Todd Siwak, who took the helm at the $1bn+ revenue Illinois-based confectioner in 2014, two years after it was formed from the merger of Farley's & Sathers Candy Co and Ferrara Pan Candy Co, said Ferrara’s strengths were in areas of the market - “gummy, spicy, sour, chewy, and tropical fruit flavors” – that particularly resonated with young, multicultural consumers.
We’re seeing growth predominantly in categories in which we are the leader
Siwak, who is responsible for brands including Lemonheads, Red Hots, Black Forest, Atomic Fireballs, Boston Baked Beans, Brach's, Now and Later, and Trolli, added: “The confectionery category has been growing in the 3% range overall, but within that, non-chocolate has been growing at 5-6% or more.
“And we’re seeing growth predominantly in categories in which we are the leader. Gummy, spicy, sour, chewy, and tropical fruit flavors are popular with Gen Z, Millennials and multicultural consumers, and many of our products index very highly with these segments to an extent I’ve not seen in my career.
“We have a dozen brands; eight are growing strongly and of these, four [Trolli, Now & Later, Jujyfruits, and Bob’s] are growing in the high double-digits.”
The growth is coming both from velocity increases and increased distribution, he said, noting that Ferrara, which is majority owned by private equity firm Catterton, has also updated packaging across the portfolio and significantly upped its spend on marketing and advertising in the past year.
Some of our bigger retailers are going through what they call aisle reinvention
While the confectionery category is mature and space allocation overall is fairly static, added Siwak, some retailers are making significant changes to how they allocate space to different sub-segments within the category, leading to a “pretty fluid, pretty dynamic” situation, he said.
“Some of our bigger retailers are going through what they call aisle reinvention and you’re seeing really tectonic planogram shifts to test consumer responses, which we like, because if you have brands that are performing well, you win in these scenarios.”
Meanwhile, tools enabling firms to monitor and evaluate the impact of trade spending far more rapidly and effectively than in the past, meant decisions were much more “data-driven” than in the past, he said.
“We have the ability to seasonally index the consumption of our product and measure lift and retention on any form of promotional activity almost immediately – virtually in real time.
“We also understand the power of combining events [eg. Halloween] with the right merchandising at the right time with the right depth to generate the right outcome.”
RAP protein gummies: ‘Initial turns at shelf have been promising’
As for new products, Ferrara is developing its own, and exploring acquisition opportunities, he said.
The most innovative is probably its RAP (rapidly acting protein) gummies, which contain 20g of protein from whey protein isolate, and tap into the growth in gummies as a convenient delivery format for vitamins and other nutrients, and growing demand for protein bars, powders and drinks.
Available in GNC, Walgreen’s, Supervalu, Delhaize, Safeway, Ahold, 7-Eleven and several c-store chains, early feedback has been positive for the product, which offers incremental growth opportunities for retailers, he said: “Initial turns at shelf have been promising and in line with the protein bar set. Our awareness is building gradually, but we are very pleased by the high incrementality we are seeing in shopper data.”
It also shows Ferrara is not resting on its laurels and seeking to create new products and platforms, said Siwak: “No one had introduced this in a gummy bear format, and we’re rapidly expanding distribution.”
The company has also invested significantly in its Black Forest gummies and fruit snacks brand, which is now being migrated onto the firm’s burgeoning organic platform, he added.
“We’re always thinking, how do we leverage our existing brands, what equities do they possess that are not fully optimized? For example, Black Forest was previously positioned as a ‘better choice for Moms’ [in that it contained ‘real fruit juice’ and ‘colors from natural sources’], but we’re migrated that into our organic platform, and we’ll spend at significant levels to support that migration so awareness and consumer trial increases.”
As for acquisition opportunities, he said, the market is “still fairly fragmented once you move beyond the larger players”.
Asked about the criteria, he added: “Our core competency is around non chocolate, particularly gummy, chewy, sour and seasonal, so the bullseye is something that fits right into that. But we could expand two or three rings out into other forms of snacking and we are actively evaluating opportunities.”
Markets outside the US also present growth opportunities, he said: “About 90% of our revenues are domestic today, but international markets such as Canada, Mexico Korea, Taiwan, Singapore and China are real areas of focus for us now."
However, the strategy will vary by market, as some US brands translate well into overseas markets, and others do not, in which case acquisitions of local players or private label products tailored to local tastes might be a better route in, he said.
“As we think about other markets, we look at what is happening with gummy and chewy and fruit snacks and sour and hot and spicy; what are consumer perceptions in those markets in relation to brand equity vis a vis those need states? In some cases we could have first mover advantage, and in some cases the best strategy might be to work with retailers to create a private label solution, but it requires a country by country analysis.”