Chewing gum market in crisis

The chewing gum market is in crisis. Revenues generated from chewing gum sales have been decreasing steadily since 2008. The slowdown even reached 3% in 2015. As a consequence Mars-Wrigley (Freedent, Skittles, …) and Mondelez (Stimorol, Malabar, Hollywood) have started a market share war.

Why is the chewing gum market in crisis ?

The reason is simple : demand is plunging. What is less obvious to understand is why the demand is plunging so much. If you are a reader of this blog, we anticipated this decrease years ago when we explained that impulsive purchases were threatened by retail innovation like self-scanning and online ordering systems. This prediction is now turning into a hard reality for manufacturers like Mondelez and Mars.

What is the reaction of manufacturers in a shrinking market ?

If you remember Porter’s 5-force framework, the reaction is easy to anticipate. You have a limited number of competitors (2) and a shrinking market. What you may expect is a war. And this is exactly what happens without your even noticing. Wrigley for instance decreased Freedent’s prices by 12%. In other words they cut margins in 3 ! (the average margin in the sector being 18%, which makes chewing gums one of the most profitable products in the FMCG branch)

What is the right marketing strategy in a shrinking market ?

As in many such market situations, the solution is called differentiation. Interestingly this differentiation may be based on authenticity and nostalgia. But it should also entail a part of innovation as the example of Verquier Confiseur reveals. The manufacture was bought back in 2008 by the founder’s grand-grand-son. The sales went from 200,000 bags to 8.3 millions. The success is based on a long history of traditional manufacturing but also on product innovation. The “Têtes Brûlées“, the most acid candy on the market, contributed largely to the success of the brand.

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