Masterfoods Focuses On Real Innovation
January 1, 2006
Masterfoods Focuses On Real Innovation
By Mary Ellen Kuhn
The terms “new” and “innovative” are not synonymous — a fact that sometimes gets swept aside by the torrent of new candy products flooding the marketplace each year.
That distinction is well understood at Masterfoods USA, where the emphasis these days is on thinking big and coming up with initiatives that represent what senior executive Richard Continelli describes as “real innovation.”
“We are definitely passionate about bringing fewer, bigger and better products [to market] around our core brands,” says Continelli, who is Senior Vice President of Sales, Snackfood, Masterfoods USA. “We are trying to develop those core businesses and to drive top-of-mind consumer awareness.” Key goals, he says, include offering consumers new choices, attracting new consumers, and moving into new markets.
To better meet these objectives, Masterfoods has decentralized, creating a new organizational structure that splits power among five key business units: Snackfood, Food, Petcare, Ethel M (new “everyday gourmet” chocolates/chocolate lounges) and Health & Nutrition.
In a recent conversation, Continelli shared three key examples of corporate confectionery initiatives that meet the Masterfoods criteria for “real innovation.”
My M&M’s. The company’s Colorworks program has offered consumers the opportunity to purchase customized color selections of M&M candies for many years. With My M&M’s, Masterfoods has taken the customization option to a whole new level. Not only is it possible for consumers to order M&M’s in their colors of choice, but new printing technologies allow for individual candies to bear customized messages.
CocoaVia. These heart-healthy snacks made with real chocolate are touted by the company for their ability to contribute to reducing cholesterol levels and supporting healthy circulation. Initially marketed only online (at www.cocoavia.com), CocoaVia currently is available in nutrition sections at select Wal-Mart, Target and Walgreen’s stores nationwide.
Ethel’s Chocolate Lounges. Masterfoods introduced this new retail concept last year and currently operates 10 sites in the Chicago area. The “chocolate lounges” allow shoppers to pick from an assortment of upscale chocolates, many with fun names and formulations — Chocolapolitan and PB&J, for example. There’s also room in the shops to sit and linger over a cup of hot chocolate or even to stage a party in some locations.
“What Ethel’s is really about is an approachable gourmet chocolate for everyday enjoyment,” says Continelli.
Masterfoods’ new approach contrasts with that of rival, The Hershey Co., which has achieved growth in recent years via a steady flow of new products, including dozens of limited edition confectionery offshoots from its core brands.
Masterfoods will not steer completely away from limited edition offerings. In fact, the company is gearing up for a couple next year, including M&M’s White Chocolate Pirate Pearls, a custom color blend including white, cream, pastel yellow and light blue candy shell colors, which will be rolled out in conjunction with the Pirates of the Caribbean movie sequel launch this summer. But the limited editions will be restricted to offerings that are truly limited, meaningful and strategic, as in the case of major movie tie-ins, Continelli emphasizes.
All Candy Expo Moves to Fall Time Frame; 2007 Show Also Brings Addition of Snacks
The National Confectioners Association’s All Candy Expo will mark its 11th year in 2007, with a date change and an expanded product focus.
Instead of being held in early June as it typically has been, the show will move to September. Specifically, the dates for the show are Sept. 17 – 19, 2007.
“NCA conducted extensive surveys among confectionery customers,” said Larry Graham, association president. “The overwhelming majority felt September was better timing in terms of confectionery planning for the year.
“Plan-o-grams are created in December or January, more new products in which they [candy buyers] are interested are released in the fall, and September is the time of year when decisions for the next year are made,” he continued.
2007 also marks the year when the Expo will begin featuring a variety of savory snacks in addition to the traditional array of sweets, a move that allows for the inclusion of a broader range of snack products based on a more global definition of confectionery.
The show will remain in Chicago, but will move to new space in McCormick Place in order to accommodate the larger pool of exhibitors and resulting increased attendance. Both decisions were made by the NCA Board of Trustees, and both moves came after extensive customer surveys, NCA reports.
