- 4 months ago
Why Haribo Refuses to Expand Beyond Gummies _ WSJ
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00:00When you open a bag of Haribo gold bears in the U.S., you'll notice that there are more
00:05red bears than there are of any other color.
00:08That's on purpose.
00:09Haribo found that U.S. consumers prefer raspberry-flavored bears, so they tweaked the mix in production.
00:16Today, the company's Wisconsin factory churns out 60 million gold bears a day.
00:22And it's this factory that Haribo is betting on to take on the U.S. candy market.
00:27This is the economics of Haribo.
00:31Haribo is one of the largest gummy candy manufacturers in the world, thanks in part to a simple strategy,
00:37focus.
00:38A lot of the bigger companies have these very diversified businesses.
00:42Hershey, best known for chocolate, now makes pretzels and dipped fruit snacks.
00:46And Ferrara owns brands across hard, chewy, and powder-based candies.
00:51And it just allows them sort of to have something for everyone versus just having really a single
00:55product that you're marketing all year long.
00:58But Haribo goes the other way, focusing primarily on gummy candy.
01:02And that focus is an advantage.
01:05They are pretty much a one-product company.
01:08It's really just simplicity of production.
01:11If you even think about, like, in your home kitchen, if you were just making one meal over and over and over again,
01:17you really only need a certain set of ingredients, a couple pots and pans.
01:20In an industrial context, it's really the same.
01:24In the U.S., the company uses select core recipes.
01:28It gives us expertise so that when we want to make a flavor change or a texture change,
01:35it allows us to tweak things.
01:37And its scale gives the company an advantage in negotiations for equipment and ingredients.
01:43The leverage it gives us is just the fact that we're buying more of one thing.
01:48When you are able to buy more of something, you get volume discounts.
01:52It gives us economies of scale.
01:54But...
01:54If your particular product isn't the one that's currently on trend, you can sort of lose out.
01:59Efficiency only benefits you when you are efficiently making something people want.
02:03So knowing exactly what consumers want is key to staying on top of demand.
02:08And in fact, creating more demand.
02:11That's why...
02:11Having facilities that are local has definite benefits in the sense that you can just really be
02:17closer to your consumer.
02:18That strategy is clear in Pleasant Prairie, Wisconsin.
02:21Home to Haribo's first U.S. production facility.
02:24A 500,000 square foot factory that opened in 2023.
02:29Before the factory...
02:30We were importing 100% of our product.
02:33Getting Haribo's to the United States used to take months.
02:37It could be up to 12 to 14 weeks because it had to be made in Europe.
02:43And then it went through Rotterdam.
02:45Then it went on a very long boat journey.
02:47Now it's a matter of weeks.
02:49With the Wisconsin factory producing about 25 different types of gummies.
02:53And the Wisconsin base is key to determining what Haribo makes in the U.S.
02:57The faster you can react, the better your sails are.
03:02Local offices run focus groups and can develop new products accordingly in shorter periods of time.
03:08We ask about both texture, flavor, but how you're going to use the product.
03:12We also do the same testing for packaging.
03:14Because packaging also plays an important role.
03:17All that feedback drives a very specific insight.
03:20What's considered good varies by region.
03:23And Haribo tailors accordingly.
03:25Take this bag of Star Mix.
03:26In the U.S., the original mix included Gold Bears, Happy Cola, Friendship Rings, Twin Snakes, and Happy Cherries.
03:33But after learning American consumers wanted the fried egg and foam heart gummies they saw in the U.K. version,
03:39Haribo swapped in those marshmallow textures.
03:42This strategy plays out across Haribo's 16 factories worldwide.
03:46The company's manufacturing facility in Turkey, for example, makes halal-certified products to meet local demand.
03:53In a Scandinavian country, Denmark, Sweden, they love licorice.
03:56And they love a strong licorice taste and even salty products.
04:01This wouldn't work in other markets.
04:03So the decentralized structure helps us to be agile and to react on developments in different markets.
04:09If demand is strong enough, Haribo will also expand its horizons.
04:13Take the Shimalo, the only Haribo product that includes chocolate.
04:17An existing marshmallow product was the base.
04:20But market research in Belgium showed demand for a chocolate version.
04:24So Haribo launched it there.
04:26And Haribo can use its larger international portfolio to its benefit.
04:30One of the big things that U.S. candy companies are facing are a lot of pressure from federal and state policy makers to transition to natural food dyes.
04:41Some Haribo products made in the States still have Red 40 in the ingredients.
04:46But the company already uses fruit and vegetable juices for color in other products and in other countries.
04:51We, in our current portfolio, have different types of coloring agents, different kinds of flavoring agents.
04:58So we feel very prepared to do things different or if there's regulations that change.
05:03Having this factory gives us the agility to make those changes.
05:07Today, Haribo produces more than 800 different products around the world.
05:12And in the past year alone, Haribo has added 2.6 million new American households to its customer base.
05:18Different candies have their moments in the sun.
05:22Gummies are really going gangbusters right now.
05:24Sugar candy sales are up 74% since 2020.
05:28And with cocoa prices historically high...
05:30You're seeing a lot of the big confection companies rolling out, you know, new gummy products as a result.
05:36So for Haribo...
05:38On the one hand, it's great.
05:40You know, they've probably got a lot of demand for their core product.
05:45On the other hand, it is inevitably going to mean more competition.
05:49They just have to be really nimble and adaptable and keep trying to appeal to consumers with new products
05:57to keep the sort of fire alive for gummies as long as they can.
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06:23On the other hand, it's cool.
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