Chupa Chups strategy
The strategy is proving to be a sweet success -- at least in Europe, where more than 50% of Chupa Chups consumers are now over the age of 11, as compared to 20% just a decade ago.
Chupa Chups has been sticking out its brightly colored tongue at convention since 1957, when Enric Bernat, a third-generation candy maker, took over an ailing Spanish confectioner and melted down its 200 products to focus on producing a single line of quality lollipops.
Within five years, Chupa Chups sales reps were servicing 300,000 outlets around Spain with a fleet of Seat-600 minicars and instructing shopkeepers to place the company's porcupine-like displays as close to the cash register as possible -- a break from the traditional policy of keeping candy in glass jars behind counters, far from little fingers.
During the 1990s, Chupa Chups threw itself into global expansion. Now 90% of its sales are outside Spain. When rivals steered clear of manufacturing in Russia, Chupa Chups jumped in headfirst, a gamble that has paid off handsomely (despite a machinery heist on the road to St. Petersburg). Russians now consume around 1 billion Chupa Chups lollipops a year.
Like a hyperactive child who has eaten too much candy, Chupa Chups continues to innovate at a furious pace. Initial flavor blends such as strawberry and cream, chocolate and banana, and chocolate and vanilla were simply a taste of things to come. In some cases, when Chupa Chups enters a new market, a new flavor enters its canon: jasmine and green tea in China, mango and chili pepper in Mexico, orange with extra vitamin C for Russia. The Middle East territories warranted a date-flavored lollipop. In more-developed markets, flavors for adult palates include margarita and pińa colada, cappuccino and mocha.
But new taste is only one way that Chupa Chups is innovating. There are also new delivery mechanisms that mark this lollipop as extraordinary: It's being packaged in toys and makeup kits and inside pretend paint cans. The Chupa Chups name is being licensed to makers of clothing, eyewear, shoes, motorcycle helmets, perfume, and toothpaste. The company also now owns two more brands: Smint mini-mints, aimed at adults, and Crazy Planet, novelty candy toys that include a digital watch with a secret gum-filled compartment.
Xavier Bernat, who took the reins from his father in 1998, is eager to make amends for last year's disappointing 2.4% fall in sales -- the first decline in more than a decade, due in part to a Pokémon merchandising deal that turned sour. Chupa Chups also quit an awkward marketing agreement in the United States with Mars Inc., whose more conservative family didn't sit well with a company that once had internal plans to advertise its core product as "oral pleasure."
But those stumbles have done nothing to discourage Chupa Chups from its innovative course. Bernat has a plan to put a sweet taste back in the company's mouth: a network of 5,000 Swatchlike "shops in shops" -- dedicated retail spaces within department stores and kiosks at airports, malls, [next page]