Typically recession-proof gum is stuck in a slump.
In junior high, I never left the house without gel in my hair, a bouquet of my grandfather’s cologne and a pack of gum. Bad breath, we thought at the time, would be the No. 1 deal breaker when talking to girls, whether on the playground or at a “dance,” where we had the chance to get close to our crushes as long as we “saved room for the Holy Spirit.”
When I didn’t have gum, I knew one of my friends would, and he would spare a piece if I was in a pickle—or, worse yet, if I had been eating pickles. But that all changed in high school. Suddenly, it became “cool” to be nonchalant about your breath. My friends stopped buying gum, though I still did.
Now, as I receive invites to my five-year high school reunion (via Facebook, of course), I still chew gum, but most of my friends don’t. Whether we did or did not chew gum as teenagers has correctly predicted our habits as twentysomethings, which is characteristic of industry research: If consumers chew gum as teenagers, then they will as adults, and vice versa.
That is why recent trends are so troubling. Gum is down across all demographics, but teenagers—gum’s biggest buyers—have shown the largest drop. Gum penetration is down 16% for teenagers, compared to an 8% decline for the general population, according to research from Kraft. Likewise, the NACS State of the Industry Report of 2011 Data shows gum sales in c-stores down nearly 3% in 2011 from 2010.
What’s behind the slump? Three factors, says Heather Oliver, Northfield, Ill.-based Kraft Foods’ Shopper Insight manager for convenience:
- Erosion of the 18- to 24-year-old purchaser. Fewer teens and millennials are buying gum, even though their spending power is the same as it was five years ago.
- Declining relevance: Gum’s role is shrinking. Perhaps it’s because of social media and new technologies that having a stick in our mouth is less important. Face-to-face is down, supplanted by texting and tweeting. So having a minty mouth does not carry the same import as it did just five years ago. Social media, from Facebook to YouTube, is also undermining traditional advertising. Even as Kraft continues to invest heavily in marketing, consumers report seeing fewer ads. Gum has always been an impulse purchase, but now our impulses are pulling us elsewhere.
- Economic strains and perceived value erosion. From 2006 to 2010, the average price per unit went up 40%, from $1.69 to $1.99. As a result, fewer consumers think gum is a good value for the money, and they’re cutting back to help balance their budget.
“Consumer confidence has decreased,” says Oliver. According to the company’s research, the number of consumers who see gum as a “good value for the money” is down 7%. Consumers are willing to live without gum, particular amid the current economic strain.
But the economy isn’t to blame, at least not fully. Typically, gum sales maintain or grow during a recession because consumers look for an inexpensive treat. Since 2009, however, gum sales have been steadily decreasing, making this the first time that a recession has been tied to a drop in the gum market.
Furthermore, the group that has dropped off the most—teenagers—has been affected the least by the recession. While teens’ parents have cut back, “their allowances haven’t changed,” Oliver says.
Like Kraft, Wrigley also blames gum’s decline on three main factors, according to Jennifer Jackson-Luth, senior manager of corporate affairs for The Wm. Wrigley Jr. Co., Chicago.
First of all, gum now competes with a greater variety of impulse purchases, sharing not only a spot in one’s budget but also a space at the front. Second, smartphones are stealing pocket space from packs of gum, even though many girls carry purses, as do a lot of guys (even if they call them messenger bags, European carryalls or “murses”). And third, teens are buying less gum. Compared to 10 years ago, teenagers have more choices to spend their money on.
“In 2012, the overall gum chewing category has continued to decline,” Jackson- Luth says. “Fewer consumers are entering the category, and those who are chewing gum are chewing less.”
Breaking the Downward Trend
Kraft and Wrigley—the two dominant players, whose combined brands include Trident, Stride, Orbit and Doublemint— are taking different approaches to winning back teenagers specifically and the population at large.
Kraft is pursuing a strategy that includes various price points as well as innovation in the category. To restore value, last fall Kraft began rolling out five-stick packs of Trident and Stride gum in the United States for 50 cents a pack.
As for store layout, Kraft has seen that value-priced gum helps fuel category sales the most when it is shelved in a separate location from higher-priced gums to avoid trading down the consumer. According to the second-quarter 2012 NPD C-store Candy Summary, 38.9% of gum is purchased on impulse, so reminding consumers to purchase gum via secondary merchandising vehicles is key to buyer conversion, Oliver says.
And in August, Kraft launched its newest brand, ID. Roughly five years in the making, ID is a new gum created, designed and profiled by teens. (Teenagers developed all of the packaging, flavors and the artwork.) ID, which has catered to teens from its inception, is designed to help Kraft attract and retain its most important consumer.
“Our hope is that ID makes gum relevant to the teen consumer once again and becomes a part of the social lifestyle so important to this consumer group,” Oliver says. “We are even incorporating an app to allow consumers to collect all of the different artwork incorporated into the product packaging.”
Wrigley is focusing on vertical expansion, tinkering with price and packaging instead of introducing new brands or flavors. “We know that consumers love our gum brands, so if we innovate against the right packaging and price, there is huge opportunity,” Jackson-Luth says. Much like Coca-Cola, which last year launched a smaller-size beverage to appeal to cost-conscious consumers, Wrigley has introduced two new sizes with value in mind, albeit in different ways.
Lowering its entry-level price point, Wrigley now offers six-tab “micro packs” of Orbit and 5 gum, which are a quarter of the size of Wrigley’s classic Slim Pack and fit easily in a crowded purse or a pocket. The packs cost less than $1 and should attract both teens, who haven’t been entering the market because prices have been too high, and anyone with a strained wallet. “Initial reaction to the packs has been positive,” Jackson-Luth says, “and we’re optimistic that these packs are providing greater choice and convenience from two of our most-loved brands.”
