Ferrara is overhauling its fruit snacks business with a new brand, Funables, that uses higher quality ingredients and redesigned packaging to rejuvenate a category at the manufacturer that was tired and stagnant, according to a top company executive.
Ferrara, which was purchased by Nutella and Tic Tac owner Ferrero Group in 2017, inherited much of the business following a deal with Kellogg in 2019 for $1.3 billion that included well-known cookie brands such as Keebler and Famous Amos.
A less publicized part of the acquisition included Kellogg's Fruity Snacks, which was folded into Ferrara, tripling the company's fruit snacks business. While the business was "not healthy" and posting flat sales, the company was confident it could regain its momentum with the right changes, said Greg Guidotti, general manager for non-chocolate at Ferrara.
"We saw there was an opportunity to reinvigorate this portfolio," said Guidotti. "After the acquisition, we did spend time kind of honing the strategy and setting the foundation for this new brand. What could this equity be?"
The answer, the company soon found, came not only in overhauling the food itself but also in creating an entertaining and fun experience for kids when they consumed it as a snack. It also had to be a product that parents would feel good about giving to their children.
After just over a year of working on Funables, Ferrara is rolling out the fruit snacks to shelves across the U.S. starting this week. The Chicago-based company is prioritizing entertainment on the pack, with games such as tic-tac-toe, stickers and licensing partnerships, including Batman and Barbie. Redesigned packaging will also devote more space to the Funables name.
“We saw there was an opportunity to reinvigorate this portfolio. After the acquisition, we did spend time kind of honing the strategy and setting the foundation for this new brand. What could this equity be?”
General manager for non-chocolate, Ferrara
The fruit snacks' ingredients will provide more nutritional heft, which is important to parents, with the addition of vitamins A, C and E to complement the real fruit puree and fat-free attributes already present.
"With all the consumer testing that we've done, we know we've got a winner with this," said Guidotti, who has experience innovating and refreshing brands like Capri Sun, Oscar Mayer hot dogs, and macaroni and cheese while at Kraft Heinz. "There is no better time than the present to hit this, but as we acquired the business we wanted to make sure that we set a strong, differentiating foundation."
Guidotti said fruit snacks as a whole are "growing at a pretty good clip." Category sales rose 8.7% to $1.3 billion in the 52 weeks ending April 24, 2021, according to data provided by NielsenIQ. With the upward momentum in the category and changes to Ferrara's offerings, Guidotti said the company is optimistic it will take part in the broader growth.
The Funables launch is taking place after years of transformative moves by parent company Ferrero. For decades, Ferrero carved out a prominent niche in U.S. confections with its Nutella chocolate and hazelnut spread, golden-wrapped Ferrero Rocher chocolates and Tic Tac mints.
But in 2017, it started moving aggressively to expand its North American presence by spending $1.3 billion for Ferrara Candy, the maker of Brach's, Lemonhead and Redhots brands. A year later, it spent another $2.8 billion for Nestlé's U.S. confections portfolio.
Since then, Ferrara, in partnership with Ferrero, have gradually moved from deal making to taking a deep dive into the brands they acquired to make them more relevant to today's consumer without losing what people love about the offerings.
The effort has included tweaking the packaging of Keebler cookies to make it stand out on shelves, and incorporating natural vanilla and more real chocolate into the treat. They added jumbo peanuts to Butterfinger, increased the percentage of cocoa and milk in the chocolate coating and removed the preservative TBHQ and hydrogenated oils.
Guidotti said Ferrara will continue to create new products and license other kid-friendly brands for its Funables label in an effort to keep it fresh and attract children in a competitive snack category.
"We saw an opportunity here to drive greater resonance with the consumer from the product first and then to the whole proposition to bring fun to the fruit snack experience," he said. "Importantly, now we have a plan to continue to drive that agenda."