Interview: Mars ITR Sales Director Marcus Hudson on brand power, partnership and promotions

Introduction: With leading global brands in chocolate and gum, Mars-Wrigley has a powerful position in the confectionery & food domestic markets that it has not always mirrored in travel retail. Marcus Hudson, who took on the role of Sales Director at Mars International Travel Retail in January, aims to ensure that the company’s share of voice reflects its wider status beyond the channel.

That starts with retailer and airport partnerships and also includes better promotional planning on the shop floor, a requirement for differentiated experiences and ensuring investments in the channel are about enhanced market share and not just executing well.

Tell us how you have found the experience in the Sales Director role please since January? What are your priorities?

I moved into this role in January and I am very fortunate that it had been within my development plan for a long time. I had a great handover from Raghav Rekhi and came into the role very excited and with a lot of confidence.

If 15 years ago someone had asked me what is my dream job, I would have said it was doing the job I am doing now. It’s an amazing opportunity.

What I have found in connecting with the customers is a lot more confidence in the channel than I might have imagined. I think we will see that the recovery happens well above the expectations that we had, and that the travellers that are coming back really want to purchase. That is very positive.

When this pandemic started, we quickly created the ambition to leave it with better customer relationships than we entered it with. So as we exit the pandemic now, I feel that the relationships that Mars has been able to mutually build has actually really cemented our position. Now we look forward to driving category growth together with the partner retailers that we work with. That is exciting for us.

The big opportunity at the moment is two-fold. How do we plan for the future? So if we are all saying we will be back at 2019 levels by 2023, with passengers back and hopefully more normality coming, how do we get ready for that future? At the same time, there are short-term opportunities in front of us.

That means driving distribution on the shop floor, building back the basics that we need to get in place, making sure the right portfolio is distributed in the right locations to satisfy all the consumer moments that we have in the airport. And doing all this while bringing some fun and entertainment to the shop, putting a smile on the face of travellers as they are going through the airports where our brands are represented.

Theatre and surprise: A colourful, engaging recent M&M’s execution at Barcelona Airport (above and below right)

You talk about creating better relationships coming out of the pandemic. What do you mean by that and how have you worked to achieve it?

First for me it was about transparency. When we had some of the more challenging conversations that had to happen during the pandemic, one of the things that I was very keen that we do was be clear about what we could do and about what we could not do. That helps build trust in a very challenging situation.

At Mars we really believe in confronting reality. Don’t confuse faith that things will work out in the end with confronting what is happening in front of you at the moment. That was important to us.

Everything we do is founded on the five principles of quality, mutuality, responsibility, efficiency and freedom. We always tried to take a mutual approach. So within the boundaries of doing everything that we could do, that was our goal, because the channel needed support, and it needed our commitment. I hope we showed that commitment to the channel throughout.

What we also did that helped was to listen well to customers. And we made some big changes, such as a big simplification of our portfolio to ensure that we had a tight range.

During the pandemic when cash was king, we were not distributing anything that we weren’t confident would sell. And we only built back very slowly over about a year to the full portfolio we have available now. And I believe that also helped.

In a wider sense, do you do you think pre-pandemic relationships in the channel needed to change? How do you see those relationships evolving now?

From a supplier to retailer point of view, pre-pandemic, we were always taking a short-term look at the business. And it was the same on both sides.

We were talking about driving category growth in the long term, but making some big short-term decisions and not giving that longer term perspective. So that is one of the things that we really did need to evolve. The pandemic forced us to think short-term, but actually getting out of the pandemic forced us to think longer term as well. So it enabled us to have that dialogue.

Some of the tensions that there were between the retailer and the airport, we also felt. And we had some similar conversations around fixed fees and minimum annual guarantees, but never at too large a scale.

In my new role, I have had some connections with airports as well, and what is interesting is the opportunity for more direct conversations, so retailers are not the sole custodians of those relationships.

