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THE ENERGY BAR INDUSTRY
In 1986, PowerBar, a firm in Berkeley, California,single-handedly created the energy bar category. Positioned as anathletic energy food, it was distributed at bike shops and eventsthat usually involved running or biking. The target segment was theathlete who needed an efficient, effective energy source.
Six years later, seeking to provide an alternative to thesticky, dry nature of the PowerBar, a competitor, also located inBerkeley, developed an energy bar with superior taste and textureand branded it the Clif bar. About the same time, anothercompetitor introduced the Balance bar, which offered a blend ofprotein, fat, and carbohydrates based on the nutrition formulaassociated with the “Zone diet.” Faced with these challengers,PowerBar responded with Harvest (a bar with a much more accessibletaste and texture) and ProteinPlus (an entry into the high-proteinsubcategory closely related to that defined by Balance).
The makers of the Clif bar observed that many women wereathletes and many more were involved in fitness. They furtherobserved that this half of the population had unique needs in termsof vitamins and supplements and that the energy bar industry hadyet to recognize or fill them—a classic case of unmet needs. As aresult, they introduced Luna as the first nutritional (not energy)bar for women, using media and promotions targeting active females.The bar had a light, crunchy texture; came in flavors like “lemonzest” and chai tea; and contained nearly two dozen vitamins,minerals, and nutrients. The target market consisted oftime-strapped women who wanted both taste and nutrition and wouldappreciate a bar tailored to their needs.
Both in reaction to Luna’s success and to expand the segmentsfor which the category was relevant, PowerBar studied why women didnot buy its products, which the firm considered to be nutritious,convenient, tasty, and able to provide a quick pick-me-up inmid-morning or mid-afternoon. One answer was that the calorie hitfrom any member of the PowerBar family was simply too great. Inresponse, the firm created the almost indulgent PowerBar-endorsedPria. With only 110 calories, Pria was designed to respond to Lunawhile attracting new users into the category.
The Balance strategy was to introduce a series of products, allof which stuck to the original bar’s 40/30/30 nutritional formulabut had different taste and textures. These spinoffs includedBalance Plus, Balance Outdoor (with no chocolate coating to melt),Balance Gold, Balance Satisfaction, and the Balance-endorsed Oasis,a bar designed for women. The big success was Balance Gold, whichwas positioned close to the candy bar category (indeed, its taglinewas “like a candy bar”) by containing ingredients such as nuts andcaramel. Such a bar probably risked some of Balance’s perceivedauthenticity as being an energy bar. However, because Balanceentered the category from the diet perspective anyway and probablywas never considered in the center of the energy bar world, therisk may have been acceptable.
In addition to the major brands, challengers from a variety ofsmall and large firms advanced subcategories by positioningthemselves around such factors as age (bars for seniors and kids)and health (products to fit dairy-free, diabetic, andheart-conscious diets), to say nothing of numerous textures,flavors, sizes, and coatings. Over a 10-year period, some 450products were introduced. For example, the popularity oflow-carbohydrate diets has prompted a host of entries, includingAtkins Advantage, developed by the Atkins organization, whichgained a substantial market share that peaked in 2003 and fell offsharply thereafter. Other participating brands include Zone-Perfect, Met-Rx, GeniSoy, EAS, CarboLite, Carb Solutions, andGatorade energy bars. Masterfoods’ Snickers Marathon—a candy barwith a blend of vitamins, minerals, and protein— has blurred thedivision between candy and energy bars by seeking to gain share inthe latter market. One concern of the energy bar industry is theskepticism among some quarters as to how qualitatively differentits products are from candy bars in the first place.
The motivation for using an energy bar is primarily to provide aconvenient energy boost. The original heritage of being a productto enhance the performance of top athletes engaged in demandingphysical activities (like Lance Armstrong, a PowerBar endorser)created credibility and self-expressive benefits in the category’searly years. Because household penetration was still under 20percent, however, the major firms worked to generalize“performance” to be relevant to anyone who needs to perform wellduring the day. In fact, the industry dream is to get people tolabel the category “performance nutrition” and think of it asenhancing one’s ability to complete any task.
New products in the category are going in several directions. Atrend toward indulgent icings, coatings, and coverings has led someto morph toward candy bars. Others go the opposite way, usingwhole-grain ingredients for products somewhat like the originalClif bar and Quaker’s Oatmeal Squares for women. The makers of theClif bar also have introduced a Mojo line of salty snack bars toprovide alternatives to sweet-tasting bars and the Clif Nectar bar,an entirely organic nut and fruit bar. PowerBar introduced NutNaturals, a low glycemic index bar. There are bars positionedaround ingredients such as protein or soy bars. A major Japanesebrand of soy bars, SoyJoy is now in the market with a dry bar thatwill not be confused with a candy bar.
The energy bar category has gone mainstream, moving from thebike shops to the grocery stores and exploding from just over $100million in revenue in 1996 to an estimated $2 billion or more adecade later, with expected future growth exceeding 10 percent peryear. It is fueled both by the confluence of trends towardlow-carb, portable, nutritious snacks and meal replacements (alongwith a general concern for health and weight control) and by theintroduction of new products. Along the way, it became large enoughto attract the attention of major packaged-goods firms. In 2000,Nestle purchased PowerBar, which has remained the leading player,with the Clif bar (which has remained independent) emerging as itsmost formidable competitor. The Balance line of products was boughtby Kraft, also in 2000.
Energy bars can be considered a part of a larger food barcategory which is also growing rapidly. The market is dividedfairly equally between granola bars (positioned as a snack foodthat is healthier than candy bars), breakfast/cereal/snack bars(used as a meal replacement), and energy bars. Energy bars have afar lower household penetration than the other food bar forms. Thetop marketers of food bars are Kellogg’s (Nutri-Grain), QuakerOats, General Mills, and Slim-Fast.
Answer all questions following casedescription:
1) Prepare an overview/history of the case industry orcompany.
2) Outline and summarize case details.
3) Summarize major Conclusions and insights on the company orindustry.
4) Lastly, you must also cite sources of all outside researchreferenced.
