Mars Inc. CEO Grant Reid Is Thinking a Hundred Years Ahead

(Bloomberg Businessweek) -- The family-owned company, based in Virginia, does more than $35 billion a year in revenue and has expanded beyond candy to become a powerhouse in the pet space. In a rare interview, Reid speaks with Bloomberg Businessweek Editor Joel Weber.

I have to ask, you’re in the candy aisle and can get one thing. What do you pick?

Galaxy chocolate. I thought you might ask me that.
 
So Milky Way or Snickers?

Snickers.
 
Skittles or Starburst?

Skittles.
 
M&M’s or Twix?

That’s a tough one. What time of day is it?
 
Let’s say 6 p.m.?

I’m going to go with M&M’s.
 
If you did pick Twix, left Twix or right Twix?

I’m left-handed. So left-handed, too.
 
Now that we’ve got those out of the way, you worked at Mars for years before taking over as CEO in 2014. What initially drew you to the company?

I grew up in Scotland, so I was very familiar with the confectionery brands—Galaxy, Mars bars. Great brands that I grew up with and I loved. But it’s much more than just the brands. It’s really about the way it runs. It was the structure, what they do and how they do it, that was a big attraction. I’ve been there 30 years, so I guess I made a good choice.
 
Mars today is much more than candy. What’s your vision for the company?

We’ve been in business for 107 years. If you’re really going to keep relevant for the next 100 years, you’ve got to be growing. So part of the vision is we want to be in the categories that are growing in order to be vibrant. We’re in pet health and pet care, brands like Pedigree. We think we can double the size of the entire business over the next 10 years. As a company, you want to be sustainable, both in the way that you operate but also in what you put back into the ecosystem in which you operate.
 
If I were to simplify the portfolio, it breaks down into food, candy, and pets. That’s not too logical. How do you make sense of that?

It seems logical to me. There’s a lot of crossover in the way you build a brand—the geographies they’re in, supermarkets and other places—but they are separate categories. They’re very different businesses and have all got their individual visions.
 
Pets have become such a central part of the business. How big is it?

We don’t publish accounts because we are privately held and family-owned. The entire business is about 115,000 or so associates [company employees] around the world and is well over $35 billion. Pets are about half of that. It’s well over in terms of associate base: Veterinary health on its own is about 70,000 associates. That’s a pretty substantial size.
 
Why are pets such a good business?

We believe that if you create a better world for pets, they create a better world for you. I’ll give you an example, a personal connection. When I was about 7 or 8, we went to get our first dog, Rascal, a Welsh corgi, which seems a bit strange given I’m Scottish. Since that day, I’ve loved dogs. It would come play with us. We’d walk it. It became part of the family. Look at the transition dogs have had over time. They may have been on the farm, but they’ve gone to the porch and now, in many cases, they’re on the bed. My dogs, Ollie and Mattie, don’t get to go upstairs, but they’re family members.
 
I think you’ve answered it, but cat or dog person?

I like cats. I love dogs.
 
Are dogs the better business or cats?

We have pet food. From that perspective, cats are much more choosy about what they eat. Everyone who’s got a dog or a cat will know that. If you put food in front of a dog, it will pretty much eat, so you have to manage their nutrition in terms of the food that you’re giving them. Cats are much more sensitive, much more delicate. It takes a lot more palatability. But they’re both great businesses.

What are the advantages of working for a 100-plus-year-old, family-owned, privately held, secretive business?

The fact that I can sit down and talk to family members. It is their business, and they really care—about the brands, about our associates. That’s a big difference. They take very little out. They reinvest in us. They reinvest in the consumer. That’s one big difference in terms of the dividend level vs. some other companies. It’s their approach and their love for the business. My job is to make sure that I’m setting us up for the next 100 years. To do that, you need a vibrant company that’s growing, that’s bringing in the best talent.
 
How many more generations of the Mars family will the company pass through?

Our vision is to keep our company privately held forever. We have “G3” still very active. We have a number of G4 on the board, and we have a number of G5 and G6.
 
Do they call themselves that?

They do, actually—otherwise I wouldn’t be saying it.
 
