Ferrara Pan may have bypassed a big opportunity to expand to the dynamic Asian market after it chose to merge with fellow US company Farley's & Sathers, according to an analyst.
Marcia Mogelonsky, director of insight for Mintel Food and Drink, gave ConfectioneryNews.com her thoughts after Ferrara sealed the merger with Farley's this week to become the Ferrara Candy Company.
‘Missed opportunity’ in Asia
“These brands are ‘strongly American,’ with little distribution outside North America,” she said.
“I would think the merger spells a continuation of the North American focus, with little consideration of markets further afield. Given the creative candy coming out of Asia, this could spell a missed opportunity,” she continued.
Ferrara Pan produces branded and private label sugar confectionery through brands including Lemonheads, Red Hots, Black Forest and Atomic Fireballs.
Farley's & Sathers, meanwhile, claims to be among the top 25 confectioners in the world. It is headquartered in Round Lake, Minnesota and manufactures confections and gum products including Brach's, Now and Later and Trolli.
The adult market
According to Mogelonsky, Ferrara’s repertoire is heavily weighted to products with significant "kid appeal", while Farley’s portfolio also includes some products targeted at children, such as Trolli, but it is better known for its Starlight Mints, which carry appeal for Baby Boomers.
“With a general ratcheting down of candy aimed at kids, Farley's & Sathers may be looking for ways to 'age up' its product mix by bringing in some more 'non-kid' brands,” she said.
Formidable private label force
However, she added that breakthrough innovation from either company had been limited and the merger would have to rely on strong “second-tier” brands and solid and broad combined distribution network.
“Both also do considerable work in private label, and together they will be a formidable force in the private label sugar confectionery industry in the US,” she said.
She added that while the new company’s combined market share would not have much of an impact on confectionery retail sales, there may be opportunities in other channels, such as foodservice, hotel minibars, and business-to-business.
The two companies
Farley's & Sathers was only established in 2002 and has since grown its market share through bolt-on acquisition including Now and Later, Trolli and Brach’s Confections.
It claims to manufacture a million pounds of gummies each week at its four manufacturing sites in the US and two in Mexico.
Farley’s is owned by private equity firm Catterton Partner, which will remain as the majority investor in the combined company.
Ferrara Pan Candy is a private company based in Illinois and has a longer history than Farley’s, which dates back to 1908.
The firm has five production facilities located in the United States, Canada and Mexico, and employs around 800 people.
Ferrara chief Salvatore Ferrara II will become the chairman and CEO of the merged company.