LONDON - The M&M owner Mars is acquiring ex-Kellogg company Kellanova in a deal valued at roughly $36 billion, or $83.50 per share.
This makes Mars the second-largest snack company in the world, surpassed only by PepsiCo.
The privately-held global confectionery giant’s move to acquire Kellanova—a leading player in the global snacking, cereal, and frozen foods markets—coincides with the UK debut of Cheez-It, America’s $1 billion snack, backed by an £18 million brand launch investment.
Hailed as historic by both companies, it is poised to significantly reshape the competitive landscape of the snacking industry across the UK, the US, and beyond. With an all-cash transaction, this acquisition not only consolidates Mars' position in the global food sector but also sets the stage for a new era of innovation and expansion in the snacking industry.
“We buy businesses to grow businesses, and we look to grow for generations,” Mars CEO Poul Weihrauch said on CNBC’s “Money Movers.” He said, “It’s a really perfect fit.”
Strategic Rationale and Financial Context
Mars, known for its iconic brands such as M&M’s, Snickers, and Twix, has reported annual sales exceeding $50 billion. In recent years, Mars has diversified its portfolio beyond confectionery, making significant inroads into the broader food and pet care markets.
This latest acquisition represents a natural extension of Mars' long-term strategy to expand its footprint in the rapidly growing snacking sector, which has been driven by shifting consumer behaviours towards more frequent, on-the-go, and health-conscious snacking.
Revenue in the Confectionery market amounts to US$586.30bn in 2024. The market is expected to grow annually by 5.40% (CAGR 2024-2029), according to Statista with luxury, premium and artisanal (whatever you want to call it) confectionery on the rise.
The Premium Chocolate Market size is estimated at USD 35.97 billion in 2024, and is expected to reach USD 54.91 billion by 2029, growing at a CAGR of 8.83% during the forecast period (2024-2029).
Of course, this isn’t just about chocolate. Kellanova, with net sales of $13 billion in 2023, brings to Mars a robust and diversified portfolio of globally recognised brands, including Pringles, Cheez-It, Pop-Tarts, and Eggo. The strategic fit between Mars and Kellanova is evident: while Mars has traditionally dominated the confectionery market, Kellanova’s strengths in savoury snacks, breakfast foods, and healthy snacks complement Mars’ existing portfolio.
This merger is expected to create synergies that will enhance the combined entity’s ability to innovate, expand market share, and meet the pulsing demands of consumers.
“This is a truly historic combination with a compelling cultural and strategic fit,” said Steve Cahillane, Chairman, President, and CEO of Kellanova. “Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realisation of our full potential and our vision. We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive.”
Market Implications and Competitive Landscape
The global snacking industry, particularly in mature markets like the UK and the US, is experiencing rapid evolution. Consumer preferences are shifting away from traditional three-meal patterns towards more frequent, smaller eating occasions, according to YouGov. This trend has driven demand for a wide range of snacks, from indulgent treats to healthier, more sustainable options. Companies that can adapt to these changing consumer behaviours are positioned to capture significant market share.
Mars’ acquisition of Kellanova is a clear signal of its intent to lead, rather than follow, in this increasingly competitive market. The merger will only trigger further consolidation within the industry, as other companies seek to scale up in response to the growing presence of large, diversified players like Mars.
Lessons for Challenger Brands
For smaller challenger brands, particularly those focused on niche markets, may find themselves under increased pressure to innovate or seek strategic partnerships to maintain their competitive edge.
Challenger brands doubling down on niche markets and unique product offerings that differentiate them from the giants like Mars-Kellanova will thrive. By catering to specific consumer needs or preferences, such as organic, plant-based, or sustainably sourced products, challenger brands will continue carving out a loyal customer base.
For instance, although sustainability is becoming increasingly a priority for Mars, only 61% of their packaging is recyclable with an aim of 100% recycled packaging by 2025. What about palm oil? Mars says, “like many food manufacturers, we use small amounts of palm oil in many of our products.” So there’s two ways to hone your product’s messaging.
Take Pip&Nut peanut butter versus Whole Earth:
Pip&Nut go all out in showing where they source their peanuts from - Argentina. And they tell us it's because they’re hi-oleic. They also make sure we all know there’s no palm oil, they’re carbon neutral and B-Corp. Pip&Nut have done their research and know this matters to their consumer.
