Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Mars Family Built a Candy and Pet Food Empire
Transcript
- Lucas: If you walk into any convenience store anywhere in the world, chances are you'll find something made by one family. Mars, Incorporated. M&M's, Snickers, Skittles, Pedigree, Whiskas, Uncle Ben's. That's a $45 billion private company, and almost nobody outside the family knows how it actually works. Luna: They are famously secretive. I think I've seen maybe two photos of the current Mars family members. It's almost like a business version of the Swiss banking system. Lucas: That's a perfect comparison. The Mars family has deliberately avoided the spotlight for nearly a century. But the secrecy isn't just about privacy—it's a deliberate strategy. When you're private, you don't have to explain quarterly earnings to analysts. You can think in decades. Luna: And they've certainly thought in decades. The company was founded in 1911 by Frank Mars. But the real story starts with his son, Forrest Mars Sr., who basically built the empire from scratch. Lucas: Right. Frank Mars started making candy in his kitchen in Tacoma, Washington. He created the Milky Way bar in 1923, and it was a hit. But Frank and Forrest had a famously difficult relationship. Forrest was demanding, combative, and eventually left the U.S. to start his own candy business in Europe. Luna: He moved to England in the 1930s, right? And that's where he created Mars bars as we know them. Lucas: Exactly. He partnered with a British company to produce a chocolate bar similar to the Milky Way, but he called it the Mars bar. Then during the Spanish Civil War, he noticed that soldiers were eating chocolate pellets coated in a hard shell to prevent melting—that gave him the idea for M&M's. He brought the concept back to the U.S. in 1941, partnered with Bruce Murrie—whose father was a Hershey executive—and launched M&M's. Luna: So the 'M' in M&M's stands for Mars and Murrie. I think most people don't know that. Lucas: Most don't. And that partnership was short-lived. Forrest bought out Murrie after the war ended. But here's the crucial thing: from the very beginning, Forrest insisted on total control. He didn't want outside investors, and he certainly didn't want to go public. That philosophy became the bedrock of the company. Luna: And that philosophy was codified in something called the 'Five Principles'. I've seen them on their website—it's almost like a corporate religion. Lucas: It really is. Quality, Responsibility, Mutuality, Efficiency, and Freedom. Every Mars associate—they don't say 'employees', they say 'associates'—is expected to live by these principles. And they are enforced. There's a story that Forrest Mars Sr. once walked into a factory, found a worker not wearing hairnets properly, and fired him on the spot. The principles are not suggestions. Luna: That's intense. But it also creates a very specific culture. And that culture helped them make a massive bet in the early 1970s—moving into pet food. Lucas: Yeah, most people think of Mars as a candy company, but pet food is actually their biggest division. They bought the Kal Kan pet food company in 1968, and then expanded with Pedigree and Whiskas. Today, Mars Petcare is the world's largest pet food company, with brands like Royal Canin, Iams, and Eukanuba. It accounts for more than half of Mars's total revenue. Luna: So they basically diversified from sugar into protein. That's a smart hedge against changing consumer tastes. Lucas: Exactly. And they did it while staying completely private. That allowed them to invest heavily in pet food for years before it became profitable. A public company might have faced pressure from shareholders to cut losses. Mars could wait. Luna: Let's talk about the ownership structure. How do they keep control across generations? Lucas: The company is entirely owned by the Mars family, but it's not a simple trust. The shares are held by a small number of family members—currently, the grandchildren of Forrest Mars Sr.: John, Forrest Jr., and Jacqueline. They don't pay dividends; all profits are reinvested. And there's a rule that family members who want to work in the business must prove themselves first, usually by working outside the company for a few years. Luna: I've read that Forrest Jr. and John were notoriously competitive with each other. How did they avoid the kind of infighting that destroyed the Oetker family? Lucas: It wasn't always smooth. When Forrest Sr. died in 1999, he left the company to his three children. John and Forrest Jr. had different philosophies—John was more focused on pet food, Forrest Jr. on candy. But they eventually divided responsibilities: John ran pet care, Forrest Jr. ran confectionery. They had a formal family council and a constitution that outlined decision-making processes. It wasn't perfect, but it worked. Luna: And then there was the Wrigley acquisition in 2008. That was a $23 billion deal, and it was entirely financed with debt. Lucas: That was a massive bet. Wrigley was the world's largest chewing gum company, and Mars paid a huge premium. But it gave them a dominant position in the confectionery market, combining M&M's, Snickers, and Skittles with Wrigley's gum brands like Orbit and Extra. And because Mars was private, they could take on that debt without worrying about quarterly earnings pressure. Luna: It also made them the largest private company in the United States at the time. But the interesting part is that they almost didn't get the deal done. Lucas: Right. They needed financing, and the credit markets were