Take the example of No. 2 marketer M&M/Mars. For the 12 months ended Nov. 30, two relatively new varieties of M&M's performed worse in wholesale dollar sales than the original M&M's (see chart). While regular Twix struggled, three line extensions were a disaster. Even Hershey Chocolate USA, which has had better luck with line extensions,most notably Hershey's Hugs, saw a decline in Reese's Crunchy Peanut Butter Cups, though the product performed slightly better than original Reese's.
The secret to even a modicum of success appears to lie in coming up with products that are truly new.
"The products that Hershey comes out with are much more innovative and new than the Mars products," said Leonard Teitelbaum, first VP-analyst with Merrill Lynch & Co. "The M&M's extensions did not capture the imagination or have the magnetism of a Hershey's Cookies 'n' Mint [an extension of Hershey's milk chocolate candy bar]. Cookies 'n' Mint was a whole new taste combination."
Cookies 'n' Mint, introduced in November 1992, shot up the charts to 16th in wholesale chocolate sales for the year ended Nov. 30, according to ICC/Accutracks.
Meanwhile, a newer entry-Hershey's Hugs, introduced in August-ended the year 42nd, passing Hershey's Kisses With Almonds, a Hershey's Kisses extension introduced in 1990, which ranked No. 45.
"I'm predicting Hugs will be at least a $50 million product," Mr. Teitelbaum said. "If there is any cannibalization, I would expect it to be less than 5%."
"I think Hershey's Hugs is clearly a success story," said David Adelman, first VP at Dean Witter Reynolds, New York.
The marketer this month will try to repeat its past successes with the introduction of Reese's NutRageous, a peanuts, chocolate, caramel and peanut butter bar that is the first candy bar to be marketed under the Reese's name.
Network and cable TV spots break in April, tagged "Give your mouth a party"; print, direct mail and on-package couponing support via DDB Needham Worldwide, New York. Spending is estimated at $7 million to $8 million.
"Hershey looks at a line extension as a new product and markets it as such," Mr. Teitelbaum said. "Mars treats a line extension as a line extension."
M&M/Mars went too far with too many line extensions at once, candy distributors said.
"Retailers didn't have the shelf space to accommodate all of M&M/Mars' line extensions. Twix, for example, had caramel and three other flavors," one candy buyer with a major Midwest distributorship said. "How can you promote that many items?"
"Almost everything M&M/Mars has done has been a failure," Mr. Adelman said. "Mars has done very poorly over the last 18 months."
M&M/Mars has scored some line extension successes. The Snickers Peanut Butter bar is the 29th ranked chocolate bar, according to ICC/Accutracks. Also, Milky Way Dark, introduced in 1990, has taken the No. 23 spot.
One candy buyer said M&M/Mars is embarking on a back-to-basics strategy that promotes core candy brands. The marketer recently broke new multimillion-dollar ad campaigns for its core Snickers and M&M's brands, via Backer Spielvogel Bates, New York. However, an M&M/Mars spokeswoman would not confirm any back-to-basics strategy.
Meanwhile, M&M/Mars appears to be retrenching from its blitz of line extensions and new products that began in 1989. Twix caramel will remain a single-serving candy counter item, but its peanut butter, cookie 'n' creme and fudge 'n' crunchy flavors will become part of multipacks sold in the cookie/snack aisle.
Also, M&M's almond, peanut butter and mint flavor line extensions are believed to be a disappointment-reporting lackluster sales and cannibalizing M&M's plain and peanut chocolate candies, analysts said.
Overall M&M's wholesale sales were down 8% to $179.3 million for the year ended Nov. 30, according to ICC/Accutracks.
No. 1 Hershey had $652.8 million in wholesale candy sales, a 2% increase. No. 2 M&M/Mars reported $602 million in sales, for a 5% decline. Hershey had a 16.5% share, M&M/Mars 15.2%, a share.