Gum Gets a Fresh Start

Sometimes you can have too much of a good thing. After years of  tremendous growth, gum sales have struggled as new products and line extensions crowd the category.

By Marilyn Odesser-Torpey, Associate Editor.

Innovation is a great thing, especially in the fickle gum category. But Danna Huskey, category manager for Texarkana, Texas-based E-Z Mart stores pointed out that too many options can overwhelm and confuse both retailers and customers.

“Customers don’t know from day to day where their favorite new gum has gone when it was on the shelf just yesterday,” Huskey said. “They don’t know if we moved the product to another location within the store or if the manufacturer simply stopped making it.”

Last year, unit sales in the gum segment at E-Z Mart stores plummeted to levels that Huskey described as “painful.” This year, however, she is seeing some unit movement beginning to build again.  

National sales and unit figures from SymphonyIRI covering the 52 weeks ended March 18, 2012, revealed that many other retailers shared Huskey’s pain when it came to the over $1.26-billion gum segment (more that $1 billion of those sales came from sugarless varieties). Last year, dollar sales in the category dropped almost 3%, unit sales more than 3.8%.

The close to $77 million plain mint segment fared somewhat better. Dollar sales rose by almost 13%, unit sales almost 9%, according to the report.

Boost Impulse Sales
Despite the gloomy gum statistics, Corpus Christi, Texas-based Stripes convenience stores has actually managed to gain solid growth in both that and the mint segment, said Chris Switzer, Stripes’ category manager. He attributed much of Stripes’ success to tweaked product placement, for example, displaying more items at eye level. Suggestive selling has also given the bottom line a boost.

Stripes is rolling out new fixtures near the checkout where gum and mints will have some new premier merchandising space. Marcia Mogelonsky, an analyst for global market research company, Mintel, agreed that such reminder strategies are key to building sales of these ultimate impulse items.

“People like to have gum and mints on hand, but they usually don’t go looking to find them,” Mogelonsky explained.
For savvy retailers, Mogelonsky said, there is ample opportunity to increase sales with consumers across age and gender demographics. According to Mintel statistics, 76% of people chew gum, slightly more women than men. Sixty-eight percent of people use mints, again skewing towards women. Adults tend to purchase mints to take to work, where gum chewing is usually taboo.

Of households with children, 83% purchase gum. The product is particularly popular among teens. Different flavors may come and go, but, in a Mintel survey, consumers were clear on what attributes they want in these products. Fifty-seven percent of the respondents said they would like their gum and mints to have longer-lasting flavor, Mogelonsky said. Forty-seven percent want products that can help them freshen their breath.

Although consumers will often attach themselves to brands that deliver on these promises, they are also always looking for the next new thing, she said. For example, Wrigley has tapped into the growing American health and wellness trend with its line of sugarless Extra Delight Dessert Gums. Available in varieties such as apple pie, strawberry shortcake and key lime pie, the product is positioned as a pleasant way to curb cravings and save calories.

To reach out to the younger generation, the company created additional promotional momentum for the gum brand by inviting Facebook and mobile phone users to select its newest “Fan Flavorite.” The winner was root beer float.  
Kraft is also adept at giving gum chewers what they want. The company’s Stride brand’s tagline is “The Ridiculously Long Lasting Gum.” Dentyne Ice promises “Safe Breath.”

Flavor Still Sells
But functional isn’t necessarily the way to consumers’ hearts. Take Trident’s newest line of Vitality gums, which were designed to invigorate, rejuvenate and “awaken” with Vitamin C, green tea or ginseng. Or Wrigley’s 5 Gum, formulated to energize or relax.   

“Everyone says they want to be healthier,” Huskey said. “But I see the consumer as liking a product’s flavor profile and if the vitamin or energy comes along with it, that’s an added bonus for them.”

Packaging is becoming an increasingly important component for consumer appeal. The cool factor is what has made Wrigley’s 5 Gum hugely successful and highly profitable, said Lee Linthicum, head of global research for strategic business intelligence provider, Euromonitor International, at the National Confectioners Association’s (NCA) 2012 State of the Industry Conference in February.

He attributed the product’s popularity to the sleek, black packaging which was designed to look good next to an iPhone. Huskey agreed that packaging can be a compelling fashion statement for some consumers, particularly those who regularly use social media such as Facebook and Twitter.

As with most retail categories today, consumers are looking for value pricing when it comes to gum and mints, Linthicum said. Manufacturers, such as Wrigley and Kraft, are shrinking gum pack sizes to protect margins and add value. They also perceive it as a viable way to raise retail prices without alienating customers.

He offered examples from 2011, including Stride, which sold its 14-piece pack for $1.29, nine cents per piece, and now offers a five-pack for 50 cents, which amounts to 10 cents per piece. Trident’s 18-piece pack sold for $1.29, seven cents per piece, while the five-pack sold for 50 cents, 10 cents a per piece.

At Stripes, deciding what to add or subtract from the product mix begins with looking at trend and sales data of new and existing products and regularly meeting with vendors to learn about experiences in other parts of the country. But, Switzer said, the “biggest tell” is the feedback solicited from customers when a new product is rolled out.

Although contractual requirements come into play, internal sales data is the number one deciding factor for E-Z Mart Stores. “And thank goodness for great brokers, company reps and trade shows,” Huskey said. “With so many options out there now, they help us keep up with the newest products that are likely to work in our stores.”

Corrie Burdick, category manager for North Grosvenordale, Conn.-based Xtra Mart convenience stores, suggested that manufacturers and suppliers can help cut through the clutter by customizing programs for the retailer.

“Generic programs do not work for every retailer,” Burdick said. “It is important for manufacturers and suppliers to customize their programs to help retailers reach their specific goals.” 

 

Location Key for Confections

The retail sector may still be struggling overall, but as some segments continue to sink, others are on the rise. American consumers are still buying billions of dollars of candy each year, and this isn’t changing as they resist making major purchases. Even during a recession, American consumers still have a sweet tooth, which explains why gum and candy sales continue to grow as customers buy old favorites and new products alike.

“Our candy sales haven’t gone down, but gum sales are really going up,” said Eric Huppert, president of Team Oil in Spring Valley, Wis. “It seems like every kid who comes by on the way to school in the mornings picks up a pack of gum. They must not get into as much trouble for chewing gum as they do for eating a candy bar.”

Just as in real estate, the top three sales drivers for gum and mints are location, location and location. Huppert said that placement is paramount to category sales success. “Whatever we put on the counter moves,” Huppert said. “If there was a way to make the whole store a counter, that would be great.”

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