Snack Attack PowerBar, Balance Bar and Clif Bar fight to win share in a growing market

January 11, 1999

Good morning, PowerBar, the Number 1 energy bar. How may I
direct your call?"

To answer the phone at PowerBar in Berkeley, Calif., is to
attest to the company's No. 1 status. In the rapidly expanding
galaxy of energy bars, which this year will approach $500
million in sales in the U.S., PowerBar comes first: first in
order of chronology (launched in 1986) and first since then in
revenue, this year eclipsing the $100 million mark. "We used to
be the only game in town," says Brian Maxwell, 45, PowerBar's
CEO and cofounder. "If we hadn't been a success, we wouldn't
have so much competition."

If Maxwell, a former world-class marathoner, sounds annoyed,
that's because he is. Nearly 50 varieties of energy bar, each
retailing at two to three times the cost of a Snickers, glut
today's market. The original concept for an energy bar was that
of a nutritious, high-carbohydrate, low-fat snack that could be
ingested during exercise. The energy boost, not the taste, was
what mattered. Just a dozen years after Maxwell, his
nutritionist and future wife, Jennifer, and Bill Vaughan, a
biochemist, created PowerBar, energy bars, like Lycra leggings
and bottled water, have become de rigueur among the sweat set.

Now marketers at brands such as Balance Bar have realized that
the energy-bar phenomenon is in its fashion-accessory stage of
evolution: The target consumer is not doing a triathlon; he or
she just wants an energy bar that tastes good.

The result: Maxwell has drawn fierce battle lines against
Balance, currently No. 2 and surging, and Clif Bar, No. 3, which
Maxwell has called "an expensive cookie." At stake, he claims in
all seriousness, is the "integrity of the energy-bar concept."

"If this were World War II, Balance Bar and Clif Bar are England
and the U.S.," says Clif Bar cofounder Gary Erickson. "PowerBar
is Germany. They have a let's-wipe-them-out approach to us."

Like any front-runner, Maxwell treats those who would draft off
him with asperity. In 1997 Balance Bar began promoting itself as
a "meal replacement" and "clinically proven" to improve workout
performance and recovery. PowerBar challenged the claims, among
others, saying they couldn't be substantiated. The National
Advertising Division of the Council of Better Business Bureaus
upheld most of Maxwell's protest but ruled in favor of Balance
Bar's use of the term meal replacement. Maxwell, however,
seethed when Balance Bar continued to run the ad, which the NAD
had no authority to stop. That Balance had grown from $1 million
in sales in 1995 to $40 million in 1997 may also have affected
Maxwell's disposition. Maxwell fired his next shot with equal
force. "On the same day last April that we filed for public
offering," says Jim Wolfe, CEO of Balance Bar, "PowerBar filed a
lawsuit against us. Was that just a coincidence?" Wolfe
countered with his own lawsuit against PowerBar.

Last February PowerBar made a modest concession to "taste" with
the introduction of its Harvest Bar. Higher in fat and more
flavorful than its forebear, Harvest is promoted as being for
"life's daily marathons." It also resembles and tastes like the
Clif Bar. "You know what Brian Maxwell calls the Harvest Bar?"
says Erickson, 41. "He calls it the Clifkiller." (Maxwell denies
this.) "Why did the Maxwells come out with a bar so similar to
ours if all they've done is criticize us?"

"I'm not about to apologize for being competitive," responds
Maxwell.

The latest dustup in this industry also involved Clif Bar, whose
offices are located one mile east of PowerBar's. Last summer
PowerBar ran a print ad that featured a climber scaling an
inverted cliff, a scene that any energy bar connoisseur will
know is also the scene on the Clif Bar wrapper. Clif Bar
immediately sued PowerBar, claiming trademark infringement.

Then Galen Rowell, the photographer who shot the PowerBar ad,
stepped in. "I had taken the exact same photograph of a
world-renowned climber [Ron Kauk] for a Sierra Club calendar in
1990," says Rowell. "That photo predates Clif Bar. If Gary
Erickson accuses the 1998 PowerBar ad of copying their
trademark, then their trademark is a rip-off of my original
photo."

Rowell is now suing Clif Bar. Adding insult to injury for
Erickson is the fact that his company sponsors Kauk. Clif Bar
declined to comment.

All this may turn out to be small potatoes if, as Maxwell
suspects, the major powers of the snack-food industry, such as
M&M Mars and Quaker Oats, decide to enter the bar market.

"Some of our competitors portray us as the big bad guys," says
Maxwell. "The reality is that we're a mouse among elephants. Our
competitors are ants and we're a mouse."

A mouse that roars.

COLOR PHOTO: COURTESY OF POWERBAR INC. "I'm not about to apologize for being competitive," says Maxwell (with wife, Jennifer).[Brian Maxwell and Jennifer Maxwell in pile of Power Bars]

HOLE YARDS PAR R1 R2 R3 R4
OUT
HOLE YARDS PAR R1 R2 R3 R4
IN
Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)