This article first appeared in The Edge Malaysia Weekly on May 30, 2022 - June 5, 2022

THE Covid-19 pandemic has turned out to be bittersweet for Mars Foods Malaysia Sdn Bhd, for although sales dropped by more than a tenth, the confectioner has learnt to capitalise on the challenges. More­over, the return of revenge snacking has boosted sales by nearly a third.

In an email interview, Mars Wrigley presi­dent of global emerging markets Blas Maquivar tells The Edge that sales in its treats and snacks category — the confectionery business better known as Mars Wrigley — declined more than 10% at the start of the pandemic as consumers adjusted to movement curbs.

Malaysians’ love of confectionery can be seen in the bottom line of Mars Foods Malaysia.

Company search data shows that it posted a net profit of RM58.33 million for the financial year ended Sept 28, 2020, down 31.38% year on year from RM84.99 million.

The fall in revenue to RM596.6 million was much smaller, or 1.6% y-o-y, from RM606.57 million. By contrast, the company posted net earnings growth of 44.44% and revenue growth of 31.8% for FY2019 and 76.76% and 36% respectively for FY2018.

Mars Wrigley contributes more than 40% in sales to Mars Foods Malaysia, while the balance comes from the latter’s pet nutrition business. According to Maquivar, Mars Wrigley is among the three largest confectionery players in the country.

He explains that the sales of items such as chewing gum predictably declined during the pandemic, as such products are consumed on-the-go, rather than at home, where people were limited to during rolling lockdowns.

“We seized the opportunity to capitalise on a trade campaign for Eclipse to reinforce the freshening attributes of mints in overcoming stale breath and prolonged periods of mask wearing,” he says.

Maquivar says that at the height of the pandemic, operational challenges necessitated three key changes to the company’s sales direction. First, in a shift of focus from marketing off-the-shelf impulse purchases to digital buys, the confectionery outfit established partnerships with food and online delivery services, such as FoodPanda in Taiwan and Kareem in the United Arab Emirates. Second, it shifted from individual “self-treat” formats to family-friendly multi-pack formats to last longer and satisfy families’ bulk-buying needs. Third, Mars Wrigley went virtual with its customers and retailers.

“We saw consumer shopping on e-commerce and digital channels flourish, which we believe is a trend that is here to stay beyond the pandemic,” Maquivar says.

As the population adjusted to a new lifestyle under movement limitations, Mars Wrigley noted a 15% surge in demand and growth rate for chocolates.

“We [then saw our] treats and snacks category in Malaysia rebounding strongly and registering double-digit growth since the second half of 2021. Twenty per cent of our consumers report that they are snacking both as comfort and the joy of treating others, which is promising for the category. Chocolate and candy sales spiked as people snacked together while bingeing on the latest Netflix series or playing games with family,” Maquivar says.

In addition, retail channels within proximity — such as minimarts — registered growth of more than 20% in snacks and treats. As Mars Wrigley saw the importance of having “the right distribution network”, it capitalised on strategic partnerships with distributors and sub-distributors to service those channels more efficiently.

The company then introduced larger take-home and family-sharing packs for home consumption, and increased shelf space for its larger-pack formats at pharmacies that consumers frequented for their health and medical needs.

“In Malaysia, e-commerce and online shopping accelerated as applications recorded a 15% increase in the number of new users who started to buy groceries online. We then listed snacks and confectionery as a category [on apps] by leveraging the infrastructure of our merchants such as retail chains and supermarkets, which had started their online delivery service,” Maquivar says.

Having registered business growth of more than 30% in the first quarter of 2022, Malaysia’s position as one of Mars Wrigley’s top-performing markets in Asia has put the company on track to meet its financial targets this year, Maquivar says, adding that the group’s observation of a positive growth trajectory in its other Asian markets such as South Korea, Vietnam and the Philippines has been assuring of resilient demand and consumption of its brands for the rest of the year, amid an increase in consumer spending.

He notes that affordability is paramount for its consumers in emerging markets, given “limited spending power and tight budgets”, which calls for an emphasis on partnerships with Mars Wrigley’s local distributor network for brands such as M&M’s, Snickers, Doublemint and Eclipse to be distributed “as widely as possible in neighbourhood mom-and-pop stores, minimarts as well as digital channels”.

“The average consumer in emerging markets including Malaysia consumes 500g of chocolate per year compared to consumers in developed markets who eat five kilogrammes of chocolate per year. That is 10 times more, indicating a huge potential for [the snacks and treats] category growth to unlock,” Maquivar says.

He notes that as snack sales in emerging markets are expected to grow four times faster than in developed countries in the coming years, the company aims to increase product penetration by way of strategies involving pricing, format innovation and flavour adjustments.

Bespoke solutions will then enable the confectionery maker to reach both modern and traditional routes-to-market such as supermarkets, convenience stores and mom-and-pop stores, which are still prevalent in emerging markets, Maquivar explains.

In addition, packing and format innovations need to be aligned with emerging market consumers’ snacking preference and occasion. Different brands, for instance, cater for different occasions.

With these strategies, Mars Wrigley intends to increase the penetration rate and per-capita consumption of treats and snacks to narrow the gap with developed markets.

On the rise of prices of commodities such as oils, edible oils and wheat affecting its confectionery business, Maquivar says Mars Wrigley had “undertaken pricing initiatives and continues to optimise its portfolio to sustain consumer demand”.

It intends to expand its portfolio by attempting to introduce healthier offerings such as snacks brand KIND, with which a global partnership was inked in 2017.  

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