You mentioned Mars is about a $35 billion-a-year business. What do you want that number to be, and how do you get there?

We think we can double it in the next 10 years. We’ve grown several billion in the last couple of years. But it’s not just about growth for the sake of growth. Part of what we do is for higher-order purposes: The way we do business today creates the world we want tomorrow. We believe we have a sustainable generation plan. We believe the bigger we are, the more good we can do. But it’s not just about being big. Performance without purpose is meaningless. Similarly, purpose without performance isn’t possible. It’s that magic combination.
 
It’s a challenge, though, when you make an acquisition in the service space—for example, Veterinary Centers of America—while so much of your business is manufacturing. How do you decide if you’re going to acquire vs. doing something homegrown?

We do both. It’s a balance of the two. The services side is already 20 percent of the Mars Inc. business and about 50 percent of our employees. It’s very substantial. When we look at potential acquisitions—pet health, services, but also consumer goods—we look if there’s a match between philosophies and cultures. When you meet some of the owners of the businesses we’re interested in, you can tell almost immediately if there’s a fit or isn’t.
 
Another challenge: sugar, which isn’t particularly good for people. You also have unique insights into consumer behavior. What trends are you seeing?

First of all, I think our confectionery brands are treats and should be eaten as such. I love our confectionery brands. I was a boring dad until my daughter’s friends heard I work for M&M’s and Mars. Suddenly I was interesting. It’s a great market. We’re very aware of the growth in obesity and the amount of hidden sugar in products. We were the first to put nutrition and calories on the front of packs. We were the first to really look at renovating the products and trying to change any saturated fat to unsaturated fat. We’ve really been very diligent. We’re trying to move with the consumer, to provide choice. It’s the right thing to do and we want to be transparent. We absolutely know that our sugar products should be enjoyed as treats. If you do, it’s fantastic.
 
Nutrition is an area of opportunity, so I’m curious about your partnership with the Tata Group in India.

In India there’s a tremendous issue with malnutrition and deficiencies in protein and other elements in the diet. We’re working with Tata to launch a series of affordable products based on local tastes and local proteins. We just had our first few cases manufactured, and it’s still very early, but we believe we have a really great product that meets the consumer need at a good price. And we’ll have a flourishing business as well as doing something good. It’s not a charitable contribution. It really is a business that we think makes a lot of sense.
 
The product is called GoMo Dal, and it’s made of peas?

Yes, lentils and peas.
 
So why partner with something like that? Why not do it yourself?

Partnerships create credibility, that together you can do something good. I’ll give you an example. In Côte d’Ivoire and Ghana we work with cocoa farmers and the issue of climate change. Those farmers are really struggling with productivity. We’ve partnered with the World Cocoa Foundation, other NGOs, as well as the government. We have an opportunity to fix the supply chain and create a movement very similar to GoMo in India.
 
Mars is such a global company and is dependent on raw materials, some of which come from faraway locations. How has climate change impacted your supply chain?

We’re basically an agricultural company that takes ingredients, from corn to cocoa, and turns them into brands. That’s really what we do. We’re very dependent on the supply chain and the farmers. We believe climate change is real. So we’ve really got to play our part. We looked at our whole supply chain. We’re working with cocoa farmers in Côte d’Ivoire communities, working with partners looking for ways to help improve productivity to manage some of the effects that are going on with that change.
 
Safeguarding your supply chain.

Exactly. I’ve walked a lot of cocoa farms in Côte d’Ivoire and Ghana. It’s a tough, tough existence for them. When I was there, I asked probably 20 kids, “What do you want to be when you grow up?” The answer was everything from school teacher to doctor. But not one of them said, “cocoa farmer.” That’s obviously a challenge for our business.
 
Before you were CEO, you were in charge of Mars’s chocolate business. Consumption is up, but cocoa is extremely vulnerable to fungal diseases. There’s some concern about the longevity of the supply. How imperiled is the future of chocolate?

