WHY MARS CHOSE AUSTRALIA FOR A WORLD-FIRST SHIFT

KEY POINTS

• The Mars group sells about 88 million chocolate bars annually in Australia led by the Mars bar, Snickers and Milky Way.
• A factory at Ballarat in Victoria has been upgraded so the company is now producing paper wrappers for its flagship Mars bar in a first for the global conglomerate. It will be rolled out to other countries. 
• Mars Wrigley Australia CFO Duncan Webster says it’s too early to say whether inflation has peaked in the local business, but people will likely keep spending on chocolate bars which are an affordable ‘treat’.

The Australian business of the global Mars conglomerate has increased sales of its chocolate bars by about 18 per cent since 2020 and expects a new paper-based wrapper for the flagship Mars bar to add momentum.

The paper-based wrapper on the product is being rolled out through supermarkets led by Woolworths and Coles, and petrol and convenience store outlets, with Australia a pioneer ahead of similar moves in the rest of the Mars empire.

Mars Wrigley Australia chief financial officer Duncan Webster says the local market is the pioneer for a global roll-out of the new paper wrappers for Mars bars.  Eamon Gallagher

Mars is one of the world’s largest consumer companies. It is privately owned by the US-based Mars family and generates annual sales of $US45 billion ($66.3 billion).

Mars Wrigley Australia chief financial officer Duncan Webster said the group’s Ballarat factory in country Victoria, which produces about 88 million chocolate bars annually, had been the focus of heavy investment to bring about the change. He said the shift away from plastic-based wrappers would remove about 360 tonnes of plastic from the product’s supply chain. “It’s the first in the Mars world,” he said.

Mr Webster said it was too early to tell whether inflation in raw material inputs in Australia had moved past its peak.

“It’s really difficult to actually call that,” he said. There were many moving parts in the supply chain and still too much uncertainty about inflationary aspects. Mars Wrigley also operates a factory at Asquith, in the outer northern suburbs of Sydney, that makes chewing gum and mints.

Mr Webster declined to forecast where the company thought official interest rates might be headed in Australia, but said the chocolate bar and confectionery market in Australia was historically resilient in economic downturns. People still wanted a small “treat” in tougher times. “Our products are still very much seen as a treat,” he said.

The Ballarat plant, which employs about 400 people, has had almost $100 million of upgrades and capital spending in the past three years. The shift to paper-based wrappers was just a small component of that.

Back to the future

The plant makes three big chocolate bar brands. Mars is the biggest seller which 42 million bars sold annually in Australia, followed by Snickers with 36 million and Milky Way with almost 10 million. Production has lifted by 18 per cent from 2020 when the group sold about 74 million bars.

Mr Webster said supermarket sales make up a substantial chunk of sales in Australia, while sales in the “on the go” segment in petrol stations and convenience stores was also an important market.

There is also a “back to the future” element to the wrapper change; the original Mars bars which hit the market in the 1930s had paper wrappers. Packaging giant Amcor has worked with Mars Wrigley for almost three years on the development of the new paper wrappers.

The Mars business also has a large pet care and pet food business in Australia with brands including Pedigree, Whiskas and Purina.

The Mars businesses in Australia produced annual revenues of $1.68 billion in 2021, its latest set of financial statements lodged with the Australian Securities and Investments Commission show. This compared with $1.66 billion in the previous year. The Mars group in Australia made a profit after tax of $136 million in 2021, up from $107 million.

Mr Webster said the position of chief financial officer across the corporate sector was increasingly becoming more broad, and had shifted away from being a “number cruncher” compared with two decades ago.

“You’ve got a unique position to be an enabler,” he said. While CFOs still made hard financial decisions, they had substantial strategic input across the group.