We understand that the airports award the concessions, and we need to enable the partner retailers we work with to get there. But I do believe that there is a role the brand can play, in also coordinating the needs of the airport and the retailer. Essentially, if you drive a better traveller experience, you make it more likely that they will shop, more likely that they will convert, and more likely that we will win. So that is something that would be quite exciting for us to explore over time. We are in the in the early stages of that now.

Beyond that, we also have to work with partners with more agility than we used to in the past.

That means ensuring we have the right promotional plan on the shop floor that works and delivers the most margin at the best profitability we possibly can while satisfying consumer needs. Pre-pandemic, we would discuss the promotional plan and sign it off for the year. We would then only talk about it again the year after. Now we looking more short term, with more agility, flexibility and openness to change and adapt to new learnings as we go.

Leveraging the power of M&M’s is central to the Mars-Wrigley strategy in the travel channel

We have had some great conversations. One we just had was all around what is the right level of promotion? What is the right level of promotion investment per brand, to ensure we are not over-investing in promotions where we don’t need to. That is a very exciting conversation that we are having as we go forward to maximise margin while satisfying consumer needs. There is much more agility there than there was probably three years ago.

You spoke about simplifying the range. What brands are going to lead the recovery from a Mars-Wrigley viewpoint in travel retail, and how are you innovating around those?

M&M’s will always be our lead brand within the airport channel. It’s the world’s biggest confectionery brand. If conversion was the biggest challenge before the pandemic started, it still remains the biggest challenge now passengers are coming back.

From a confectionery category point of view, we can leverage M&M’s to really signpost the category, bring the consumer into the category and take a full category approach, so M&M’s will always lead. Every year we supplement M&M’s with limited editions and innovations and we are doing the same again this year with M&M’s Salted Caramel.

What we have seen with the bar brands, for example with Twix, is that there has been clear demand for limited editions. And we are bringing in Twix Salted Caramel as well this year (right), as a limited edition.

We recently moved into the blocks category space with M&M’s blocks. We are bringing in additional variants this year.

How can Mars ITR underline the group’s leadership credentials in the category in terms of global size and reach?

There are two things in my new role that I want to focus on. One is ensuring that Mars share of voice is proportional to its perception as a power supplier in the channel. We leverage M&M’s as the biggest chocolate brand in the world and with that comes responsibility. We need to be present, to be there in the market.

I want myself and our team to represent Mars a bit more vocally than perhaps we have in the past. I want our partners to know that we are here, we’re present, we’re committed and we believe strongly in the channel.

Then there’s the category point of view. The recovery of confectionery is going ahead of expectations but maybe slower than other categories. That may be because impulse is under pressure and we are seeing more planned purchases in this phase.

With that in mind we want to show category leadership in two main ways. We want to drive a differentiated experience, not just a differentiated portfolio. That means newness, exclusivity, constant differentiation versus domestic markets on the shop floor, not just in the portfolio. That is something we always need to challenge. Our agility comes from our scale, and we need to use that.

Our focus will be clearly on bringing that differentiated experience on the shop floor. How do we leverage the M&M’s eco-system, that network of major cities across the world, and connect those to an immersive experience in the airport? That is where we want to challenge ourselves in the future. How can we bring that leadership to drive category conversion?

We also want to be more externally focused, check our market share and how we are performing versus the competition more often. We want to be the number one player in driving category growth. During this year, our share is performing very well so we are going on the right track. I am focusing on getting the basics right at the moment but we will be more externally focused on ensuring that we are competing very well with our competitive set.

Connecting what M&M’s does powerfully in domestic to travel retail seems a clear opportunity, doesn’t it?

Exactly. We know that the channel is a billboard for brands. Awareness of M&M’s is not an issue and so those billboards need to work to drive category conversion and bring in that immersive experience.

So how can we ensure that in a very smooth, logical way, M&M’s immerses itself into the experience that you are having? If you are having screen time, and sitting at home, how can M&M’s immerse itself into that moment? And if you are having a tourist experience in London, you visit the M&M’s store and are flying back out, how can part of that immersion be something at Heathrow? It is extremely exciting.

