Gum
July/August 2003
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Something to Chew On
um is a profitable, high turnover category that takes up very little space. Although chewing gum and bubble gum appeal to two distinct markets - adults and kids - the same principles apply: innovation and location.
Something to chew on
Gum is an expandable, profitable, high turning category that takes up very little space. It has also been one of the fastest growing impulse categories over the last three years, showing strong growth in the convenience channel at over 20%.Even though chewing gum is popular across all age groups, Australian consumption at 97 sticks per capita is below that of the UK (99 sticks per capita) and well below that of Canada (130 sticks) and the United States (152 sticks). This potential favours convenience stores, with gum a popular purchase by people driving or going out for the night. Further, the main chewing gum demographic is 18 to 35 years - the convenience store demographic.
Increasing sales of gum
To meet rising consumer demand and to turn the potential into sales, you need to offer a range of gum products that appeal to the various consumer tastes. The strongest growth has been in the functional products - ones that the consumer sees as meeting a specific purpose such as breath freshness, dental care and healthy lifestyle. With 75% of gum sales in the sugarfree category, it's this key benefit that is largely driving consumer purchase.According to research by Wrigley, 55% of gum consumers identify helping to prevent tooth decay as a key category need.
"Extra is the flagship brand for the category with over 60% share," says Damien Timmins, National Key Account Manager, Wrigley. "The brand promotes healthy teeth with advertising featuring Gold Medalist, Alisa Camplin." Extra White and Extra for Kids have been launched to further meet the dental care needs of consumers. Extra White has performed strongly since its launch in 2001 with its unique formula that helps keep teeth white. Extra for Kids is an innovative gum product, helping kids' teeth stay healthy and is a confectionery treat that parents feel happy giving to their kids.
The graph illustrates that promotional activity has proven a successful way to increase sales and expand the chewing gum category. The Extra 3 for $2 promotion conducted in Shell last year has provided incremental value to the category, ranking the promotion alone as number 4 on the National Gum Convenience ranking report.The fresh breath category is driving innovation this year. When Wrigley relaunched Eclipse gum in June with improved flavour, texture and crunch, it also launched an extension to the Eclipse Brand, Eclipse Flash Strips, offering consumers great tasting, instant fresh breath. The Eclipse Flash Strips and Listerine PocketPaks are expanding the overall fresh breath market segment.
"Gum and flash strips have different consumer usage occasions, making the products complementary, and the innovation of fresh breath strips has added largely incremental value to the fresh breath category," says Damien Timmins
The range of functions is expanding to include menthol-eucalyptus and 'energy-boost' varieties. "The only way this market will continue to grow is with real products that address the various consumer tastes," adds Bruce Edward, Managing Director, Ferndale Confectionery. "New products and innovative packaging, such as the popular click-shut packs, can successfully trade the market up."
Bubblegum too
Innovation is just as important in the bubble gum category."The main driver is novelty - new ideas, novel display, and new pack format, says Sean Issell, General Manager, Mike and Jack. "Products need to be 'cool' in the school yard." And what's in this year? According to Steve Natsis, Business Manager, JNH Confectionery, the latest trends are sour taste and extreme flavours, tattoos, and collectible stickers:
"Gruesome is always popular - if it makes Mum cringe, kids love it in the 7 to 10 year age group. But they need something new all the time - new ideas, competitions, and activities. Kids immediately recognise licensed properties, from toys and games and series on TV. With licenses such as Cat in The Hat, Teenage Mutant Ninja Turtles and Hulk, all soon to be making big impressions, kids have a lot to look forward to."
Also this year, Bubble Tape received a makeover with the launch of Hubba Bubba Bubble Tape by Wrigley, to be supported by an $800,000 promotional campaign running from August to December. The campaign will include TV, print and internet advertising as well as public relations and consumer competitions. In keeping with its strategy of trading the market up, Ferndale launched Bozo, a premium novelty brand offer. The Bozo brand consists of gumballs and sours, both in 40 gram boxes with a unique 'zip-and-slide' opening mechanism.
"In the convenience sector, Bozo products will sell for around $1.50, giving the retailer a margin of approximately 45%," says Neil Fonti, National Sales Manager, Ferndale Confectionery.
Plan for the impulsive
Around 90% of all gum sales are impulse purchases: "For the best results, gum products need to be well-positioned in store for impulse purchase, with new products to create interest. The display must be in a 'hot spot' and the hottest is near the cash register. This strategic placement of merchandising supports the impulse nature of gum products and provides the retailer with the opportunity to up-weight consumer transactions," says Damien Timmins.Bruce Edward agrees: "You need to have something for everybody to generate the impulse sales. The route channel is a bit slow to respond. You need to carry a broader range to take advantage of the demand not being met."
It's the same for bubble gum - location is critical. "Location in a hot spot will make a five-fold difference in sales," says Sean Issell. Suppliers can provide different display options as alternatives to valuable counter space, such as wire stands and gravity feed tubes. Bubble gum displays are ideal for dual location in store - near the cash register and somewhere accessible to children such as a 'kids corner.
"Where retailers, like Caltex and Mobil Quix, have devoted a kids section that displays new and traditional novelty and kids products, sales of both increase, along with total spend," says Steve Natsis, "Kids love being able to find all their favourites in the one spot. This emulates the traditional corner store concept."
It seems some aspects of the traditional corner shop are worth preserving.
