The CEO of Perfetti Van Melle USA talks to ConfectioneryNews about innovation, turning around the ailing gum category and the firm’s US strategy.
Dutch-Italian confectioner Perfetti Van Melle (PVM) has been in the US for the past 30 years, but believes a recent innovation and “transformation” drive for its two US brands, Airheads and Mentos, will take it to new heights.
Airheads for adults
Speaking from the company’s US headquarters in Northern Kentucky, president & CEO at Perfetti Van Melle USA Mehmet Yuksek said: “We are proliferating our product range under these two brands.”
“Airheads is still a local brand. But it’s at the beginning of a very exciting transformation.”
The company recently launched Airheads in a new format to bring it to a wider range of consumers.
“We never before had a proposition for adults. Now we have Airheads Bites, we are catering to a much larger audience…It [the bite-format] is the most cherished and bestselling adult format over the last few years.”
The company has also launched Airheads Xtreme in bites and pouches and has developed a Mentos breath freshening mint that Yuksek claimed didn’t compromise on taste.
US factory and warehouse expansion
The CEO called the US a leading priority in PVM’s global growth plans.
The US subsidiary recently moved to a larger distribution center in Hebron, Kentucky, to keep pace with the growing needs of the business.
The company manufactures Airheads in the US at its Hebron plant, but imports Mentos gum and mints mainly from the Netherlands.
PVM and gum
PVM is the third largest global gum player with a 7.8% share. Its share is slightly smaller in the US at around 4%, but it is still third, ahead of Hershey.
“It’s certainly a major task if you look at the gap between us and the second player,” said Yusek. “In a very challenged and troubled market we have had stellar performance.”
Retail value sales for gum in North America have remained flat over the past five years at around $4.6bn per annum as other confectionery categories have grown, according to data from market analysts Euromonitor International.
“The economy has impacted, number one, and the lack of innovation is another one. Gum consumers have been losing their habit,” said Yusek.
He added that cross-category competition from the likes of premium better-for-you chocolate had also put strains on the gum category.
“We must remember that between 1998 and 2008, gum went through a tremendous transformation of double digit growth fuelled by innovation.”
He said that R&D on new packaging formats and formulations had peaked over this period, which had helped the category grow hurriedly, distorting the figures and taking the price out of reach of many consumers.
Asked what could be done to turn around the category, he said: “It all boils down to having a very compelling marketing mix.”
PVM sells only pellet gum in the US in two bottle packaging formats.
“If you look at the other packaging formats, the bottled format has come to the aid of the category,” said Yuksek.
Wrigley and Mondelez will set the groundwork for gum’s revival and he has heard positive news about the category in the past few weeks.
“I think it should happen very soon otherwise retailers are going to look at other opportunities, which they currently are.”
US thinks lollipops suck
One of PVM’s major global brands Chupa Chups is not sold in the US anymore and it would not seem as though the company has plans to bring it back anytime soon.
“The attitude towards lollipops here is very different. It is viewed as a much cheaper proposition,” said Yuksek.
He said that with the exception of Tootsie Roll, lollipops had very low brand recognition in the States,
PVM USA’s new launches will keep it occupied for the remainder of the year as it works on distribution throughout the country.