Cadbury CEO Todd Stitzer today (29 July) insisted that the US gum market would bounce back as the economic downturn continues to hit sales.
Earlier today, the UK confectionery group upped its margin forecast after a jump in half-year profits as chocolate sales climbed 10%.
However, despite revealing its gum business enjoyed a “better” second quarter, the company still saw its share of the category fall in the US.
Stitzer (pictured) pointed to the economic slowdown and industry-wide price increases in the US for declining gum sales Stateside.
However, he admitted that a lack of innovation by Cadbury had put its share of the market under pressure. The company’s share of gum sales in the US is “off about 80 basis points”, Stitzer said.
“The economy and the state of the consumer [means] that there have been fewer trips to convenience stores. The gum business in the US is an impulse-oriented business,” Stitzer said. “The major players in the market have also taken an 18% price increase in 15 months and consumers have to get used to those changes.”
Stitzer said Cadbury had not launched “a big platform innovation” in about 18 months but revealed that the company would unveil a new product, Trident Layers, in September.
However, he argued that economic recovery, consumer acceptance of price increases and more innovation would revitalise the US gum market.
“The combination of the economy and the pricing changes and the lack of innovation has brought us to where we are now,” Stitzer said.
Cadbury is also lining up new gum products for the UK market during the second half of 2009, although Stitzer remained coy over the precise details of the new lines.
The Cadbury boss said the trend for more consumers to stay in during the downturn had boosted UK chocolate sales, while the company would look to roll out more Fairtrade products following last week’s move on Dairy Milk.