Mars, a leading manufacturer, faces significant challenges in Australia due to high operational costs such as labour, transport, and energy, compounded by rising ingredient prices, particularly cocoa.
The iconic Mars bars, a blend of soft nougat, caramel, and solid milk chocolate, originated in the 1930s in the United Kingdom, created by Forrest Mars, the progeny of Franklin Mars, founder of the Mars empire. Forrest Mars not only introduced Mars bars but also developed Maltesers and M&Ms, earning a global reputation and immense wealth from these popular treats.
In Australia, Mars operates several factories, including those in Ballarat, producing various products not just for the local market but also for export to Asia and New Zealand. These facilities are crucial for the region’s economy, providing jobs and fostering innovation in manufacturing and product development.
However, Mars reports that manufacturing in Australia is increasingly costly, driven by factors such as wage inflation, high energy demands, and complex supply chains. This environment pressures them to maintain profitability and sustain investment in their operations.
Mars has voiced concerns in a federal inquiry about the concentrated Australian retail market dominated by a few major players like Woolworths and Coles, which poses challenges in negotiation and business operations.
Cocoa, a critical raw material for Mars, has seen price surges due to supply shortages from poor weather and disease in West Africa and competition from other sectors like mining. The global trade in cocoa is volatile, affecting costs significantly.
In response to these economic pressures, Mars and other manufacturers like Nestlé have adopted strategies such as “shrinkflation,” where product sizes are reduced while prices remain the same or are slightly reduced, to manage rising costs without overburdening consumers.
Overall, Mars continues to navigate these challenges, striving for efficiency and sustainability in its operations while maintaining its commitment to quality and innovation in the face of rising costs and market complexities.
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