Do not attempt to solve if you can not answer all!!!! THE ENERGY BAR INDUSTRY In

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Do not attempt to solve if you can not answer all!!!!

THE ENERGY BAR INDUSTRY

In 1986, PowerBar, a firm in Berkeley, California, single-handedly created the energy bar category. Positioned as an athletic energy food, it was distributed at bike shops and events that usually involved running or biking. The target segment was the athlete who needed an efficient, effective energy source.

Six years later, seeking to provide an alternative to the sticky, dry nature of the PowerBar, a competitor, also located in Berkeley, developed an energy bar with superior taste and texture and branded it the Clif bar. About the same time, another competitor introduced the Balance bar, which offered a blend of protein, fat, and carbohydrates based on the nutrition formula associated with the “Zone diet.” Faced with these challengers, PowerBar responded with Harvest (a bar with a much more accessible taste and texture) and ProteinPlus (an entry into the high-protein subcategory closely related to that defined by Balance).

The makers of the Clif bar observed that many women were athletes and many more were involved in fitness. They further observed that this half of the population had unique needs in terms of vitamins and supplements and that the energy bar industry had yet to recognize or fill them—a classic case of unmet needs. As a result, 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 “lemon zest” and chai tea; and contained nearly two dozen vitamins, minerals, and nutrients. The target market consisted of time-strapped women who wanted both taste and nutrition and would appreciate a bar tailored to their needs.

Both in reaction to Luna’s success and to expand the segments for which the category was relevant, PowerBar studied why women did not buy its products, which the firm considered to be nutritious, convenient, tasty, and able to provide a quick pick-me-up in mid-morning or mid-afternoon. One answer was that the calorie hit from any member of the PowerBar family was simply too great. In response, the firm created the almost indulgent PowerBar-endorsed Pria. With only 110 calories, Pria was designed to respond to Luna while attracting new users into the category.

The Balance strategy was to introduce a series of products, all of which stuck to the original bar’s 40/30/30 nutritional formula but had different taste and textures. These spinoffs included Balance 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, which was positioned close to the candy bar category (indeed, its tagline was “like a candy bar”) by containing ingredients such as nuts and caramel. Such a bar probably risked some of Balance’s perceived authenticity as being an energy bar. However, because Balance entered the category from the diet perspective anyway and probably was never considered in the center of the energy bar world, the risk may have been acceptable.

In addition to the major brands, challengers from a variety of small and large firms advanced subcategories by positioning themselves around such factors as age (bars for seniors and kids) and health (products to fit dairy-free, diabetic, and heart-conscious diets), to say nothing of numerous textures, flavors, sizes, and coatings. Over a 10-year period, some 450 products were introduced. For example, the popularity of low-carbohydrate diets has prompted a host of entries, including Atkins Advantage, developed by the Atkins organization, which gained a substantial market share that peaked in 2003 and fell off sharply thereafter. Other participating brands include Zone- Perfect, Met-Rx, GeniSoy, EAS, CarboLite, Carb Solutions, and Gatorade energy bars. Masterfoods’ Snickers Marathon—a candy bar with a blend of vitamins, minerals, and protein— has blurred the division between candy and energy bars by seeking to gain share in the latter market. One concern of the energy bar industry is the skepticism among some quarters as to how qualitatively different its products are from candy bars in the first place.

The motivation for using an energy bar is primarily to provide a convenient energy boost. The original heritage of being a product to enhance the performance of top athletes engaged in demanding physical activities (like Lance Armstrong, a PowerBar endorser) created credibility and self-expressive benefits in the category’s early years. Because household penetration was still under 20 percent, however, the major firms worked to generalize “performance” to be relevant to anyone who needs to perform well during the day. In fact, the industry dream is to get people to label the category “performance nutrition” and think of it as enhancing one’s ability to complete any task.