Coming Expo Dates
June 6 – 8, 2006
Sept. 17 – 19, 2007
Sept. 22 – 24, 2008
Hershey Implements New Organizational Structure
A number of senior-level Hershey Co. executives received new assignments with the company’s recently announced organizational structure revamp. With the reorganization, the company created new units including a U.S. Commercial Group, International Commercial Group and a Global Growth and Innovation Group. According to Rick Lenny, chairman, president and CEO, the revamp is designed to better position Hershey to leverage its scale domestically and to accelerate growth in key global markets.
Personnel appointments included naming Chris Baldwin, formerly senior vice president, chief global customer officer, to the position of senior vice president, president U.S. Commercial Group. Michele Buck, formerly senior vice president, president, U.S. snacks, was named senior vice president, chief marketing officer, U.S. Commercial Group, reporting to Baldwin.
Also with the reorganization, John Bilbrey, formerly senior vice president, president Hershey International, will continue in his current role and, in addition, has been appointed senior vice president, president International Commercial Group.
Thomas Hernquist, formerly senior vice president, president U.S. confectionery, has been named senior vice president, global chief growth officer.
World’s Finest Chocolate Acquires Gray & Co.’s Queen Anne Brand
The Queen is returning to Chicago — Queen Anne Cherry Cordials, that is. The chocolate-covered cherries’ brand was originally established in Chicago in 1921, but since 1992 had been owned by Portland, Ore.-based Gray & Co., which in January announced the sale of the Queen Anne brand to Chicago-based World’s Finest Chocolate.
“World’s Finest Chocolate is proud to bring this great brand back to Chicago,” said Ed Opler, company chairman and CEO, in a statement made at the time of the announcement.
Since acquiring the brand 14 years ago, privately held Gray & Co. grew Queen Anne sales by more than 450 percent to a total in excess of $29 million, earning a 65 percent share of the market for cordial cherries.
All production of chocolate-covered cordials will be moved to WFC’s 500,000-square-foot production facility by March 1, and is expected to result in the addition of from 80 to 100 jobs in Chicago. The sale also includes a variety of premium fruit-and-chocolate combinations and panned glacé fruit products Gray & Co. had developed in recent years.
The leader in the chocolate fund raising industry for more than 50 years, WFC is one of a small group of North American companies that manufactures chocolate directly from the cocoa bean. In addition to its fund-raising operation, WFC makes premium chocolates, including a number of items positioned for holiday sales. The acquisition of Queen Anne further strengthens the company’s holiday retail operations.
“We’ve made an entry into the holiday market … and this gives us a nice portfolio of holiday products that should garner some attention,” says Tyler Jeffrey, WFC vice president of sales and marketing.
The cordials will continue to be sold at retail under the Queen Anne brand name. Gray & Co. makes maraschino cherries for the retail and foodservice markets, glacé fruit for the ingredient market, and dipping cherries for the confectionery industry. The Queen Anne transaction includes a long-term supply agreement under which Gray & Co. will supply cherries to WFC.
Jim Reynolds Sr., who has been CEO of Gray & Co. since 1983, will remain with the fruit processing operation in Portland, as will his son, Josh Reynolds. Jim Reynolds Jr., vice president and general manager of the Queen Anne Division, reports that he will spend a few months assisting WFC with the transition before searching for a new endeavor, which he is hoping will allow him to remain in the confectionery business. n
Holiday Season Sales Solid, But 2006 Will Be Tougher
When it was all said and done, the nation’s shoppers came through during the holiday season. According to the National Retail Federation, retail industry sales (excluding automobiles, gas stations and restaurants) for the month of December increased 5.7 percent unadjusted over last year.
Combined November and December sales brought holiday sales growth to 6.4 percent, slightly higher than NRF’s forecast of 6.0 percent. Total holiday season spending came in at $438.6 billion.
“This was clearly more than just a ho-hum holiday season as some have prematurely reported,” said NRF Chief Economist Rosalind Wells in a statement released by the retail association.
Still, however, the economist is anticipating a “more challenging” retail environment in 2006. The NRF is forecasting overall retail industry sales growth of 4.7 percent for the year, but has identified food and beverage retailers as among those that will see steady sales gains.