Don’t be fooled by Whole Earth’s peanut butter colour psychology on their packaging. It is actually made with less peanuts and contains palm oil. Side by side on the shelf, along with competitive pricing, who would you go for?
Consumers, particularly younger demographics, are increasingly drawn to brands that stand for something beyond profit—whether it’s environmental sustainability, social justice, or health and wellness. Communicating these values effectively can create a deep emotional connection with consumers.
However, it's not just about the products themselves—how your brand communicates its identity is equally crucial. Today, it’s becoming increasingly clear that social feeds should be tribe- and association-led rather than product-led. Instead of merely showcasing products, challenger brands should focus on sharing the lifestyle, values, and vibe of your consumers. This approach builds a strong emotional connection and fosters a community that resonates with the brand’s ethos.
Lucky Saint is a great example of this:
They’re not only marketing and community building but charging product innovation. The alcohol-free arena is becoming more and more flooded by the big beverage brands. Lucky Saint, though, are one of very few brands offering unfiltered, additive-and-alcohol-free beer.
For instance, Guinness launched their 0.0 stout with sucrose included in the ingredients. Not ideal. Challenger brand Lucky Saint has just three basic ingredients, low in calories and tastes brilliant, too.
Their messaging tells the story clearly:
‘Lucky Saint, superior alcohol-free beer.’
‘Superior Taste: Left unfiltered for maximum flavour.’
‘5* Rated: Trustpilot's #1 rated alcohol-free beer.’
‘Low Calorie: Under 59 calories & sugar free.’
So, accelerate innovation. Tighten your strategy. Focus your messaging. With large companies often slower to innovate due to their size, challenger brands can use their agility to quickly adapt to emerging trends. Whether it’s through new product development, creative packaging (as above), or leveraging the latest food tech innovations, being first to market with a new idea can capture consumer attention and market share.
Building and nurturing a community around your brand can be a powerful tool. This involves not just marketing, but also engaging with customers through social media, events, and direct feedback loops. Brands that listen to and involve their customers in the brand’s journey often see higher loyalty and advocacy.
Back to the merger. From a financial perspective, the acquisition is likely to provide a short-term boost to Kellanova’s share price, as investors typically respond positively to all-cash transactions. However, the long-term impact on Mars, a privately-held company, will be less visible to the public markets. Nevertheless, industry analysts will closely scrutinise the merger for signs of successful integration and realisation of the projected synergies, which are critical for achieving the desired financial outcomes.
Broader Industry Impact
The integration of Mars and Kellanova is likely to have significant implications for the broader snacking industry. The combined entity is expected to set new benchmarks in product innovation, supply chain management, and sustainability practices. Both Mars and Kellanova have made substantial investments in these areas with strong targets for 2025. Their combined resources could accelerate the development and introduction of new products that align with consumer trends towards healthier and more sustainable snacking options.
Moreover, this merger could reshape the competitive dynamics within the industry. As Mars and Kellanova integrate, their increased scale and market influence could place additional pressure on smaller competitors, potentially leading to further consolidation within the sector. The increased market concentration may also raise concerns about reduced competition, which could impact pricing and consumer choice in the long term.
Leadership Vision and Future Prospects
Mars’ leadership has consistently demonstrated a long-term strategic vision, and this acquisition is a testament to its commitment to growth and innovation. While the immediate focus will be on the successful integration of Kellanova’s operations, the broader goal is clearly to establish Mars as a leading player not only in confectionery but across the entire snacking industry.
Steve Cahillane’s remarks highlight the shared vision and cultural alignment between Mars and Kellanova, which are crucial factors in ensuring the success of this merger. “With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees,” Cahillane said. This confidence is shared by Mars, which has a history of effectively integrating acquired businesses and leveraging its global scale to drive growth.
Looking ahead, the success of this merger will depend on how well Mars can integrate Kellanova’s operations and cultures. Both companies have emphasised the strong cultural fit, which they believe will ease the integration process and allow them to quickly realise synergies. For Mars, this acquisition is not just about expanding its product portfolio; it’s about reinforcing its position as a dominant player in the global food industry.
As the snacking industry continues to grow, Mars and Kellanova’s combined strengths position them to lead the way in innovation, sustainability, and market expansion. The industry will be watching closely as this historic merger unfolds, potentially setting the stage for a transformative period in the global snacking sector. Whether the merger delivers the anticipated shareholder value and market dominance remains to be seen, but one thing is clear: the snacking industry will never be quite the same again.
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