“What we are trying to understand more is where do we promote for example, where promotion has an incremental effectiveness? But we must also be agile and sometimes quite bold and brave on not promoting where we don’t need to.”

And all along the way, there will be digital assets that support driving that awareness, build the brand presence and communicate the brand purpose across that full journey. The question is how do we leverage digital engagement within ITR, in order to make that that happen? That is something that we are engaging with.

I hope in the future we will be connecting some of our global trade partners with our digital commerce team and our on-demand delivery team, the real experts globally in this space.

New M&M’s and Twix products hit the industry spotlight in 2022

As well as ensuring that Mars is present within the channel, one of the responsibilities that I have is that Mars Travel Retail is very present within Mars Wrigley as a global group. Often we have a lot of asks about how we can win in the channel by leveraging the power of the group.

We can also flip that and be clearer about what we contribute back to Mars Wrigley via the beautiful channel that we are working in. That’s a challenge, to communicate back to an organisation of 130,000 people about the contribution that this channel can make to the brands they work with.

Put in context, the Halloween business in the US is six or seven times larger than our total annual airport business. So we cannot compete internally on scale but we can show what we do on presence, on immersion, on connectedness within the global eco-system.

It is exciting and is quite new for us, to articulate the role of our channel and celebrate its uniqueness and contribution where appropriate. But also to celebrate how similar we are to other markets too, which is how we gain traction internally. The channel is viewed positively internally, we just need to be clear about its contribution so we can get people excited about what we can do with our brands.

You highlighted how Mars ITR will speak with a louder voice; does this also mean more investment with your retail partners?

Potentially yes as long as the outcome of those investments is market share growth for us. It has to be effective, whether short or longer term.

We are having these conversations with our customers around market share. And we are evolving our capability and discussions around those perspectives. I like the analogy of the rugby team that might at the end of the game celebrate that they executed their game plan perfectly. Congratulations, but you still lost 25-5.

Promoting value in the category via the portfolio

We want to execute our game plan but also to win the match. That’s what the external focus for us is now. We have always had great plans, we have always done exciting stuff and we have executed and celebrated. But we didn’t always know if we won the game. I want us to get our heads into that. It is a subtle shift but a significant one for us.

What factors do you see driving a return to growth within confectionery & food in particular?

At Mars we believe that 70% of our sales growth will come from category growth. So our role will always be to drive the category. The encouragement that we are working with the retailers on, and hopefully the airports in future, is about building the total category.

Our strategy is always embedded in how we satisfy consumer moments and specific shopper missions around recharging, rewarding, connecting and celebrating. What we would love to explore in the future is how we drive the category and actually segment those missions on the shop floor .

We are building something that we are calling engine two. And our engine two strategy is all about how we drive conversion outside of the traditional duty free store. We are investigating unattended retail, leveraging the global capability that Mars has in the area of smart vending. That is big for us.

We are also looking closely at the evolution of food & beverage and importantly of airport convenience. We are working closely with the likes of WHSmith to build a category vision and work with them, respectful of the fact that they are playing a very specific role in the airside space. That is also going to be a big pillar for us.

What are you expecting of the new consumer post-pandemic and how is the company adapting?

On the one hand we have a lot of expectations about how the consumer has changed while on the other we are doing similar promotions to before and they are working very well. We don’t yet know what the long-term change on consumer needs and consumer behaviour will be. As the passenger mix evolves over time, we will see where that goes too.

What we do see is that the average transaction value is up. So what we are doing on the shop floor seems to be working and consumers do want to buy. As travel, normalises again, that is where their real needs will become clearer. We expect it will be around the entertainment space and how we drive disruption.

How do we give them some newness that will attract them into the category, while understanding that they have fluid lives, and that there is more snacking on the go and treating on the go? So all of those capabilities that we were focusing on before will come back, but maybe our lens on them needs to evolve.

At the same time, all of our trade spend to drive volume and drive growth needs to be effective. What we are trying to understand more is where do we promote for example, where promotion has an incremental effectiveness? But we must also be agile and sometimes quite bold and brave on not promoting where we don’t need to.

