Hershey kicks off next month with the national rollout of Hershey's Crispy Rice Snacks, scrimmaging with Kellogg Co.'s Rice Krispies Treats, arguably the cereal company's biggest new-product success in 10 years. Made with Hershey's milk chocolate, crisp rice, marshmallows and peanut butter, the bagged, snack-size Hershey's Crispy Rice Snacks are seen by industry observers as a battle cry against Kellogg's growing encroachment into the candy giant's turf.
Although sales for Rice Krispies Treats are down 1.8% for the year ended July 18, the ready-made version of what consumers had been creating at home for years has grown into a $138 million franchise since its launch in March 1995. Directly after the launch, it became so successful Kellogg couldn't stock product fast enough.
SUCCESS IN THE CHECKOUT LINE
Much of Treats' success came from Kellogg's pushing single-serve versions of Treats at drugstore and grocery checkouts, where candy has traditionally ruled. Now, Hershey is fighting back.
Although the company maintains the product is seasonal, available only during a 12-week period around Halloween, industry observers think it could become a permanent item. Credit Suisse First Boston analyst Dave Nelson said Hershey likely will monitor the product's sales potential; "and, if all goes well, will take it beyond the fall season and limited distribution," he added. "They would be remiss if they didn't."
CHEAPER PRICE PUSHED
Mr. Nelson said Hershey's Crispy Rice Snacks will be offered to consumers at a lower price point than Kellogg's Rice Krispies Treats and positioned as a "value proposition from a credible and strong brand." It won't be supported initially beyond in-store displays and coupons; Kellogg spent $20.5 million in measured media on Rice Krispies Treats last year, handled by Leo Burnett USA, Chicago.
MILLION DOLLAR KICK
Hershey may well be gearing up its advertising, however, for the Super Bowl pregame show, where it will showcase the "Hershey's Million Dollar Kick" promotion.
The 5-year-old "Hershey's Million Dollar Kick" is being moved from the National Football League's Pro Bowl, according to executives close to the deal, because of a new NFL advertising mandate that prevents sponsored events from taking place during the course of the game itself.
The rule last year moved the promo to "The Battle of the Gridiron," an event held in conjunction with the Pro Bowl in Hawaii.
The terms of the agreement weren't disclosed, although Hershey is said to have negotiated with Super Bowl carrier ABC-TV for a media buy on the network in