History of the "Chocolate Wars"

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The history of chocolate in America begins with the Aztec and Mayan civilizations of Central America harvesting the bean of the Cacao tree centuries ago. However, it was the vision of Frank Mars and Milton Hershey that brought chocolate to the masses, and the rivalry between the two companies they created rages to this day.

Milton Hershey, born in 1857, founded the Hershey Chocolate Company in 1894 as a subsidiary to his larger business, the Lancaster Caramel Company. In 1900, he sold the Lancaster Caramel Company for $1 million in order to focus entirely on producing chocolate, using the proceeds from the sale to purchase 1,200 acres of land near Derry Township, Pennsylvania. It was on this spot that he would begin to build his vision of the model town. Hershey believed that the Hershey Chocolate Company and the town of Hershey, PA were intertwined and that he had a responsibility to his employees and the community. It was this belief that led to the development of Hershey with homes, utilities and community areas provided by the company to all of its employees. Creating what was, in essence, the perfect community.

Frank Mars, founder of Mars Incorporated, began making candy in 1902. Confectionary success eluded him for more than twenty years until an unlikely reunion with his son Forrest led to the creation of the Milky Way Bar. With the Milky Way, Mars struck a goldmine. Although a rift between father and son would lead to his eventual ousting from the company, Forrest left with a license to manufacture and distribute the Milky Way in Europe. This split would eventually make Mars Incorporated one of the largest food companies in the world. However, it was Forrest's return to America that would turn Mars into the giant it has become today.

In 1940, while Mars Incorporated was controlled by Frank Mars' widow Ethel, Forrest returned to the United States looking for a partner. He had an idea for a revolutionary new candy product. Finding no friends within the company controlled by his stepmother and her brother, Forrest turned to William Murrie, then president of Hershey. He approached Murrie with a proposal - Hershey would provide the sugar and chocolate, while Forrest would provide the product and make Bruce Murrie, William's eldest son, Executive Vice-President of the new limited partnership. He would even put Murrie's name on the new candy, calling them M&M's, for Mars & Murrie. William Murrie was impressed, and Forrest Mars was in business.

The war years were hard on the chocolate industry, yet Hershey and M&M Ltd managed to stay afloat through their contracts with the United States Military to produce chocolate that was included with soldier's rations. Hershey was contracted to create a high-calorie chocolate-based ration that would give soldiers a quick energy boost when they were in the field away from supply lines. Even though Mars managed to get M&M's into soldier's rations, those soldiers returned from the war with an amazing loyalty to Hershey's chocolate. It would be Hershey's inability to capitalize on this loyalty that opened the doors for M&M and Mars to finally topple the goliath that was Hershey.

The success of M&M's during and after World War II, coupled with the death of his stepmother Ethel, gave Forrest Mars the opportunity he had long waited for. Ethel's death gave Forrest a controlling interest in the company, which he used to oust the CEO. He also used Mars' sinking profits as muscle to convince his step-sister Patty to sell her company stock to him. Forrest, who now controlled 80 percent of the company, had little trouble convincing the rest of the board to sell their shares. In 1964, he had regained 100 percent control of the company.

With complete control of his father's company, Forrest began making the business his own. One year after taking control, Forrest notified the Hershey Company of his decision to discontinue his company's relationship with the candy giant, a move which shocked the executives at Hershey. For decades, Mars had been one of Hershey's best customers, making up the bulk of the company's chocolate coating sales. With one move, Forrest Mars had become Hershey's largest competitor.

Mars quickly became a nightmare for Hershey, whose old fashioned sales methods and lack of marketing support left them incredibly vulnerable to the hard and fast marketing and sales approaches utilized by Forrest Mars. Hershey had fallen far behind the curve and was being overshadowed by Mars' products in nearly every major grocery store, gas station and vending machine in America. However, changes at Mars led to a large number of former executives defecting to other food companies and, most importantly, to Hershey.

The Mars executives that went to work for Hershey brought with them a brand new philosophy on sales and marketing, which would reposition Hershey to battle Mars on their own ground. The changes that were implemented turned Hershey from the maker of "the great American chocolate bar" into a true corporate giant that knew how to control its share of the market. Yet even with this influx of new talent, Hershey's most successful coup would come not from innovation, but straight from Mars itself.

When the Mars Company turned down the opportunity to include M&M's in an upcoming motion picture, the producers turned to Hershey. The result was the beginning of product placement as we know it. Imagine if young Henry had used M&M's to lure ET into his home, but Mars' disinterest allowed Hershey to put Reese's Pieces in the minds of every parent and child in America. Mars' missed opportunity became Hershey's goldmine, and "The Chocolate Wars" were given new life.

Over the next 25 years, the two companies continued to duke it out for control of the American market (Hershey had never had any significant success in selling its product in the international market due to a widespread European dislike of Hershey's "sour" chocolate) with the battle raging on billboards, TV screens and magazines. The dispute even found itself going again into battle as the two companies collided bitterly over providing chocolate-based rations to soldiers serving during Operation Desert Storm.

Hershey and Mars have dominated the landscape of the American candy industry for so long that they have overshadowed (or overtaken) nearly every other American candy maker. They rank among the largest food companies in the world, with Mars being second only to Nestlé (the European food juggernaut). The battle rages today on supermarket and convenience store shelves as we speak. In what is in all likelihood, a war that will end only when Americans no longer desire chocolate, which is a remote possibility at best.