Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Mars Family Built a Private Candy Empire
Transcript
- Lucas: There is a roughly one hundred billion dollar company that almost nobody outside its industry has ever heard of. It is private, it has no ticker to track, and its headquarters is a low-slung building in McLean, Virginia that looks like a suburban insurance office. Luna: You're talking about Mars, right? The candy company. Lucas: Exactly. Mars Incorporated. The family behind M&M's, Snickers, Milky Way, Twix. But also Pedigree pet food, Whiskas, and about a dozen veterinary clinic chains. They are the sixth-largest privately held company in the United States, with annual revenue around forty-five billion dollars. Luna: And almost no one knows who actually runs it. That's by design, from what I've read. Lucas: Completely. The Mars family has been famously press-shy for generations. There are no glossy profiles, no tell-all memoirs. The founder, Franklin Mars, started in 1911 in Tacoma, Washington, making buttercream candies in his kitchen. But the real architect of the empire was his son, Forrest Mars Sr. Luna: Forrest is the one who created M&M's, right? I remember the story — he saw soldiers eating chocolate pellets with a hard shell during the Spanish Civil War. Lucas: That's the legend. In the 1930s, Forrest was travelling in Europe and noticed that British soldiers were eating chocolate-coated pellets that didn't melt. He brought the idea back and launched M&M's in 1941, with a deal from Hershey to supply the chocolate. But the real story is about how he ran the business. Luna: What was his management style? Lucas: Brutal. Forrest Mars Sr. was famous for walking into factories and throwing candy bars at managers if he thought the quality was slipping. He demanded absolute precision. Every M&M had to be exactly the same size and color. He would fire people on the spot for small mistakes. But he also paid above-market wages and gave plant managers real autonomy. Luna: So he was demanding but also rewarding. That sounds like a way to build loyalty and fear at the same time. Lucas: It worked. Under Forrest, the company grew from a regional candy maker into a global powerhouse. But he was also obsessive about privacy. He never gave interviews, and he insisted that the company remain private. No debt, no outside shareholders, no need to explain anything to Wall Street. Luna: That's a huge advantage. You can take a thirty-year view on investments without worrying about quarterly earnings. Lucas: Exactly. And they used that freedom to vertically integrate. Mars owns its own cocoa processing plants, its own printing facilities for packaging, its own truck fleet. They even buy their own sugar directly from refineries. That vertical integration gives them cost advantages that competitors like Hershey can't match. Luna: But here's what I've always wondered: how did a candy company end up being one of the largest pet food companies in the world? Lucas: That's the most interesting strategic pivot of the last forty years. In the 1980s, Forrest's sons — Forrest Jr. and John — took over day-to-day operations. They saw that pet food had similar manufacturing processes to candy: mixing, cooking, extruding, packaging. And the pet food market was less competitive, with higher margins on premium products. Luna: So they started making dog food in candy factories? Lucas: Essentially. They acquired the Pedigree brand in the UK in the 1990s, and then bought the Doane Pet Care company, which made private-label pet food. They invested heavily in the veterinary business, buying Banfield Pet Hospitals and VCA Animal Hospitals. Today, pet care makes up nearly half of Mars's revenue. Luna: That's remarkable. A family candy company now makes more money from pet food and vet visits than from chocolate bars. Lucas: And it's still run by the family. The current CEO is Poul Weihrauch, who's not a Mars by blood, but the board is controlled by family members. The Mars family still owns one hundred percent of the equity. There's no plan to go public. Luna: But how do they keep the family aligned? With that much wealth, the temptation to cash out must be enormous. Lucas: They have a family constitution, and they've created what they call the 'Five Principles' — quality, responsibility, mutuality, efficiency, and freedom. Every employee, including family members, must adhere to them. Family members who want to work in the business have to apply like anyone else and prove themselves. Luna: So no nepotism, at least not in the obvious sense. Lucas: Right. The family also has a practice of not putting family names on products. You don't see 'Mars' on the candy wrappers. It's all brand names. That reduces the ego attachment. The focus is on the business, not the family. Luna: And the current generation? The fourth generation is now in their thirties and forties. Are they interested? Lucas: Some are. A few have joined the board. But the family has also been active in philanthropy, particularly through the Mars Foundation. They've donated to sustainability initiatives in cocoa farming and to veterinary research. But they remain very private. No one really knows the full details of their wealth distribution. Luna: It's a fascinating model. A hundred-year-old family business that has reinvented itself multiple times, while staying private and staying rich. But there must be challenges. Lucas: The biggest challenge is succession. With each generation, there are more family members but fewer meaningful roles in the business. The family trust owns the shares, but individual family members have different levels of engagement. If too many become passive heirs, the entrepreneurial culture could erode. Luna: Has that happened yet? Any signs of trouble? Lucas: Not publicly. But in 2019, the company did something it had never done before: it brought in an outside CEO, Grant F. Reid, who was not a family member. That was a signal that the family recognized the need for professional management. But the family still holds the ultimate control. Luna: I think that's smart. You bring in outside talent to run the day-to-day, but keep the ownership structure intact. That way you get the best of both worlds. Lucas: And it works because the family has a clear set of principles. Those Five Principles are not just wall decorations. They actually drive decisions. For example, the principle of 'mutuality' — meaning a shared benefit for all stakeholders — led Mars to commit to sourcing one hundred percent sustainable cocoa by 2025. That's a long-term investment that might not make sense if you're worried about quarterly earnings. Luna: So the family's patience is a real competitive advantage. They can invest in sustainability, or in pet food, or in new markets, without having to justify it to analysts. Lucas: Exactly. And that's the core lesson from the Mars story. The family has been willing to forgo short-term liquidity in exchange for long-term control and strategic freedom. That's a trade-off that most companies can't make. Luna: But it comes with a cost. The family is also incredibly secretive. They're not transparent about their finances, their governance, or their succession plans. That can create its own risks. Lucas: It's a deliberate choice. And it's worked for over a century. But you're right — it's a bet that the family will always be able to manage its own affairs better than outsiders could. So far, that bet has paid off. Luna: And for listeners who find these kinds of deep-dive business stories valuable — look, we don't run ads on this show. We keep it independent. A small group of listeners already supports us through buy me a coffee dot com slash fexingo, and that's what keeps these episodes coming. Lucas: Yeah, it's a simple model. No sponsors, no pressure. Just listeners who find the content useful and choose to chip in. It makes a real difference. Luna: Absolutely. And now, back to Mars. One thing I want to understand: the company has been accused of using child labor in its cocoa supply chain in West Africa. How has the family responded to that? Lucas: That's a serious issue. Mars has acknowledged the problem and has been working with governments and NGOs to improve traceability. In 2021, they launched a program called 'Sustainable in a Generation' that includes a commitment to mapping their entire cocoa supply chain by 2025. But critics say progress has been slow. Luna: So the family's privacy culture might also make it harder to hold them accountable. Without public scrutiny, there's less pressure to act quickly. Lucas: That's the flip side. The same privacy that enables long-term thinking can also shield the family from criticism. It's a trade-off. But to their credit, Mars has invested more than any other confectionery company in sustainability research. They've even created a cocoa genome database to help farmers develop more resilient crops. Luna: So it's not all bad. They're using their resources to tackle systemic problems. Lucas: Yes, but it's a long road. The Mars story is ultimately about a family that has been remarkably disciplined in preserving its wealth and its values. Whether that discipline will hold in the fifth generation is an open question. Luna: It will be fascinating to watch. Thanks, Lucas, for unpacking this. Lucas: Thanks, Luna. Until next time.