Good things come in small packages

The World it seems, it becoming a little less keen to chew gum (and blow bubbles with it): this confectionery sub-sector that grew by a healthy 7.7 per cent in 2011 saw growth slowing to 1.7 per cent in 2012. It is the quietest sales period since the chewing gum segment (that includes bubble gums) posted a fall of 2.5 per cent from $23.2 billion (€17.1bn) to $22.4bn (€16.6bn) during the recession from 2008 to 2009, according to figures from market researcher Euromonitor International. Gum companies are responding to the calm – offering innovative smaller portions or value added packs, analysts say.

The $26.4bn (€19.5bn) world gum industry (as at 2012) is attempting to “capture more price oriented consumers,” Euromonitor International’s senior food analyst Ildiko Szalai tells Confectionery Production.

“Companies such as Wrigley will continue to push small but seemingly more affordable packs of gum,” she says, adding Kraft is attempting to use flashy “stylised packaging” as with its new iD gum to encourage people to chew gum again. But both these methods of attracting customers are “likely to increase the average price of sugar free gum and therefore the prices of gum in general,” she warns.

There are particular problems in Western Europe (including Britain), where gum sales fell 4.2 per cent, down from $5.7bn (€4.2bn) to $5.4bn (€4bn) in retail value between 2011 and 2012, according to Euromonitor.

The British gum market alone stood at $464 million (€342.6m) in 2012 slightly down from $468m (€345.6m) the previous year.

And North America (the US and Canada) was the worst hit, posting sales falls in 2011 and 2012 of 1.8 per cent and 1.9 per cent respectively. Retail gum sales in North America that stood at $4.8bn (€3.5bn) in 2010 slipped to $4.7bn (€3.5bn) in 2011, and $4.6bn (€3.4bn) last year, again, according to Euromonitor.

There are growth spots though. Latin American sales grew 1.7 per cent last year from $5.2bn (€3.8bn) to $5.3bn (€3.9bn). And the Asia Pacific region (excluding the Americas) has seen the strongest gum sales, with growth of 6.3 per cent in 2012 and 10.5 per cent in 2011, with retail sales increasing from $6.3bn (€4.7bn) to $6.7bn (€4.9bn) in 2012.

The US based National Confectioners Association (NCA) attributed “market saturation” for the downturn in the American gum market – a key assessment, given the US is probably the most mature market in the world and could be the shape of things to come for other regions.

Szalai attributed the fall in US and EU sales to a “reduced interest of young consumers,” adding, “Traditionally, the gum category has relied heavily on younger consumers to make up a large part of its consumer base.” But in recent years “younger consumers have had less disposable income and increased apathy towards the activity of chewing gum in general.”

Therefore gum sales that have been “somewhat flat in the past few years, have finally started to decline.”
This would increase competition between gum manufacturers, she says, and “mean the introduction of more innovative flavours and packaging.”

New packaging introductions

Some of this has been targeted at younger adults. Wrigley’s 2007 launch of its Wrigley’s 5 gum 12-15 stick stack, “really shook up the market” through its slim sleek packaging which “fitted with the ‘iphone’ generation,” says Benjamin Punchard, senior global packaging analyst at Mintel.

Also, January 2013, Wrigley “launched the UK’s first ever small bottle format” for gum packaging which has 46 pellets inside, Wrigley senior brand manager Adrian Toomey says.

The packaging is all about getting consumers to “eat, drink, chew” more often, says Toomey. The 46 pellet bottle format was launched in three flavours – Airwaves Menthol & Eucalyptus, Extra Ice Peppermint and new Extra White, formally Extra Ice White.

Larger jar packs that can be stored in the home or car have also been pushed – for instance Wrigley’s 5 have a larger pack with 50 units in Canada.

But this strategy does have its weaknesses, “This rise in margins did make the packs very expensive,” says Punchard. For example in the UK a 12 pack of Wrigley’s 5 costs around £1.10 (€1.3) but a 12 pack of Trident costs about £0.70 (€0.80). And while gum-for-gum it offers good value, Wrigley’s bottle costs £1.99 (€2.3).

So manufacturers are also looking at small packs.

Smaller packs

These smaller sized packages will be a “solution for those consumers who are finding themselves cash strapped and increasingly holding to a restricted budget when they shop,” says Punchard.

He adds,  “Going micro-mini is a response to this, giving access to consumers to the same styling and wide variety of flavour variants but at a much more affordable price point.”

This helps attract impulse buyers who make up a lot of gum consumers. In the past, gum has “often been displayed in that key impulse position, just next to the tills. But the higher price that larger packs of gum were achieving started to push gum out of this impulse bracket, the new smaller sizes pulls this back,” says Punchard.

Global players

Wrigley’s parent Mars is the global market leader in global gum industry, accounting for 33.7 per cent of the world gum industry in 2012, according to Euromonitor International.

Meanwhile, Mondelez International’s Kraft is the global gum market’s second largest player, accounting for 28.5 per cent of world sales in 2012. And it has been cementing its position with mini-servings. In late 2011 Kraft launched smaller five piece packs of Trident and Stride in the US for $0.50 (€0.40).

Kraft’s has also Stride’s launched iD gum in the US in 2012. It is distinctive in flavour and packaging. It has peppermint, berry, melon and spearmint flavours and comes in a unique folding pack featuring a new magnetic closure with a semi-transparent cellophane wrapper. When unfolded it reveals original artwork sourced from young emerging artists from around the world with 18 designs in total.

“Many younger consumers are demanding more personalisation of their products, and iD gum seeks to offer this to them via distinct packaging designs,” says Szalai. “But whether it can reverse the trend of apathy towards gum chewing among younger consumers remains to be seen,” she says.

Italy’s Perfetti Van Melle group, with the third largest global market share with 7.8 per cent of sales will certainly hope so, as will Japan’s Lotte Group – the fourth largest with a share of 5.7 per cent.

Lotte is planning to launch smaller packs of bubble gum across Asia, “Small pack gum is under consideration,” says Tomoharu Iida, a researcher at Lotte’s chewing gum R&D section in Japan. As for its timeline he says “we will keep them in secret until the launch.” Lotte will be building on its experience of selling smaller chewing gum packs in Southeast Asia – this new bubble gum release will target younger consumers and low income groups.
In Japan functional gums dominate the market, says Iida, adding the company is hoping Southeast Asia will also be fertile ground for its new bubble gum line.

 Gum flavours

Worldwide, gum flavours have “largely started to become more bold and unique to better keep up with the changing flavour preferences of younger consumers,” according to Szalai.

“Traditionally, mint flavoured gums have been the dominant force.” But recently more exotic flavours, such as strawberry cheesecake and mint choc chip, and exotic fruits, such as pomegranate, have grown in popularity among gum consumers, says Szalai.

A US certified flavour chemist Susie Bautista, of IP Callison & Sons, the largest global supplier of mint oil, noted that different gum flavours dominate various markets.
She says, in the US most popular gum flavours are peppermint, mint (including menthol, mentha arvensis, peppermint blend), wintergreen, spearmint, bubblegum, citrus, berry and tropical fruit while Europeans prefer mint, spearmint, citrus, berry, peppermint, green tea and peach flavours.

In China, mint blend (menthe arvensis), spearmint, tea and floral blends, and citrus are most popular while in Japan flavours such as menthol, mint blends, peppermint, spearmint, tea, and citrus flavours dominate, says Bautista.

By Poorna Rodrigo

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