Wrigley has also introduced a larger pack to appeal to consumers conscious of price per piece. “While smaller packs fill a void, our research shows that people want more gum at a better value,” Jackson-Luth says. Thus Wrigley this spring launched smaller bottles of 5 and Orbit gum. These bottles, which have 29 to 32 pieces and cost $2.69, are designed for a car, desk or backpack. “Our goal with these packs is to give chewers more gum so they don’t run out as frequently.”
Too Many Choices
A great debate among retailers—and even suppliers—is whether there is too much variety in a category driven by impulse and quick buys.
One study shows that c-store consumers appreciate variety. According to the second-quarter 2012 NPD C-store Candy Summary, 43.7% of candy/gum buyers surveyed chose a particular c-store location based on the candy/gum assortment offered. “This proves to us the importance of variety in the category,” Oliver says.
Others aren’t so sure. “There have been too many flavor extensions that cannibalize each other and do not grow the category,” says Stephanie Poitry, candy category manager for Kum & Go, West Des Moines, Iowa. “Kraft’s ID is not much different.” And new brands come in at a higher price, which could add to gum’s decline, she says.
Who is right won’t be decided for a while. In the meantime, however, category managers such as Poitry are working with gum companies including Kraft and Wrigley, believing that a change in plan-o-grams, not flavors, is what’s needed.
“Our July 7 plan-o-gram has some Wrigley 5 items at a smaller pack preprice similar to the 35-cent Big Red and Doublemint,” Poitry says. “These retail at 69 cents. Hopefully, they will draw more consumer trial and then shift them to the larger sizes.”
Out of the Blue?
The strangest part of gum’s slump is that no one predicted it. Mintel released a report in 2010 forecasting that gum, mints and breath fresheners would “continue to enjoy modest growth through 2014.” Amid the start of the Great Recession, gum sales went up 4% in 2009, when the U.S. gross domestic product (GDP) growth rate was at its worst; gum sales were expected to improve while the economy did.
But even though GDP growth stays positive, gum sales have decreased since 2009, and the slide continues to this day. According to Chicago-based SymphonyIRI Group, sugarless gum, which accounts for more than 80% of all gum sales, had fallen 2.4%, as of July 8.
And indeed, there may be a health story for gum, in particular as a way to increase enthusiasm. In the Chicago Tribune in May, Harry Balzer, an analyst with The NPD Group, said that gum makers ought to “tout the health benefits of gum to encourage more moms and young people.”
According to Phil Lempert, the food editor for NBC’s “Today,” a health-based marketing campaign will appeal to all age demographics, including boomers. “Chewing gum grew with boomers,” Lempert says. “As boomers age, they have moved out of the category. To get them back, the sector will have to add two things: more flavor (as we age, our taste buds diminish) and health benefits link using gum as a delivery system for vitamins, antioxidants, etc.”
Though health-based marketing will appeal to all ages, the desired health benefits depend on the specific age groups. “Boomers want to stay young and strong forever (bone health, eye health, cholesterol, etc.), teens want to look great (vitamin E) and millennials want to know where the ingredients come from, how natural, the transparency of the company’s operation, sustainability efforts ... and keeping their breath fresh,” Lempert says.
What makes a health-based campaign successful? “The facts,” Lempert says. “Making sure the health claims are real, proven and bulletproof. Ensuring there is actually enough of whatever is in the product to deliver on those claims. Substance.”
Wrigley has taken heed. The company recently hired Porter Novelli to promote Wrigley’s Extra in the United Kingdom with an oral-health campaign titled “Eat Drink Chew.” It highlights the health benefits of chewing gum after eating and “is aimed at all age groups, from teenagers to retired people,” PRweek reports.
Stateside, the company is working with dental professionals and the American Dental Association to educate consumers on gum’s health benefits. “According to some of our research, chewing sugar-free gum for 20 minutes after eating or drinking can help protect your teeth,” Jackson-Luth says. “The ‘Eat Drink Chew’ campaign is an extension of these findings, reminding consumers and dental professionals to practice good oral health, especially when on the go. The ‘Eat Drink Chew’ campaign is delivered by TV, print and online media channels under the Orbit brand.”
Kraft, meanwhile, is sticking to lifestyle campaigns and aiming for a more cohesive message with its online, TV, magazine and radio advertising. Through marketing, Kraft hopes to renew energy and thus restore relevance and consumer engagement, according to Oliver.
Gum has no short shortage of health advantages, however small. According to a slew of studies, chewing gum can decrease your risk of cavities, make you feel more awake, help you relax, improve memory and enhance cognition. Looking for a brain boost of my own, I’m chewing gum as I write this. Socrates probably chewed gum for the same reason.
Gum marketed via added ingredients, such as ginseng or vitamin C, has not had much success. Appealing to the rational, health-concerned part of the consumers’ brain never works as well as it should. If it did, anti-tobacco campaigns would have a better chance at reducing the odor on my friends’ clothing.
But laughter is the best medicine, at least for improving the health of commercials. A good ad campaign, one powered by creativity, not celebrity endorsement, may make gum more top of mind.
Just recently, on my walk back from lunch, I stopped in at a Duane Reade in Manhattan, looking to replenish my stock of my favorite brand. The man in front of me in the gum aisle, seemingly overwhelmed by choice, stood there for three or four minutes before choosing a three-pack of Mentos. In fact, he remained in the aisle in between my grabbing a pack of gum and my return from the downstairs pharmacy.