As a very wise man once said, “You can’t make chocolate without cocoa.” Farmers have to deal with things like swollen shoot virus and witches’-broom. We provided funding to map the cocoa genome and then gave the information free to the world to help us, to use the DNA structure to develop better hybrids—not GMO but faster hybridization. By investing in that, we’re helping local farmers. A lot of them are in cooperatives run by women. We’re really putting something back into the communities to allow them to flourish. At the same time, we get a solid supply chain. That’s where the magic happens.
 
Where else is there room for improvement in the industry as a whole right now?

On cocoa, we’re looking at tracking which cocoa batches are coming from particular areas so we can ensure that they’re not from areas that are protected. That way we can avoid deforestation. There’s really opportunities everywhere. The mission is to try and prioritize those. There are 25 million people in forced labor and slavery in all industries, according to the statistics from the International Labour Organization. We know we can’t solve that on our own. I work with other members of the Consumer Goods Forum to try and create this movement of forward momentum.
 
Let’s talk about packaging—something we all took for granted until we clogged the oceans with plastic. What can we do?

You’ve touched on a big challenge. If you look, 90 percent of Mars packaging is recyclable; 10 percent is still an issue, but it’s even broader than that because, even if it’s recyclable, is it really being recycled? We’re looking at a multitude of solutions. How do you get away from plastic itself? You’ve got your single-use plastic, but how do you get it recycled? We don’t have the answer for that, but we’re working internally, as well as with suppliers and governments, to achieve that.
 
On global trade, the United Kingdom and China are important for Mars. Let’s start with the U.K. What’s your Brexit plan?

Before the referendum, we came out in public to say we believe that the U.K. is better to stay in Europe. The public voted, and we respect the public’s vote. So, then, it’s very important for everyone—Mars, the U.K., Europe—to have an orderly withdrawal. We’re relatively fortunate because we have a big manufacturing base in the U.K. But we still need to bring in raw materials and to ship products around. No deal would be a worst-case scenario. I’m hoping that level heads will prevail, that discussions will go beyond politics.
 
What impact do you see coming from the trade war with China?

Just speaking for Mars, we see very little—mostly because of our philosophy and how we participate. When we go into a country, we put in manufacturing plants and build up raw material capabilities in those countries. We make most of our products for the U.S. in the U.S. We make most of our products for Mexico in Mexico.

We understand the pressure that others feel. We believe in free trade. We believe in the free movement of products. We’ve benefited from that. We’re a global company. We’ve generated great livelihoods not only for our associates but for our supply base and those places where we participate. Free trade is good for all the economies in the world. Again, we hope that level heads prevail. I think the bigger issue isn’t so much the transfer of commodities or finished products. It’s bad for the markets, and it creates uncertainty in the mind of the consumer. When consumers are nervous and not sure what’s happening, when there’s a lot of ambiguity, they tend to step back a little bit. That’s a potential impact. I think we’re seeing some of that softening around the world.
 
As a business leader, what advice would you like to give to President Trump?

It’s not about giving advice. We tend to stick away from politics. We’ve been in business 100 years. We’ve seen regimes change over time. We’ve seen a lot of politicians, not only in the U.S. but all over. We’re in 80 countries, with 450 sites around the world. We’ve been through two world wars and multiple regional wars. It’s not about politics. If you look at our business—our associate base, our customers, and our consumers—some are Republican, some are Democrat. So it’s not about politics. My advice would be “Guys, let’s think about what’s right for the consumer, what’s right for the country.” Put it in a broader perspective. Treat everybody with respect just like we do at Mars. Have a sensible discussion. Come up with a solution.
 
Have there been any consequences for Mars as a result of the shutdown of the U.S. government?

We haven’t seen any major impact. The uncertainty creates challenges—if you get 800,000 people who aren’t getting paid. It would be nice to get that resolved and behind us. Over time, you want to be able to freely move goods across borders—it’s good for the economy, it’s good for business, and it’s good for Mars.
 
Final question. On Halloween, how much pressure do you face to provide full-size candy bars instead of the mini ones?

Well, that’s a good question. Where I live, we actually restrict Halloween to one street—and I’m not on that street. So it’s a beautiful thing.
 
Edited for space and clarity.

To contact the editor responsible for this story: Howard Chua-Eoan at hchuaeoan@bloomberg.net

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