There was a time when parents would fight to keep their kids away from the menace of chewing gum but a revolution has taken place in this part of the confectionery market and suddenly gum is a functional food – and it’s flying off the shelves. David Robertson reports.
Gum was the fastest growing segment of the confectionery market in 2003-04 with sales up 5.2% to US$15.6bn. Since 1998 gum sales have grown 35.4%. This may still be far behind the value of the chocolate market ($64bn) and sugar confectionery ($39bn) but gum’s growth prospects has made it a sector to watch.
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The key to this change in consumption habits has been a shift from teeth-rotting sugar gums to sugarfree products. In the US, sugar gum holds just 37% of the market (down 2.3% on the previous year). Only a few years ago sugar gum dominated the market but gum is no longer a product that parents keep away from their children; it is now promoted by dentists and sold in the same way as health foods and medicines.
This has been a global phenomenon with gum markets all over the world shifting from sugar to non-sugar products, and seeing sales rise as a result. In Thailand, for example, sugar gum’s share of the market has fallen from 70% to 45% in five years with no sign that the trend will reverse.
Gum an oral care product alongside toothpaste, mouthwash
Initially sugarfree gum was promoted as a good way of protecting teeth and removing bad breath by stimulating saliva in the mouth. But new technology means there is now a whole range of fluoride products that go much further – they have become oral care products, like toothpaste or mouthwash.
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By GlobalDataThese new oral care gums can prevent cavities, repair decaying teeth and even whiten teeth. Orbit has just launched its Professional range, which is sold in medicine-style packaging specifically to reinforce the idea that it has health benefits.
A true functional food
And this is just the start of what is happening in the gum market. There are now gums that come with added vitamins and minerals, added sodium and calcium (for children and older women).
Gums are being supercharged with flavours to spice up the taste and researchers are hoping to introduce local, or “ethnic”, flavours that will appeal in specific countries. Gum Runners of New Jersey has created Jolt, a caffeinated gum. Ovalette Brands, also of the USA, has introduced mentholated gums in mint and lemon flavours for smokers and people with allergies and sore throats. The American Gum Company has strawberry, banana, orange, vanilla and cappuccino flavoured gums. The list of new innovations seems endless.
Dora McCabe, a spokeswoman for Cadbury Schweppes, explained how the gum market was changing: “Gum manufacturers are introducing new functional benefits to broaden the appeal of gum and give consumers new and better reasons to chew. These additional benefits are growing the category by increasing penetration and consumption. However, it is important to note that gum is a confection so it has to be delicious, fun and a playful treat. The introduction of additional functional benefits will continue to drive category growth provided that these products also deliver the joy of confection that consumers demand.”
Wrigley, Cadbury leading the charge
There are dozens of small gum makers all over the world doing just this: developing innovative products that will take the market in new directions. But when it comes to analysing the gum market there are really only two companies to consider: Wrigley and Cadbury Schweppes.
The Wm. Wrigley Jr. Company is the world’s largest chewing-gum manufacturer with distribution in 140 countries and a 60% market share in the USA. With brands like Big Red, Extra and Orbit, Wrigley has benefited from the upsurge in consumer interest for gums. In 2002 the company’s net sales rose 14% to $2.7bn.
Wrigley is continuing to develop its booming gum business and announced earlier this year that it planned to double production capacity in Russia. It has also moved into the mint market with the launch of Extra Mint.
Wrigley losing focus?
However, Wrigley faces a major challenge. About 90% of the company’s sales have traditionally come from the gum market and Bill Wrigley, the chairman, president and chief executive officer, has a stated ambition of diversifying the company. Two years ago Wrigley attempted to buy the Hershey confectionery business but the sale was dropped. Despite this set back, Wrigley has kept a careful watch on other opportunities and last week clinched the $1.48bn purchase of Kraft Foods’ confectionery business.
This deal adds the famous Life Savers and Altoid mint brands to the Wrigley portfolio (as well as Crème Savers, Trolli gums and Sugus candies). Wrigley has been looking to move into the mint market for some time and has attempted to do so with organically developed products like Extra Mints. The Life Saver/Altoid acquisition is a significant leap forward in the development of Wrigley’s mint division and should give the company plenty to build on.
However, analysts have told just-food.com that they are concerned this determination to develop new sectors and diversify the company could keep Wrigley’s attention from what it does best: gum. This is particularly concerning given the pressure now coming from the number two in the gum market, Cadbury.
A decade ago, Cadbury had virtually no presence in the gum market but with the acquisition of brands like Hollywood, Trident and Dentyne the British company is now a major threat to Wrigley.
Cadbury has achieved this position through deals including the $4.2bn purchase of Pfizer’s medicated confectionery arm, Adams, in 2002 and the Danish manufacturer Dandy.
Analysts believe that Cadbury represents a serious threat to Wrigley, given the confectionery company’s ability to develop strong “youth” brands. Analysts say that if Cadbury can do in gum what it did with the Dr Pepper soft drink brand, it could overtake Wrigley in many markets. Cadbury is also expected to look for more acquisitions, particularly among the smaller gum makers developing unique product lines.
This competition between Cadbury and Wrigley, which will rage from North America to Asia, should ensure that consumers are presented with a bewildering array of new products in the coming years, which should in turn maintain gum’s position as the fastest growing confectionery market for the foreseeable future.
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