This article is based on data of retail audit regularly executed by the company “Business Analytics” in 60 large Russian cities.
Recently domestic market of chewing gum has been rather dynamic. Interesting peculiarity of this market is simultaneous targeting on several consumer groups. Gum market is traditionally divided into Adult Gum and Bubble Gum (for kids). Besides, Medical Gum is often distinguished – for instance, gum with healing or whitening effect.
Russian gum market is probably the most consolidated consumer market. In fact it is divided between two operators – British company “Dirol Cadbury LLC” and American corporation “Wm. Wrigley Jr. Company”. These two displaced smaller manufacturers thank to efficient work of distribution chains and investment support of theirs own brands.
“Dirol Cadbury” was established in 2003 after acquisition of Danish company “Dandy A/S” by British concern “Cadbury Schweppes”. By that moment “Cadbury Schweppes” already acquired such gum manufacturers as Turkish “Kent Gida Maddeleri Sanayii ve Ticaret A.S.” and second large USA company “Adams”. “Wrigley” in its turn bought Spanish “Joyco Group” (owner of TM “Boomer” and “Pim Pom”). Both international operators own production facilities in Russia: “Wrigley” – a plant in Saint Petersburg and “Dirol Cadbury” – a factory in Velikiy Novgorod started in 1999, former property of “Dandy”.
During the past two years gum market undergone serious changes which affected both adult and bubble gums segments.
Analysis revealed that growth rates in both segments slowed down last year. In 2005 as compared to 2004 share of adult gum in market volume somewhat reduced in favor of bubble gum. Bubble gum is less concentrated and includes besides the leading “Dirol” and “Wrigley” several smaller operators with significant shares. For example, Turkish “Integrum” in the first half of 2006 took 5% of the market volume.
Average gum prices were constantly growing. For instance, in the first half of this year as compared to the same period of the previous year price growth in adult gum constituted a little more than 6%, and in bubble gum – about 11%.
As it has been already mentioned in adult gum segment two key operators reign – “Dirol Cadbury” and “Wrigley” – they controlled about 99% of market volume in the middle of this year. The inarguable leader in this rival couple is “Wrigley” retail distribution of which constitutes 87%. Noteworthy, during the review period growth of “Wrigley” share in volume terms continued: by the end of the first half of 2006 it constituted 72.7%. “Dirol Cadbury” failed to improve its positions in the segment loosing the battle: market share in volume terms went from 33.2% in June of 2004 down to 27.2% in June of 2006, and retail distribution reduced – from 71.4 to 60.6%.
This situation required immediate action – and it came with the scaled re-branding of gum brand “Dirol” made in May 2005. First of all this re-branding implied the new idea of more exquisite and lasting taste of the gum. Production technology was significantly improved using experience of American “Adams”. Package design also changed to become brighter and more eye-catching.
Currently two main brands of the company are “Dirol” positioned as dental gum and “Stimorol” – image-making brand. TM “Aeroeffect” also belonging to this operator was constantly loosing popularity throughout the recent years and finally quit the market in 2006 in all the regions covered by this research.
At the same time new promo campaign announced a number of novelties in product lines of the key brands. For example, appeared such new product groups as “Dirol Mint”, “Dirol Fruits” and “Dirol White” and they practically displaced the old brands. “Stimorol” was supplemented with “Stimîrol Ice” with different flavors. Launch of all varieties of this brand had strong promo media support. All these efforts of course helped to slow down collapsing market share of the company.
“Wrigley” responded to rival’s changed product line with focus on medical bubble gum. In brand portfolio of the company this category is presented with the brand “Orbit for Children” and in the beginning of 2006 this product line was enlarged with new flavors: “Berry”, “Cherry”, “Classical”, “Lemonade” and “Tropical”. The most popular among them became “Orbit for Children Classical” and it looks like this flavor keeps high growth rates for a long time.
