Kinder Egg Is Coming to America

May 22, 2017

Three-and-half billion Kinder eggs are sold globally each year but the popular chocolate-toy hybrid generates zero sales from the United States market. Until now.

Confectionery maker Ferrero International S.A. says at the beginning of 2018, it will debut a version of the iconic, decades-old Kinder Egg to the U.S. market for the first time. The most commonly known version of the product is the Kinder Surprise, which is a hollow chocolate egg that holds a plastic capsule which itself contains a toy. The toy is often a tiny collectible like a mini bike or an animal figurine, and it often requires some assembly. The surprise, of course, is that the purchaser doesn't know what toy is in the egg until it has been opened.

But the version that will debut in grocery and drugstores across the United States is the Kinder Joy, which is a more recent concoction that separates the toy from the candy because it is comprised of two sealed halves. One half contains milk-crème and cocoa flavoring with wafer bites and is eaten with an included spoon, while the other half of the egg contains a toy. That packaging—used by Ferrero to sell the chocolate treats in warm-weather markets—is fully compliant with both the U.S. Food and Drug Administration and the Consumer Product Safety Commission. Kinder Surprise debuted in 1974, while Kinder Joy launched in 2001.

"Kinder is the second largest confectionery brand worldwide behind Cadbury," said Martino Caretto, director of institutional affairs at Ferrero, in an interview with Fortune. "We hope in time to catch the number one spot with more expansion of Kinder outside of Europe."

Founded in 1946, Ferrero's most popular treats include Nutella spreads, Kinder chocolates and Tic Tacs. Through those brands, it has grown to become the world's fourth-largest confectionery maker, (when accounting for all sub-brands) ranking behind Mars Inc., Mondelez (mdlz), and Nestle. The Kinder Egg was conceptualized as a way to play on the Italian tradition of giving children large chocolate eggs that often had a toy inside of them to celebrate Easter. That family tradition was replicated in the Kinder Surprise, which became a popular food-toy outside of the holiday season.

"We realized that moment of joy was something that was worth replicating more frequently," Caretto said.

Over time, Kinder Surprise expanded distribution beyond Italy and the treat is now sold in every major market except the United States. It wasn't allowed to be sold stateside because of a 1938 regulation that made it illegal to sell any candy with a non-nutritive object inside of it. Over the years, various importers have tried to bring the Kinder Eggs to the U.S. market, though those efforts have always been thwarted by the federal government via recalls.

The 2018 launch of the Kinder Joy is the first time that the brand's parent company, Ferrero, is bringing it to the U.S. The Kinder Joy packaging format that keeps the toy separate from the food ensures that it adheres to both FDA and CPSC standards. The launch also coincides with the debut of a gum version of the popular Tic Tac snack.

Both initiatives build on Ferrero's push to become a more aggressive player in the U.S. market. Ferrero's chocolate confectionery market share is just 2.3% in the U.S. market, according to research firm Euromonitor, and executives have said it could take a decade to become a big player. Other key initiatives that are in place: Ferrero earlier this year paid $115 million to buy Fannie May Confections Brands. And it recently unveiled the world's first-ever Nutella cafe, set to open this month.

Courtesy of Ferrero 

"Ferrero is an amazingly successful family company but without a large presence in the United States," said Paul Chibe, President and CEO of Ferrero North America. "It isn't to the scale here that it is in other parts of the world. That's always been a dream for Ferrero—to achieve the status it has in other parts of the world here in the U.S."

Ferrero is debuting a gum version of Tic Tac next year because that category has experienced softness of late and the candy maker thinks that there is room for disruption from brands like Tic Tac which are actually still posting strong sales among mint makers. "I think we will have a fantastic winner in the market," says Chibe.

Kinder Joy's push into the U.S. market in some ways is reminiscent of how Ferrero expanded the foreign-produced Nutella brand. The hazelnut spread first reached the states in 1983 but Ferrero only really began marketing behind it and focusing on increased distribution over the past decade. In the early years, Nutella was a treat that was primarily known by two consumer groups: those that traveled extensively abroad (especially within Europe) and foreigners that lived in the states.

That's the same brand equity that exists for Kinder today. Ferrero executives say that most Americans don't know the brand, except for travelers or foreigners now living stateside. That gives the company a long runway to potentially expand the Kinder brand. Ferrero claims that retailers are very supportive of Kinder Joy's launch because there hasn't been a ton of major innovation in the confectionery aisle in recent years. On the toy side, there's been strong, double-digit sales increases for collectibles—especially "blind packs" where you don't know what's inside the secretive packaging. Kinder Joy plays into that broader trend.

When asked if Ferrero can replicate Nutella's success with a similar strategy for Kinder, the team says the formula is fairly simple.

"The most important point is Nutella is delicious," Chibe said, adding that's why it is an iconic brand. "For Kinder, it is the same. Kinder at its core is a delicious confection and that’s the foundation of the brand’s success around the world and will be in the U.S. as well."

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