Monday, April 28, 2008

Mars buying Wrigley

The big news today, which I'm sure you've heard, is that Mars (with help from Warren Buffett) is buying the Wrigley Company. In Chicago, the significance is that thousands of drunken Cub fans are wondering if their favorite bars are now in Marsville.

(Answer: Probably not).

To the rest of the world, the point is that this creates the world's biggest confectionery company:
Combined, Wrigley and Mars controlled 14.4 percent of the global confectionery market in 2006, compared with 10.1 percent for Cadbury, according to the most recent market share data from Euromonitor International.
Cadbury (which is in the midst of spinning off its soft drinks as a separate entity) may now be looking at trying to buy Hershey, although the linked article says that state law in Pennsylvania may prevent Hershey being sold (which seems a bit strange).

This sort of transaction represents the flip side of the increasing concentration of retail channels. As retailers grow, their suppliers have to grow to be big enough to sit at the same table on terms of some sort of equality.

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