We see some dynamics as travellers are returning, where the incrementality of promotions in certain geographies on some of our bigger brands and SKUs is limited compared to where it used to be.

In an inflationary environment, consumers are coming to terms with the fact that RSPs will go up a little, and if they want to buy a gift, maybe they are not looking for a promotion as much as they used to. We don’t want to be silly in where we take out promotions. But we also want to test and learn what the new dynamics are. What that would give us is the opportunity to direct our promotional effectiveness to where we really have the most incrementality.

Besides that, some of the innovations and limited editions that we have brought in this year do drive trial, and therefore basket size, but also can have a big impact on the core portfolio as well. For example, if we can integrate newness into a promotion, and do that at the pack group level, it gives us the scale to really drive the average basket size. I feel that from the trade, there is a willingness to try new things and learn as consumer dynamics are evolving.

Tell us about the role of sustainability in the strategy for travel retail? How is Mars-Wrigley aiming to lead in this space? What more can the industry do together?

Our position on sustainability is to take a scalable and generational approach. So when we talk sustainability, we really look at the global Mars level. We have our sustainable in a generation plan, which launched in 2017, and commits to spending US$1 billion in sustainability initiatives over time across people, planet and portfolio. On top of that, we are investing another US$100 million a year to drive sustainability in the cocoa supply chain.

I am very confident in what Mars is doing globally and we are working to translate that into the channel. We have an initiative, for example, looking at the local sourcing of our displays, to limit the carbon footprint as much as we can.

All of the global Mars initiatives filter down to what we are doing at ITR. What we need to do over time is to communicate these things more openly and more structurally with our retailers.

Culturally, Mars has been quite a private company, which is why we haven’t shouted very loudly about some of our initiatives in the past. There is a consumer need for us to talk more about these things. So we are looking into how can we engage more broadly on our sustainability initiatives.

In terms of the channel, for me, it is extremely important to keep the dialogue open. We should keep sharing what we are doing. We will never shout the loudest, but we will always be there, engaging with the retailers clearly and transparently about what we are doing, which is a lot. And we will always keep on trying to do more, even if it is never enough.

How would you describe performance in 2022 to date, and your expectations for the rest of the year?

The year is going very well so far. We are very positively surprised with the acceleration in demand that we are seeing. The biggest challenge that we are facing at the moment is our ability to keep up with that demand. Globally, our factories are operating at full capacity everywhere.

We are having conversations with the trade as well, ensuring that we can forecast out as much as possible, and to be clear on what we can and cannot supply.

Our starting position was about -33% down on 2019, but we are seeing performance quite significantly above that, and the mix is very different per region. Overall we are very positive. We do need to supply and then as we look towards the future, assess how we handle the current inflationary environment that is happening externally. That obviously is impacting our business quite heavily, so how we handle that in the right way going forward is going to be a big challenge. 

That current inflationary environment presents some big questions. How do you see it having an impact on pricing and how will that shake out in conversations with your partners?

At Mars, under our five principles noted already, there are two that are most relevant here, freedom and mutuality. Freedom is about having the economic freedom to make our own choices. This is about driving quality growth. And we do need to have a profitable business to maintain our freedom.

There is mutuality as well. Our new prices are going live in 2022 all over the world. We will pause to see what the impact is and how the category pricing develops. And then we will make the right decisions. Will standard ways of price evolution that have been in place for years exist anymore in the future? I doubt it. What we do know is that we need to be more agile.

Mutuality is something that we will always challenge ourselves on. So it’s not just about the huge inflation costs that Mars is having to cover, but also what is right for the retailer to ensure that their margin is maintained. and also fair for the consumer as well.

And a final message to the industry about how Mars intends to play its part in the recovery and the long-term future?

We are the biggest confectionery supplier in the world with the biggest brands both in gum and chocolate. We love the channel and we have the responsibility to be present and to be out there, and that is something I really want to try to drive in my new role.

*This article first appeared in The Moodie Davitt eZine. Click here for access.

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