There can’t be many companies out there like Wrigley. It commands a 50 per cent share of the global gum market and sells products in more than 140 countries. In the UK, it has almost 100 per cent of the gum market. And in a food industry where product diversification and brand extension are all the rage, it has yet to stray from its core product.
But the 110-year-old company, which is still tightly controlled by the Wrigley family, has had its hegemony threatened in the past decade. Its latest offering – X-Cite, a mint chewing gum hybrid (MW January 31) which is being launched in the UK in April before being rolled out globally – shows that the company is aware that standing still is not an option.
A glance across the Atlantic shows why. In the late Nineties the advent of intensely flavoured “mini-mints” made inroads into Wrigley’s sales across North America. Fighting back, it launched Eclipse – a strong-flavoured mint pellet gum – in the US, followed by Surpass, an antacid gum aimed at taking sales from indigestion products.
Wrigley claims that these innovations have boosted the company’s performance. Leonard Teitelbaum, an analyst at Merrill Lynch in New York, says: “Wrigley has done more, in terms of broadening its product range, in the last eight or nine months than it had in the previous eight or nine years.”
Product innovation appears to have had a positive effect on global sales, which rose 13 per cent to $2.4bn (£1.7bn) last year, while earnings were up ten per cent to $363m (£256m).
In the UK, mint sales fell by 5.4 per cent between 1998 and 2000 while chewing gum sales grew by 10.1 per cent, according to Mintel. Sugar confectionery sales overall fell by 5.7 per cent in the same period.
Mini-mints (including fruit-flavoured variants), which include Ferrero’s Tic Tac, Chupa Chups’ Smint and Cadbury Trebor Bassett’s Mighty Mints, was the best performing sub-sector within mints, although it still suffered a decline – Mintel estimates that sales fell to £32.3m in 2001, from £35m the previous year.
Some industry insiders reckon that Wrigley’s latest line, X-Cite – a crunchy white gum pearl that looks and tastes like a mini-mint (MW last week) – is designed to take sales from the mini-mint sub-sector.
One industry insider says: “X-Cite will steal some sales from the mini-mint sector. Every new product from Wrigley seems to build the gum sector.”
But Wrigley marketing director Gharry Eccles insists the launch, backed by an ad campaign through Abbott Mead Vickers.BBDO, is “in no way an attempt to attack the mini-mint market”. He claims it is a new type of confectionery, aimed at “people who are looking for extreme sensations”.
Nevertheless, Wrigley will be aware that the product could accelerate the downward spiral of the mint sector, putting gum in the ascendancy.
Three-quarters of Wrigley’s chewing gum sales in the UK are brands that did not exist 15 years ago. Extra, now the UK’s top-selling sugar confectionery brand, was launched in 1990 and expanded the chewing gum market by an estimated 5 million people. And Airwaves, launched in 1997, is already the third best-selling sugar confectionery product in the UK.
Extra is positioned as a breath-freshening product, while Airwaves is marketed on nasal clearance and sore throat relief.
But while these product areas are performing well for Wrigley in the UK, the performance of Wrigley’s dental benefit products will be of some concern. Wrigley has just rebranded its Ice White product – a standalone brand – as Orbit Ice White in the UK, bringing it under the wing of one of the company’s main sugar-free brands. The move follows the launch of Colgate-Palmolive’s Colgate Dental Gum in the UK last autumn.
Eccles denies that Ice White’s rebranding was due to competition from Colgate. He says the axing of the standalone Ice White brand was “driven by consumers, rather than competition”.
But Colgate has set a target of seven per cent of the UK gum market and if it is to achieve this, it will no doubt have to take sales from Wrigley.
Wrigley has also been forced onto the offensive in the US dental market. It has struck a deal with Procter & Gamble to put the packaged goods giant’s Crest brand on its Orbit White gum. GlaxoSmithKline already has a similar product – Aquafresh Dental Gum – in the US market. Colgate also plans to launch its dental gum on the other side of the Atlantic.
Although Wrigley has been innovative when it has come to new product launches, at least one industry insider thinks the company needs to be much more creative in its use of media. The media buying account, held by Mediaedge:CIA, is currently under review in the UK. BBJ, OMD, MediaCom and Starcom Motive have been shortlisted to pitch against the incumbent.