freezing up in 2008. Ultimately, Warren Buffett's Berkshire Hathaway provided $6.5 billion in financing. That's how they sealed it. And it's a testament to the Mars family's reputation that a legendary investor like Buffett was willing to back them. Luna: Speaking of reputation—the secrecy. Why do you think they've remained so media-shy? Lucas: I think it's partly cultural, partly strategic. Forrest Mars Sr. was notoriously reclusive. He didn't give interviews, he didn't allow photographs. His children grew up in that environment. But there's also a business logic: when you're private, you don't have to disclose your margins, your growth plans, your R&D spending. Competitors can't copy you as easily. And the Mars family values their privacy deeply. Luna: Yet they are one of the wealthiest families in the world. Forbes estimates their net worth at around $120 billion. That's a lot of privacy. Lucas: It is. And they've managed to avoid the kind of scandals that have plagued other dynasties. No public feuds, no messy divorces splashed across tabloids. They keep their personal lives completely separate from the business. Luna: But there is one notable exception. In 2017, the company publicly announced that it was splitting into two entities: Mars Food and Mars Petcare, effectively separating the candy and pet food divisions. That was a big move for such a secretive company. Lucas: And it was a sign that the next generation is taking over. John Mars stepped down as chairman in 2020, and the company is now led by non-family CEO Poul Weihrauch. But the family still controls the board. The challenge is how to keep the family engaged and aligned when the fourth and fifth generations have very different interests. Luna: That's the classic family business problem. How do you maintain the founder's mentality after the founder is gone? Lucas: Mars seems to have done it through a combination of structure and culture. The Five Principles provide a consistent framework. The family council ensures that big decisions are made collectively. And they've been willing to bring in professional managers from outside the family when needed. But the ultimate strength is that the family remains the sole owner, so there's no pressure to maximize short-term profits. Luna: That's a huge advantage. But it also means that if the family ever decides to sell or go public, the entire edifice could change. Lucas: And that's the big question for the future. The current generation—the grandchildren of Forrest Sr.—are in their 70s and 80s. The great-grandchildren are in their 40s and 50s. Will they want to keep the company private? Or will they eventually want to cash out? So far, all signs point to staying private, but we'll see. Luna: One thing that's interesting is that Mars has been expanding into areas like veterinary clinics and pet hospitals. They own Banfield Pet Hospital and VCA Animal Hospitals. It's a vertical integration strategy—they sell the food, and they also provide the care. Lucas: That's a smart move. Pet owners are increasingly treating their animals like family members, and they're willing to spend on premium food and healthcare. Mars is positioning itself to capture that entire value chain. And because they're private, they can make these long-term investments without worrying about next quarter's earnings. Luna: So really, the Mars story is a case study in the power of staying private. It's not for every company, but for a family business with a clear vision, it can be a huge moat. Lucas: Absolutely. And it's worth noting that Mars is one of the few family businesses that has successfully navigated the transition from founder to multiple generations without losing its identity. The Oetker family, which we covered a few episodes ago, tore itself apart. The Mars family managed to avoid that. Luna: Yeah, that's a testament to their governance. They built systems that allowed for disagreement without destruction. Lucas: Exactly. And speaking of building systems—it occurs to me that the same principle applies to what we do here. We keep this podcast ad-free, and we're able to do that because of a small group of listeners who support us directly. If these conversations have been useful to you in any way, you can join them at buy me a coffee dot com slash fexingo. It's a simple way to ensure we keep producing these deep dives without any outside pressure. Luna: Yeah, it's exactly that—no ads, no sponsors, just the content we want to make. And it's really the listeners who make that possible. Lucas: So back to Mars. One last thing I want to touch on: the company's focus on quality. There's a famous story that when Forrest Mars Sr. was starting M&M's, he insisted that the candy shell be perfectly uniform. He rejected entire batches if the color was off. That obsession with quality is still embedded in the company culture today. Luna: And that attention to detail is probably why M&M's have been around for 85 years and are still one of the most recognizable candies in the world. Lucas: Right. The lesson from Mars is that a family business can survive and thrive if it has a strong culture, clear governance, and the discipline to ignore short-term noise. It's easier said than done, but they've proven it's possible. Luna: And they did it all without ever selling a single share to the public. That's pretty remarkable. Lucas: It is. And as the next generation takes the reins, the question is whether they can maintain that discipline. If they do, Mars will likely remain a family powerhouse for another century. Luna: We'll be watching. Thanks for listening.