1) Why is Planters struggling in 2012?
Prior to 2012, Planters nuts had annual revenues around $1 billion and was the largest-selling brand of nuts in the United States. For numerous compounding reasons, Planters was struggling in 2012. Some reasons were the result of decisions the company made, and other reasons were
the consequence of the changing likes and dislikes of the American consumer.
First, in 2011, Kraft Foods- the parent company of Planters nuts- split into two separate
business: Mondelez and the Kraft Foods Group. Planters was classified under the Kraft Foods
Group. Under new administration, Planters added pistachios and almonds to their line of peanuts, cashews, and mixed nuts. As the company focused on the new nuts, their sales of their existing
line decreased.
Secondly, margins from the new nut products were significantly lower than margins from the existing line. The peanuts, cashews, and mixed nuts from the existing line were sold at 60% of
revenue; whereas, the newer nuts were sold at 85% of revenue- dramatically lowering profit
margins.
Another element of this perfect storm was that Planters chose to engage in the almond and
pistachio business when their focused competitors Blue Diamond Almond and Wonderful
Pistachio were employing significant marketing dollars to advertise and fully engage the
customer. Not only were Blue Diamond Almond and Wonderful Pistachio spending more than
Planters in advertising, their Industry group counterparts- Almond Board of California and
American Pistachio Growers- were spending between two and five times more than what the
National Peanut Board was spending to assist Planters.
In early 2012, Planters executives redirected their focus from promoting Planters as the
natural and healthy choice to appealing directly to their target segment: males. Planters created a Men’s Health Recommended Mix with almonds, peanuts, and pistachios. Advertisements were posted in Men’s Health Magazine. The irony of choosing the male demographic was that studies assessing demographics showed that females consumed more snacks and more nuts than males.
Moreover, females ate more almonds and pistachios than males. Marketing to the males
demographic, completely isolated the largest segment of consumers: females.
One reason Planters turned away from the original nut, the peanut, was that peanuts were
losing favor with the American consumers. This change in the consumers’ likes and dislikes
drove the company to change and branch out towards other nuts. However, their marketing
primarily to the male demographic, method of advertising, ill-timing of advertising the pistachio
and almond nuts in relation to their competitors, and lower profit margins associated with the
new nut lines all played a role in the decline of Planters products in U.S. households.
