Here’s What the $36 Billion Mars-Kellanova Deal Means for You

Eyes in the food world widened this week with a big merger that links two major players in the world of candy and snacks.

Mars, best known as the maker of M&Ms, Snickers, and its eponymous candy bar, agreed to buy Kellanova, whose crunchy lineup includes Pringles and Cheez-Its. Until last year, Kellanova was part of the W.K. Kellogg Company, which divided itself into two separate entities last year. 

The deal was valued at $35.9 billion and in effect creates another king-sized food company with worldwide reach. Combined, they have $63 billion in revenue — $13 billion for Kellanova and $50 billion for Mars. But in food alone, they’re hardly behemoths, trailing companies like Switzerland-based Nestle, whose brands include Nesquik and Häagen Dazs, and American player PepsiCo, which owns Frito-Lay. 

The deal comes just as trends in snacks are moving faster and becoming more intercontinental than ever, thanks to video platforms such as TikTok. International flavors from Asia, Indian subcontinent, and Latin America are pushing companies to become more imaginative, says Raj Konanahalli, a partner and managing director at AlixPartners, the global analysis firm. 

Though Mars has primarily been known for its sweets, Konanahalli believes the merger will send the bigger company in the direction of savory flavors. “It’s a faster-growing category, and it helps them divert from confectionary,” where volatile prices for cocoa and sugar are putting pressure on manufacturers, he says. 

Around the world, the snack market is far more diverse than it traditionally has been in the United States, leaving manufacturers in a race to compete. The growth of international supermarkets is helping to popularize a wide variety of flavors — particularly “swicy” profiles, which combine both sweet and spicy notes. (Think hot honey or Tajín, the beloved Mexican chile-lime seasoning that’s seemingly on everything from gummy candy to peanuts.) 

And it’s as global and ubiquitous a trend could possibly be: YouTube and TikTok abound with videos of intrepid shoppers visiting the shelves of crunchy choices in Japanese, Korean, and South Asian convenience stores. Even Phil Rosenthal, the veteran television executive known for his Netflix show, Somebody Feed Phil, munches on vividly flavored snacks and candy on the program. 

Beyond that, although the grocery world has been hit by inflation, Konanahalli believes expanded choices could keep consumers coming in for new tastes. “Consumers are resilient. They’re not only seeing value, but they’re also seeking choice,” he says. 

Healthier foods are also in vogue, which Konanahalli thinks was a driver for the deal with Kellanova. It brings energy bar brands like Nutri-Grain and RXBar to the Mars portfolio, which looks to be a big plus with Millennials, Gen Z, and even younger shoppers. Consumers are reading labels more closely than ever before, looking for clues that products use sustainable ingredients and are manufactured with minimal additives. 

Fortunately, Konanahalli thinks the deal shouldn’t lead to higher prices beyond prevailing inflation because there’s simply too much snack and candy competition. But it could prompt some of Mars’ competitors to jump into the acquisition game too. 

And while there might not be another merger of this size, analysts are watching to see if larger companies begin snapping up smaller players as an effort to expand value and reach, in what is called a “bolt-on” deal. This may be the beginning of a series of some such mergers in the food industry. (Earlier this year, in a much smaller deal amounting to $2.7 billion, Campbell Soup bought Sovos Brands, the maker of Rao’s Homemade and Noosa Yoghurt, for $2.7 billion.)

No matter what happens, it can only mean more choices for the consumer. Whether that’s a good or bad thing is up to you.