For almost a century, Wrigley led the UK chewing gum market. But recent months have seen the confectionery giant’s dominance challenged by rival Cadbury with the launch of Trident.
Following the £2.7bn acquisition of US chewing gum company Adams in 2003 and a £10m marketing push instigated in February, Cadbury employed a high-profile and controversial "Mastication For the Nation" TV ad campaign to bring Trident chewing gum to the masses. In spite of an Advertising Standards Authority ban, upholding complaints of racism, the launch was a huge success and Cadbury Trebor Bassett managed to take 15% of the UK’s £240m chewing gum market.
Its arrival was disheartening news for family-controlled Wrigley, which maintained a robust 98% monopoly in the UK gum market before Trident. But news Wrigley is to consolidate its £200m global advertising business (MW last week) is evidence that the company is planning to fight back.
Since first introducing Spearmint to the UK in 1911, Wrigley expanded to swallow up most of the country’s gum market.
In 1927 it opened a factory in London and in 1970 opened its subsidiary, The Wrigley Company, in Plymouth. In 2005, it reported sales of £214m, of which £175m were achieved in the UK, and in the same year announced the acquisition of the Altoid mint brand from Kraft Jacob Suchard (KJS) and confectionery company Life Savers. Estimates suggest that at the time, 13 million Britons were chewing Wrigley’s biggest brand, Extra, every day.
Despite strong sales, things were not as rosy as they seemed. Last year, Wrigley hired William Perez as chief executive to replace Bill Wrigley Jnr, who shouldered the blame for a series of mistakes during his seven-year tenure at the helm. Former head of sportswear giant Nike, Perez was the first person assigned the role outside the Wrigley family and was made responsible for overcoming recent slip-ups.
Wrigley had tried and failed to take over iconic American chocolate brand Hershey in 2002 while the deal with Kraft defeated expectations by leading to a drop in earnings per share. Wrigley Jnr admitted mistakes had been made in trying to integrate the acquisition, but external forces added to its woes. In the UK, the gum market experienced decline as consumers displayed apathy towards gum: in the past four years sales fell nearly 4%.
Yet, according to AC Nielsen, Cadbury’s entrance to market with Trident saw weekly sales across the UK rise 29% – or £1.4m – compared to last year. In fact, seven weeks after Trident’s February launch, total gum sales were up £6.2m compared to last year.
Cadbury may have reinvigorated the market, but Wrigley refuses to capitulate. It launched a fight back with new flavour variants, pack formats and TV advertising. In March, the company boosted its promotion of Orbit Complete, and the Extra brand’s association with the Premier League is being promoted through television advertising in April, May and August.
Wrigley marketing director Toby Baker says the company’s market-leading position stands it in good stead and adds: "The Wrigley Company has always supported new products with exciting and innovative marketing and advertising campaigns. In the past few years we have partnered with the likes of Yahoo! Music through the Extra Venue and our flagship brand Extra is the official chewing gum of the football Premier League.
Ironically, the last time Wrigley employed an "exciting" marketing campaign was the launch of X-cite chewing gum: the ad was banned after receiving the most complaints of that year. In 2003 Ofcom predecessor the Independent Television Commission received 860 objections to the ad that showed a man with bad breath apparently coughing up a dog. Unlike Cadbury’s Trident, the brand did not thrive on the controversy and it was hastily withdrawn after the ad was prohibited.
Advertising and marketing are key: a Wrigley representative last week stated that consolidating its advertising was prompted by its "strong growth and the tremendous opportunities ahead". But not all observers are convinced.
Williams De Broe analyst David Hallam says the company faces an uphill battle: "Wrigley has had a clear run of the market for a long time and hasn’t stimulated much growth recently. Whether it achieves more or less business depends on many variables, but I suspect that it will end up with slightly less in the long-term."
He says Wrigley products are based on functionality such as dental care and teeth whitening, whereas Cadbury’s Trident is focused on taste, texture and pleasure. "Cadbury can support the Trident brand with other products possibly concentrating on functionality as well. This is not a short-term campaign – it lasts for two years – and we can be sure Cadbury will continue to attack the gum market vigorously," he says.
However, Interbrand managing director Graham Hales is more optimistic about Wrigley’s position. He says: "Wrigley has been in the market for many years and is well-established. Cadbury has transformed the gum market into open competition but Wrigley is still the leader. It is up to Cadbury’s Trident to gain dominance."
Wrigley is considering legal action against Cadbury as it says the latter may have broken competition rules with the UK launch of Trident. Whether Wrigley will maintain its dominance of the UK’s gum market remains to be seen, but Cadbury has already taken a large bite of the market.
Facts and figures
- Wrigley launched in 1893 with its Spearmint product
- The UK subsidiary of the US business opened in 1911
- Wrigley delisted its X-cite brand in 2003, despite sales of £10m
- In 2005, Wrigley’s Extra brand was worth £170m globally
- UK Wrigley managing director Gharry Eccles signs all employees’ birthday cards
- Each year, Wrigley’s UK plant, uses mint from the equivalent of 30,550 football pitches
- In 2006, UK consumers spent about £300m on chewing gum
- In 2006, Wrigley reported net earnings of $529.4m (£226m).