The largest market share was registered for such brand as “Orbit Juicy Watermelon” – it was launched in summer 2005 and conquered consumers rather quickly. We should also mention continuous market leaders – “Orbit Sweet Mint”, “Orbit White”, “Orbit White Fresh Mint” and “Orbit Winterfresh” – these flavors are classical and proved their right for existence heading popularity ratings year after year.
Positions of three traditional flavors of the second important brand of “Wrigley’s” – “Doublemint”, “Juicy Fruit” and “Spearmint” – are slowly getting worse with almost equal market shares.
Not long ago adult gum segment was entered by a new-comer – Dutch-Italian concern “Perfetti Van Melle”. The company was established in 2001 as a merge of “Van Melle” (Netherlands) and “Perfetti” (Italy) and became one of the world largest confectionery concerns. Now it entered Russian market with the brand “Methos” presented in several flavor varieties: “Ice Cherry”, “Ice Mint”, “Ice Orange” and “Ice Snow Mint”. Company share of the segment does not exceed 1% and retail distribution has not yet reached 15%. Still we can say that this concern has good chances to win a steady position in adult gum. Until recent the company worked on Russian market only in candy segment and was presented by such brands as “Alpenliebe”, “Fruit-tella”, “Meller”, “Mentos” and others. Products of “Perfetti Van Melle” can be met in 60% of retail outlets and of course to promote new brands in gum segment the company will use the existing distribution chains. At the same time segment’s new-comer will soon face a number of serious problems including start of new production and promotion of product in unfriendly market environment – practically on monopolized market.
Changes of main players’ positions in bubble gum have always been significant and recent years were no exclusion.
First, researches show that kids consume almost by two times more gum than adults do. Second, until 2004 this market had only four operators: “Wrigley” (ÒÌ “Hubba Bubba”), “Joyco” (ÒÌ “Boomer”), and also Russian confectionary “Menshevik” (ÒÌ “Life Is Life” and “Zhuy-ka (Chew It)”). Perhaps this stability lead “Dirol Cadbury” to decision about launch of new brand for preschool kids. In spring 2004 bubble gum “Malabar” appeared.
Infant consumers give to manufacturers a lot of benefits like impulse purchase decisions and attentive and critical attitude to promotion and package design. “Dirol Cadbury” considered all this and focused on emotional perception of the brand – created a joyful and stylish promo hero and also made a tattoo collection of 48 pieces with 4 of them in each package.
“Dirol Cadbury” managed to increase distribution level quickly and thus “Malabar” became a serious rival to the leader of bubble gum – the brand “Hubba Bubba”. Despite manufacturer’s anticipations, “Malabar” didn’t reach the first line: brand intensive growth slowed down in the second half of last year. This year brought slight reduction of “Malabar” share – down to 26% in segment volume by the end of the fist half of the year. To a great extent this was determined by retail distribution level jammed on 40%.
It is also possible that desirable success was not achieved because “Wrigley” promptly responded to appearance of serious rival and improved its positions in this attractive and dynamic segment. For this purpose “Wrigley” acquired second large player of the market – “Joyco”, owner of the brand “Boomer”. Thus, product line of “Boomer” was significantly reduced so that it stopped threatening the key brand “Hubba Bubba”. And finally the company managed to keep its share of the segment.
Among most popular flavors we should first of all mention “Hubba Bubba Banana Cocktail” launched by the end of 2004 – it won infant consumers in a flash. We also should note permanent high demand for such brands as “Hubba Bubba Orange” and “Hubba Bubba Incredible Fruit”.
Besides such strong operators like “Dirol Cadbury” and “Wrigley” smashingly fighting for leadership segment includes smaller players. Still, aggregate share of smaller manufacturers by the end of the first half of this year hardly exceeded 10% and it displayed strong reduction trend after “Dirol” improved its positions and “Wrigley” acquired “Joyco”. So, as no other large competitors are expected, we can assume that opposition “Dirol Cadbury” vs “Wrigley” will go on for a long time. And most interesting part of this fight might take place exactly in bubble gum segment.