The Candyman Can

Tal Pinchevsky  Mar 11, 2009 1:20 pm

The Candyman Can
 
Hershey, Cadbury, Topps sweeten the pot.
 

 
Despite a troubling recession, an increasing insistence on healthy eating, and a scary peanut butter salmonella scare, people around the globe are continuing to enjoy sweet, sweet candy.

Looking back to last April, this may not be terribly surprising. Mars -- the maker of such historic chocolate indulgences as the Mars bar and M&Ms -- bought gum giant Wrigley for $23 billion, creating the world’s largest confectionery group - surpassing big-boy competitors like Hershey (HSY) and Cadbury (CBY).

What made the deal particularly eye-opening was that, while financing for such massive deals was all but nonexistent, Warren Buffett’s Berkshire Hathaway (BRK-A) contributed $4.4 billion to help Mars complete the transaction. The involvement of Buffett, himself the owner of Dairy Queen, only instilled more confidence in the industry.

In 2008, Hershey saw a net sales increase of 3.8%, while British giant Cadbury, which last year de-merged from Schweppes, also reported solid growth. The company saw base business revenue increase 7% and growth across all categories, including 6% in chocolate, 10% for bubblegum, and 6% for candy. Even the company’s Halls lozenge product saw 9% growth.

What makes this confectionery explosion even more impressive is the fact that the it comes on the heels of the massive salmonella outbreak. The industry addressed the issue quickly, and all the major candy players announced their products were free of the offending peanuts. The only major exception may have been Jelly Belly, which voluntarily recalled some of its tasty, tasty jellybeans.

At the same time, Mars is aggressively working to expand the scope of their iconic brands, such as M&Ms and Skittles, including expansion into sporting goods, crafting, and even publishing in the form of cookbooks and coffee-table volumes.

Not to be outdone, one prominent former CEO is taking an established candy brand and bringing it back. After his consortium bought Topps Confectioneries for $385 million in late-2007, former Disney CEO Michael Eisner now leads the company best-known for baseball cards and brands like Ring Pop and Push Pop.

But Eisner’s main goal is to bring back to prominence the iconic gum mascot, Bazooka Joe. And if his work with Mickey Mouse is any indication, Eisner has a shot at rejuvenating the eye-patched character best known for some of the worst jokes in history.

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