Early in the Covid-19 pandemic, two years before the Mars family picked him to lead its $45bn empire, Poul Weihrauch found himself running a business whose revenues had suddenly dropped by a quarter.
Mars’s once booming petcare business was grinding to a halt as owners stayed at home rather than bringing their cats and dogs to its clinics. Anxious about exposing its 75,000 vets to infection, Weihrauch asked whether he could extend their paid sick leave to six weeks.
The cost, he discovered, would be $75mn. Mars’s board approved the expense but Weihrauch thought he should make one more call, to John Mars, the oldest surviving member of the Mars family’s third generation.
The patriarch, now 87 and with an estimated $54bn fortune, did not flinch. “John’s reply to me was ‘Poul, if you need to go beyond the six weeks, you can do so’,” Weihrauch recalled in his first interview since becoming chief executive last September. “I don’t think in a publicly listed company . . . you get that kind of reply.”
A century after Frank Mars made the first Milky Way and 23 years after Weihrauch joined Mars from Nestlé, the Danish-born executive has been tasked with setting America’s third wealthiest dynasty up for the next hundred years.
“We think in generations and not in quarters,” he said. “I’m not here forever, but the Mars family is here forever.”
From Mars’s studiously bland head office in Virginia, a short drive from the CIA, Weihrauch is lifting the veil a little further on what had been one of the world’s most opaque companies.
Mars revealed last year that revenues had grown from $28bn to $45bn in Grant Reid’s eight years as CEO. Weihrauch hopes to double sales by 2033 while almost tripling its spending on a sustainability agenda that spans redesigning packaging, cutting greenhouse gas emissions and eliminating forced labour from cocoa supply chains.
Breaking with the habit of a business that puts few figures in its public statements, he reveals that Mars now has 12 brands with sales above $1bn. They range from confectionery staples such as Snickers and M&Ms to the Pedigree and Royal Canin pet food brands and VCA, the vet clinic chain it bought for $9.1bn in 2017.
“There’s actually not a lot of connective tissue between the businesses,” Weihrauch said, whose own career tells the story of the Mars family’s diversification away from the chocolates for which it is still best known.
He joined Mars in Slough, near London, as European brand leader for Snickers, ran Wrigley’s European business after Mars bought the gum brand in 2008 and became president of Mars Petcare in 2014. He doubled that division’s sales in eight years, turning a pet food business into the world’s largest provider of veterinary services.
Weihrauch sees “a lot of societal trends” pointing to further growth in services, which went from 5 per cent of Mars’s revenues to 20 per cent under Reid.
“Forty years ago, a pet was living out in the garden,” he said, but we have since brought our animals into our bedrooms. “Eighty per cent of millennials in the United States sleep in the same bed as their dog,” he added.
“We are older and we are increasingly lonely,” he said. “Millennials move into big cities, postpone [having] their first child and have a small dog or cat [instead].”
With only four in five dog owners and less than half of all cat owners taking their animal to a vet each year, “there’s lots of growth to go for” in services, Weihrauch argued, not least outside North America and Europe, the most developed markets.
Mars’s bet on petcare stemmed from a mission that dates back to Forrest Mars Sr’s assertion in 1947 that a company’s purpose was to generate “a mutuality of benefits” for its employees, suppliers, distributors and consumers.
For the pet business, this should mean focusing on animal health, Weihrauch said. “The purpose is a strategy and a decision-making criteria. So we are only in businesses that create a better world for pets. We are not in feeding bowls.”
Weihrauch sees petcare delivering 5-6 per cent annual growth over the coming years — faster than confectionery is expected to grow — and he is investing to position Mars in its fastest-growing segments.
Mars now spends more than $500mn a year on scientific research, he said, and expects “tremendous growth” from a new pet diagnostics division.
Mars is digitising pets’ health records so they can be analysed more effectively, Weihrauch said, pointing to its ability to catch kidney disease in cats early and design diets to delay its onset.
Weihrauch plans to accelerate such digital investments. “We can register invoices with robots [and] we can do better sales forecasts with the use of AI than we can with human beings,” he said. Digital optimisation of its logistics network has cut the greenhouse gases its supply chain emits.
Under Reid, Mars pledged to become “sustainable in a generation”. Weihrauch said greenhouse gas emissions from its operations and its supply chain have fallen by 6 per cent since a 2015 peak even as sales grew by 30 per cent, but Mars family members — “the bosses” — want faster progress.
So Mars has tied 20 per cent of its top 300 leaders’ pay to “positive societal impact”, including progress towards reducing emissions and plastic waste. It is also incorporating such “non-traditional metrics” into its reviews of potential acquisitions.
“When we compete against other companies that don’t do this, our teams have to deliver either higher growth or higher earnings in order to win these auctions, but it’s an example where we have taken the shareholder objectives of focusing on society and actually [costed them] out with a price per tonne,” he said.
It is asking executives to manage such extra costs at a moment when inflation is at levels unseen by all but the Mars family’s oldest members. The US Bureau of Labor Statistics reported a 15 per cent spike in the price of pet food in the year to January.
Mars’s growth is “surprisingly” good despite that, Weihrauch said, but “most CEOs I speak to, we are all worried about when does this thing called recession come”. Food, he added, tends to weather recessions relatively well.
Petcare dominates Weihrauch’s conversation, just as it now accounts for a majority of Mars’s sales. But should the company see the appointment of its former petcare chief as bad news for the Mars Bar and Wrigley?
“I’ve spent 23 years in Mars; I’ve spent a third in food, a third in confectionery and a third in petcare,” Weihrauch said. “What we prefer to say in Mars is that we believe you can walk the dog and chew gum at the same time.”
