NACS Show 2017

SmashMallow sets $25m sales target as business enters second year

By Douglas Yu contact

- Last updated on GMT

SmashMallow dollar sales expected to grow three times faster in 2018. Photo: CN
SmashMallow dollar sales expected to grow three times faster in 2018. Photo: CN

Related tags: Confectionery, Marshmallow

Snacking marshmallow maker SmashMallow hopes to get more consumers to ‘dip their toes in the confections space’ as the company enters its second year.

Speaking to ConfectioneryNews at the NACS Show in Chicago,  Jonathan Sebastiani, CEO of SmashMallow said:“The [sales] results have been resounding.

“As we’re building our business, it’s important to understand the repeatability of purchase, and we wanted to test that repeat purchase in specific channels: Grocery stores on the East and West Coasts.”

“Since then, we begun to distribute in the middle of the country as well as drug and mass stores, clubs and c-stores,”​ he added. “We also just launched a single-serve size, 80-calorie pack SmashMallow into 7-Eleven nationally.”

C-stores go premium

7-Eleven is SmashMallow’s first broad distribution in the US c-store channel.

Sebastiani said:“We recently launched a 4.5-ounce pack in Sheetz, a 600-store chain on the East Coast. They realized Millennials are looking for more premium products… and they’re willing to pay a premium for it.

"With this 80-calorie pack, we’re able to position as an alternative confection in that ‘snackfection’ set, but also a penny profit that is going to upgrade our existing consumers.”

However, he pointed out that not all convenience stores are created equally since some of them are “extremely premium".

“Wawa is introducing a fresh deli option within their stores, creating a portfolio of brands that offers premium experience,”​ Sebastiani said. “We feel more strategically aligned with their effort because if they don’t begin to adopt brands that offer that experience, customers are going to go elsewhere.”

Disruption outside the bag

SmashMallow anticipates a “north of $25m run rate”​ by the end of 2018, growing 300% faster than this year if the target comes to fruition, said Sebastiani.

But the company was not formed initially to compete in the $1bn marshmallow market, Sebastiani emphasized. “We’re in the overall confectionery category, so we’re competing for stomach share of the $36bn confections space,”​ he said.

“The basic question of starting a company is understanding the interaction with the consumer,” ​Sebastiani added. “Entrepreneurship is not just about disruption within the bag, the qualitative ingredient disruption. Instead, we think about usage occasion disruptions.”

“The marshmallows are often used for roasting s’mores during summer. The stores that stocked SmashMallow actually doubled their dollar performance because having different flavors can create so much excitement over the camp fire,”​ he said.

Given that Sebastiani previously created KRAVE meat snacks, which was acquired by Hershey in 2015, Sebastiani is confident that his team’s capability will be passed along to SmashMallow.

“We’re going to see broader distribution next year,”​ he said.

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