Thursday, January 26, 2006

EXCLUSIVE: M&M’s Going Exclusive

In a strange marketing move, M&Ms started informing its online vendors that they will no longer be able to carry the M&Ms ColorWorks 21 color plain chocolate candies, effective immediately. I’ve been in contact with several “candy insiders” (who did not wish to be named here) but are alarmed at this turn of events.

ColorWorks are still available online at many candy stores, but consumers can expect supplies and variety to dwindle as vendors are not able to reorder through M&Ms’ wholesale division. I have not been able to ascertain if this will apply to brick and mortar stores like Candy Station and Sweets Factory that also sell the ColorWorks candies. I would expect this to be the case as M&Ms open more of their branded stores as their flagship store in Las Vegas has become and hot destination there.

M&Ms has been making great strides in the viral marketing of its custom printable M&Ms online along with the ColorWorks line. Their webstore has an incredible selection, though they are at the moment priced about the same as the online candy stores in the large quantities but when it comes to smaller quantities (one pound or less), buying directly from M&Ms means at least a 20% premium. (Yes, you’d think buying direct would mean you’d pay less, wouldn’t you?) When you knock out the middleman, I can imagine that M&Ms profits on these are pretty high. Even with economies of scale it’s clear that the ColorWorks are a huge moneymaker for Mars. A half pound of ColorWorks (whether part of a color blend or a single color) are $4.69 for eight ounces ($.59 an ounce). M&Ms cost about $3.50 for a 12 ounce bag (not on sale) at your local grocer ($.29 an ounce). Find an in-store sale on M&Ms for $1.99 a bag and you’ve brought it down to $.17 an ounce.

What does this mean to you and me? Well, less choice. If you want the expanded color selection that M&Ms offers, you’ll have to go directly to them from now on (unless they’re planning to create “official resellers”). This means that you’re beholden to their product pricing and their shipping fees.

It also means that shopping for candy just got harder. Say you want to plan a party or event and want to have some ColorWorks M&Ms as well as some Jordan Almonds or Pillow Mints. Well, you’re going to have to put in orders at two different places now. Those are some of the best things about webstores - selection and bulk discounts. It’s a pain in the ass, to say the least, as you’re not going to get the benefit of consolidating your shipping costs and then you’re stuck waiting around for two shipments instead of one. What else does it mean? It means that the price is now firmly controlled by M&Ms directly. Oddly enough,  you can’t even buy Peanut M&Ms in bulk on the M&Ms website. You can only get the Plain ones, so forget about picking up some of the Almond, Crispy, Peanut Butter or Mega ones.

Finally, it means a loss of privacy. It sounds like a strange point, but think about it. If you can only get M&Ms ColorWorks online (or at one of their two brick & mortar stores), you’re going to be giving them a lot of information about yourself and they’re going to be able to harvest info about their customer base on this exclusive line of products far more easily. Mars is a privately held company who is well known for being secretive about their operations. You can view their privacy policy here.

Also, M&Ms seems to be threatening resellers that they’re not allowed to buy from middlemen on this and I’m guessing anyone caught reselling ColorWorks would be in big trouble, too. It’s not clear if Mars wants to just reel in the selling of their premium ColorWorks or if this will eventually apply to all bulk buys of Mars products, such as Skittles, Starbursts, Snickers, 3 Musketeers, Milky Way and Twix.

I understand the whole “official resellers” thing when it comes to products that require support and knowlegable staff, like computers or electronics—you know, things that require a certain amount of troubleshooting or perhaps expertise in installation. But this is candy. As long as their storing it correctly, it doesn’t require any support. Also, candy is not like soda. There aren’t candy stores that sell only Mars or Nestle products like when you go to a fast food restaurant and have to go with either the Pepsi sodas or the Coco-Cola sodas. Imagine a world where you can’t purchase a Twix bar at the same time as a Reese’s Peanut Butter Cup. I have to wonder if this is the direction we’re going.

