Russell Stover Plans to Be a Chic Chocolatier

Grandma's Favorite Candy Maker Wants a Piece of the Gourmet Market

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NEW YORK (AdAge.com) -- Want to give your loved one a trendy, exciting and sexy gift for Valentine's Day? Pick up some Russell Stover candy. Stop laughing. We'll wait.
Long a favorite of grandmothers, Russell Stover is moving to sex up its image for the gourmet crowd.
Long a favorite of grandmothers, Russell Stover is moving to sex up its image for the gourmet crowd.

Image overhaul
Recognizing that the familiar white boxes on supermarket and drugstore shelves are most appealing to nannies and grannies, Russell Stover is trying to up its sex appeal. The plan: more-sophisticated lines (Urban, Private Reserve), upscale flavors (vanillabean brûlée), trendy packaging (red, alligator-skin-clad hearts) and a new marketing push. The company is even dabbling in viral marketing.

Russell Stover's play comes as the privately held marketer tries to both hold onto its core customer and blunt the growing popularity of gourmet-chocolate purveyors Ghirardelli and Lindt & Sprüngli. "While Lindt and Ghirardelli have seen incredible growth over the last couple of years, we've stayed complacent in the boxed category," one Russell Stover executive said.

Falling sales
Although the marketer -- which also owns the Whitman's brand -- dominates the box-chocolate category, Russell Stover sales fell 4% last year to $93 million and Whitman's sales dropped 12% to $41 million. Meanwhile, Lindt and Ghirardelli -- each with less than $5 million in sales in the segment -- skyrocketed 87% and 244% respectively, according to Information Resources Inc.

Russell Stover begins its revamp this spring with lines including Whitman's Soho, Russell Stover Urban, and Internationale and Origin Select varieties.
Russel Stover's new Private Reserve gourmet line of chocolates uses packaging resembling Lindt's.
Russel Stover's new Private Reserve gourmet line of chocolates uses packaging resembling Lindt's.
The marketer has already expanded into organic candies and added a Private Reserve extension that prompted Candy Industry magazine to name Russell Stover its 2006 Manufacturer of the Year.

"This isn't grandma's Russell Stover anymore," Editor Bernard Pacyniak said in his blog.

Difficult branding shift
Maybe, but branding experts say the shift from grandma to gourmet won't be so easy.

"Russell Stover is in a spot where their greatest asset can be their greatest liability," said Scott Lucas, Interbrand's VP-packaging for North America. "The brand has such authentic heritage it's almost iconic in its category, which makes it harder for them to stretch to new products and new markets."

Mr. Lucas said developing sub-brands that help modify the traditional brand can be a way to strike "the right balance of the Russell Stover heritage and relevance to the new audience" -- hence, the haute flavors and colorful stenciling of the lines.

Russell Stover will use extensive TV advertising to launch the lines, which will come in trendy roll-top bags, said John O'Hare, marketing director for Russell Stover. The marketer spent $12 million on media in 2005 but only $2.2 million between January and September of last year, according to TNS Media Intelligence/CMR.

Targeting hipper market
Mr. O'Hare said the company is still looking at how best to reach its hipper target, with the help of media buyer PHD Media, St. Louis. A viral e-mail campaign is under way for Valentine's Day (unrelated to the new products), and Mr. O'Hare said he imagines the internet will play a part in introducing the lines.
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