M&M-Mars has introduced a peanut butter M&M to cash in on what analysts say is a booming demand for the palate-clinging product.
The newest version of the familiar M&M consists of a creamy peanut butter center covered by a layer of milk chocolate and wrapped in the famous candy-coated outer shell.
It can be bought only on the West Coast now because of limited production capacity, said Bill Deeter, a spokesman for M&M-Mars, a division of Mars Inc. of McLean. He declined to predict when it would be widely available.
"We're rolling it out as we have the capacity to supply," Deeter said in a telephone interview from his office in Hackettstown, N.J.
Deeter denied that the popularity of Reese's Pieces -- Hershey Foods Corp.'s peanut butter candy -- had fueled M&M-Mars's marketing strategy.
"Mars makes up its mind based on where it sees its opportunities and consumer appetites," Deeter said. "This was the logical next step for the product."
Industry analysts said the new product, which was rolled out in September, underscores an insatiable appetite in the United States for peanut butter.
Earlier this year, M&M-Mars added peanut butter to its popular Snickers candy bar and also rolled out PB Max, another peanut butter confection that the industry sees as a competitor to Reese's Peanut Butter Cups.
"Peanut butter sales are increasing in America," said marketing consultant Phil Lempert of Montclair, N.J. He noted the addition of chocolate chip and cinnamon raisin peanut butters on the supermarket shelf next to creamy and crunchy styles.
"This is just one of a number of products that Mars has introduced with peanut butter aimed at slowing down Reese's and gaining a foothold in this growing category," said John McMillin, a food industry analyst with Prudential-Bache Securities Inc. in New York.
Hershey Foods's Reese's Cups are the second-most popular candy in the United States after M&M-Mars's Snickers bars, analysts said.
McMillin noted that the Reese's product line was boosted after Reese's Pieces were used to lure a shy alien in the movie, "E.T.: the Extraterrestrial."
The sales gap between the top two candies, however, has narrowed considerably in the past few years, with Snickers bringing in revenues of $129 million in 1989 compared with $105 million for Reese's Cups, McMillin said.
"Snickers used to be way out in front," he said, "and Mars wants to maintain its lead."
Hershey, based in Hershey, Pa., controls about 44 percent of the $5 billion chocolate candy market compared with Mars's 38 percent, McMillin said.
The peanut butter-enhanced M&M -- which marks the first new M&M flavor since the peanut variety was introduced in 1954 -- will boost an already successful product line.
Peanut M&Ms are the third best-selling candy in the United States, with $102 million in sales, followed by M&Ms Plain, with $83 million in revenue, analysts said.
Ironically, McMillin noted, M&M-Mars chose to launch its new peanut butter-heavy product line in the midst of a peanut drought in Georgia that has driven up the price of peanuts.
Deeter said the peanut drought would have little effect because commodity buying is done "years in advance."