New products in the category are going in several directions. A trend toward indulgent icings, coatings, and coverings has led some to morph toward candy bars. Others go the opposite way, using whole-grain ingredients for products somewhat like the original Clif bar and Quaker’s Oatmeal Squares for women. The makers of the Clif bar also have introduced a Mojo line of salty snack bars to provide alternatives to sweet-tasting bars and the Clif Nectar bar, an entirely organic nut and fruit bar. PowerBar introduced Nut Naturals, a low glycemic index bar. There are bars positioned around ingredients such as protein or soy bars. A major Japanese brand of soy bars, SoyJoy is now in the market with a dry bar that will not be confused with a candy bar.

The energy bar category has gone mainstream, moving from the bike shops to the grocery stores and exploding from just over $100 million in revenue in 1996 to an estimated $2 billion or more a decade later, with expected future growth exceeding 10 percent per year. It is fueled both by the confluence of trends toward low-carb, portable, nutritious snacks and meal replacements (along with a general concern for health and weight control) and by the introduction of new products. Along the way, it became large enough to 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 its most formidable competitor. The Balance line of products was bought by Kraft, also in 2000.

Energy bars can be considered a part of a larger food bar category which is also growing rapidly. The market is divided fairly equally between granola bars (positioned as a snack food that is healthier than candy bars), breakfast/cereal/snack bars (used as a meal replacement), and energy bars. Energy bars have a far lower household penetration than the other food bar forms. The top marketers of food bars are Kellogg’s (Nutri-Grain), Quaker Oats, General Mills, and Slim-Fast.

Answer the following questions:

1) Prepare an overview/history of the case industry or company

2) Outline and summarize case details

3) Summarize major Conclusions and insights on the company or industry.

4) Lastly, you must also cite sources of all outside research referenced.

Explanation / Answer

Overview of the case industry/ company:

The energy bar market primarily focused on performance athletes. The market was built by power bar and also other competitors.

The power bar started as a company to create a food for enhancing the performance of the race. The product was initially marketed and distributed at the bike shops and events which were conducting running and biking with minimal competition. As the new category started to expand, there were new entrants. This segmented the market to several categories.

The primary consumers for this company were of three types namely energy bars, sports bars and weight loss bars. The growth of the bar markets can be due to various factors like colors, flavors, preservatives etc.

The manufacturers of the organic energy bar are stressing on the importance of various promotional activities in the nations of Asia pacific for increasing the sales of the bar in these nations between the time periods between 2017 – 2023.

The prospective consumers can include:

Wholesalers and retailers, raw material suppliers, end users, importers and exporters, bar manufacturers etc.

Summary of case details:

The energy bar was producing power bar for its athletes taking part in the competition. So in response to that, its competitor came up with zone diet against which power bar also came up with harvest and protein plus to answer its competitor. In order to take over the market, clif bar targeted the women athletes as they knew that energy bar is yet to target the women section, they came up with Luna a nutritional bar for women. After which power bar was analyzing the reasons as to why women customers did not buy its products as a result of which it came up with pria.

In addition to this, power bar was also facing competition from many other small and large firms. These firms focused more on factors like age, health and came up with around 450 products. After sometime power bar came up with its new product called nut naturals having ingredients such as soy bar. All this made energy bar to go mainstream in its business with an estimated growth rate of 10% per year. This is because power bar still gave importance to issues like weight control, health and frequent introduction of new products.

Later in 2000 it was purchased by nestle and clif bar continued to remain as its independent competitor. Energy bars have a lower household penetration compared to other food bar forms.

Major conclusions:

From the above case, it can be understood that energy bars continued its healthy competition with clif bar and other small and large bar manufacturers. Whenever the competitor comes up with new product, energy bar never remains silent and comes up with an immediate competent product. In spite of introducing new products then and there, it also gave importance to the health issues like weight control etc of its customers. This is how it helped energy bar to succeed with very good profits and also a good growth rate every year.

From this, it can be concluded that a company must always be aware of its competitor’s actions, keep introducing new products for retaining the market and also remain as a healthy competitor to succeed in this competitive world.

Sources of outside research:

The answers were mainly provided on the basis of the case study provided before the questions and hence no outside sources were referred as there was no requirement to do that. The case itself gives a clear picture and all the required information.

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