As far as I can tell, this is a move on M&Ms part to control their product and corner their marketshare. Candy is a pretty cut-throat business. There are slotting fees paid by the candy companies to the major retailers like grocery chains and drug stores and the candy companies are fiercely protective of their trademarks and products. Witness Hershey’s reaction when a book was trying to use their candy logos. This is not limited to the United States either and it’s well known that Roald Dahl based the Charlie and the Chocolate factory book on the industrial espionage allegations between the UK candymakers of the time.

It may be coincidental that M&Ms made this move just after Hershey’s introduced their new candy-coated Kissables. I think they’re feeling threatened and are looking to maximize their profits. Maybe they’re looking to shift the current model of candy retailing to one more akin to soft drink manufacturer’s deals with fast food chains. Sugar prices are expected to go up markedly this year, which means they’ll have to reduce overhead (they’re already a very efficient company), raise prices, reduce product sizes or create new marketing models. At a time when markets are opening up world-wide and people have access to more of a selection of candy from all over the globe, M&Ms could benefit from making their candy more readily available for purchase, not less.

POSTED BY Cybele AT 1:07 pm Tracker Pixel for Entry     MarsUnited StatesNewsShopping

Comments
  1. does anyone know of a cheaper M&M Peanut look-a-like?

    Comment by wally on 3/15/06 at 11:25 am #
  2. There a ton of m&m colorworks sellers - I don’t think you are right - why are they still in stock?  You may want to call M&M people for their comment on this.  Cool blog!

    Comment by Kim on 4/09/06 at 7:20 am #
  3. Cybele's avatar

    Wally - I haven’t an exact version of a peanut M&M. Some folks like Goobers, but they don’t have a candy shell.

    Kim - there seems to be no change in the retail, brick & mortar sellers, just the online ones. Quite a few of them that I surveyed for this story were selling them at the time but I guess have run through their inventory and no longer have them on the websites.

    I’m planning my trip to the All Candy Expo in June, perhaps Mars will be willing to discuss their marketing plans and strategies at that time.

    Comment by Cybele on 4/10/06 at 5:03 am #
  4. I heard that M&M’s is actually going to come out with My M&M’s as a packaged product at retail. (Offering bags of 22 different colors…) Has anyone else heard anything about that?

    Comment by Stephanie on 5/24/06 at 10:54 am #
  5. masterfoods is very well known in the candy business to be a very odd and eccentric company.  This company seems to very well known to use legal action to combat distribution issues.  Masterfoods probably just isn’t selling enough M&M’s on their site that they decide to stick it to the other distributors and do everything on their own.  Typical Masterfoods.

    Comment by michael on 6/17/06 at 3:40 am #
  6. We were a vendor of Colorworks for 7 years. They are a most peculiar company indeed - they never communicated, one couldn’t get thru on the phone to a person, and they seemed to not care about their wholesale customers. One day, out of the blue, we received a letter from a lawyer telling us that we were in violation of our agreement by selling Colorworks M&M on the web. In fact, we were not, as our agreement was 7 years old, and did not contain that language as their new ones did.  I sent them a copy, reminded them that they in fact had an “affiliated” program to encourage web sales once, and heard nothing again - for months or a year. Until, a letter arrived from another lawyer saying here’s a new agreement, which not only prevented web sales, but re-packaging in anything except their plastic bags. That is, we couldn’t even do wedding and shower favors for customers, or use acrylic containers. My attempts at communication with them were equally strange, and to no avail. The logic of expanded access to customers thru a network of retailers seemed to be of no interest to them. We departed ways with them after a very unpleasant few weeks in which they withheld several hundred dollars from us in a refund. We had funny feelings from these folks from day one, and they wee quite hard to deal with, so fair well M&M and welcome Milkies. Our customers like them more, anyway, and they are a better chocolate.

    Comment by RHS on 9/03/07 at 9:38 am #
  7. this site sucks

    Comment by wrfvxtwx on 9/16/09 at 10:50 pm #
  8. I see the custom colored m&ms; on more Internet retailer web sites now but others still say they are not allowed to sell - do you have any updated info?

    Comment by Bill on 10/07/09 at 7:36 am #
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