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The nation's largest candy marketers are taking a bite out of promotional spending.

The top 35 players in the category spent $51.5 million for the first nine months of 1993, down 25% from the same period a year earlier, according to Promotion Information Management, Chicago. Circulation of promotions through newspapers, magazines and direct mail dropped 25% to 3.3 billion.

Heavy spending cuts at Hershey Foods Corp. and M&M/Mars explain the decline.

Hershey, which handles promotions in-house, remained the biggest spender but reduced its budget by 38.4% to $18.3 million. Because the data covers spending through September, the figures may not include full promotional spending for Hershey's Hugs, introduced in mid-August.

Spending for M&M/Mars' promotions, handled by a roster of agencies and also done in-house, fell a whopping 43% to $12.2 million. The company held steady with 25 promotional events but cut costs by reducing circulation 51%. The promotion survey found 16 free standing inserts for M&M/Mars products in 1992 with circulations greater than 50 million, but only five last year.

An M&M/Mars spokesman said the company has reallocated its budget, reducing national promotions but increasing single-market and account-specific promotions.

"We spend our dollars more efficiently" by running events market by market, or even with one retail chain within a market, he said. Decreased promotional spending continued at M&M/Mars through the end of the year.

"You won't see any difference in our fourth quarter," the spokesman said.

At the same time, smaller candy marketers are picking up some of the slack.

Leaf Inc., marketer of Whoppers, Jolly Ranchers, PayDay and Milk Duds, increased promotional spending last year by 30.9% to $7.2 million, PIM said. Promotional events grew to 17 from 10.

Leaf's test market introduction of bite-size Heath Sensations in late 1992 probably accounts for increased spending in 1993.

However, Carol O'Donnell, VP-marketing, disagreed with PIM's findings, saying Leaf's spending, has been constant the past few years. Ms. O'Donnell did agree that local promotions are becoming more attractive to candy marketers. Leaf's strongest effort, with help from Berryman Communications Co., Chicago, ties into Major League Baseball. In addition, Leaf conducts individual team promotions through several local retail chains.

Although local promotions require more "manpower" and are more difficult to execute, marketers like the ability to link to activities that are popular in each area, Ms. O'Donnell said. In shifting to more local events, Leaf has "tried not to change the dollars spent."

Nestle Chocolate & Confection Co., introducing new products for the first time in nine years, showed the biggest increase. Spending was up 54.3% to $5.4 million, and the number of events jumped to 14 from eight.

Nestle is test-marketing three new products. Butterfinger BB's and Nestle Buncha Crunch are bite-size versions of their namesakes, and Nestle Arrow is a bar of honeycombed dark chocolate dipped in milk chocolate. To support Buncha Crunch in the five-city test market, Nestle is using couponing plus sampling in stores and movie theaters.

E.J. Brach Inc., the only other marketer with more than 10 promotional events, offered most of its 13 promotions in 1993 through magazines and solo newspaper inserts. Brach, which does some promotional work in-house, recently signed an agreement with Flair Communications Agency, Chicago, on a dollar-off coupon to Busch Gardens theme parks.

Roughly 90% of all package-goods promotions with coupons are distributed through FSIs, but only 38% of candy promotions were found in FSIs last year.M


Major candy marketers go on diet

Hershey and M&M/Mars, the two biggest players in the candy market, slashed promotion spending significantly for the first nine months of 1993 compared with a year earlier, while Leaf and Nestle heavied up

on promotions.

Jan.-Sept. Jan.-Sept.

1992 1993 Change

Hershey Foods Corp. $29.7 million $18.3 million -38.4%

M&M/Mars $21.4 million $12.2 million -43.0%

Leaf Inc. $5.5 million $7.2 million +30.9%

Nestle $3.5 million $5.4 million +54.3%

Source: Promotion Information Management

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