather than artificial benefits from aging infrastructure.
Brand power operates differently at Mars than traditional premium brands. Rather than commanding price premiums, Mars leverages brand trust to drive volume and lifetime customer value. Consumers choose Snickers over unknown alternatives at equivalent prices, generating higher absolute profits through scale and repeat purchases.
The family ownership structure enables long-term strategic thinking impossible for public companies. Private ownership allows investments with decade-long payback periods, maintaining quality during economic downturns, and resisting short-term profit maximization. This freedom principle—one of their five core tenets—compounds over time through superior strategic positioning.
Common Questions
Q: How big is Mars compared to other candy companies?
A: Mars and Hershey each hold about 24% of U.S. candy market share, with Mars leading globally at 11% versus fragmented international competition.
Q: Why don't more people know Mars is bigger than just candy?
A: The company maintains extreme privacy, rarely grants interviews, and operates decentralized brands that don't emphasize Mars ownership.
Q: What makes Mars's business model so profitable?
A: Scale economies, vertical integration, commodity trading profits, and converting agricultural inputs into branded consumer products with premium margins.
Q: How did Mars become so dominant in pet food?
A: Early diversification in 1934, strategic acquisitions like Royal Canin prescription foods, and vertical integration through veterinary hospital ownership.
Q: Will Mars ever go public?
A: Highly unlikely given their "Freedom" principle emphasizing private ownership as core to long-term thinking and operational flexibility.
Mars Inc's transformation from Frank Mars's failed candy ventures to a $50 billion global empire demonstrates how exceptional leadership, operational discipline, and patient capital can create enduring competitive advantages across multiple industries. Forest Mars's genius lay not just in product innovation, but in pioneering modern management practices decades before they became standard—from open offices and performance-based compensation to scientific market research and vertical integration. Today's Mars, dominated by pet care rather than candy, proves that successful conglomerates require both strategic vision to spot emerging markets early and operational excellence to scale efficiently across vastly different business models.
Practical Implications
• Long-term private ownership enables superior strategic positioning - Mars's ability to invest with decade-long paybacks and resist short-term profit pressure creates compounding competitive advantages unavailable to public companies
• Diversification works when built on operational expertise - Mars succeeded in pet food and veterinary services by applying manufacturing efficiency and brand-building skills, not just financial engineering
• Scale economies in consumer goods require controlling the entire value chain - Vertical integration from commodity sourcing to retail placement enables both cost advantages and quality control impossible with outsourced models
• Brand loyalty in recurring purchase categories generates massive lifetime value - Companies should prioritize volume and repeat purchases over price premiums when building consumer franchises
• Scientific management principles compound over time - Mars's ROA focus, performance-based compensation, and quality obsession created sustainable operational advantages that persist across generations
• Market research can transform struggling products into category leaders - M&M's success demonstrates how understanding true customer motivations (parents buying for children) can unlock entirely new positioning strategies
