Retail value sales in the North American gum market have dropped around 4.7% per year since 2009, while the $24.7bn global gum market has been stagnate for the past five years, Euromonitor International data shows.
Too many SKUs
Speaking to ConfectioneryNews at the International Sweets and Biscuits Fair ISM last month, Tom Joyce, VP of global customer & industry affairs at Hershey, said gum makers had identified the problem.
“There was a proliferation of SKUs in the marketplace. The gum manufacturers have done a good job of identifying their core products and when innovation does come, it is significant innovation and I think that’s what the consumers are looking for.”
In the UK for example, gum leader Wrigley has merged its Orbit brand into the Extra range to help drive sales and will also launch soft chew options to appeal to younger consumers.
“You do have to bring innovation but you can’t just proliferate the number of SKUs and just confuse the consumer,“ said Joyce. “The gum companies have done a good job of getting that right and I think you’re going to see a turnaround in the gum category,” he said.
Hershey has its own small gum business through its Icebreakers brand. The firm grew market share in the US mint & gum category in the fourth quarter of 2014.
Historical US gum decline
[Source: NCA & IRI Worldwide Multi-Outlet plus convenience stores-Total US]
Mondelez reviewing portfolio and consolidating production
Trident owner Mondelēz International is currently reviewing its entire portfolio across all categories and expects to prune some products. The number two global gum maker has closed gum factories in Botswana, Ireland, Lebanon and Morocco in the past few years to consolidate gum production in Poland.
US National Confectioners Association president John H. Downs echoed Joyce’s sentiments: “In discussions that I’ve had with our members in this segment of the business, one of the things they said they needed to do was make sure they had this SKU rationalization, illuminating to consumers what is most important in terms of what their needs and wants are.
“If you look at the last two quarters, gum has been doing much better than it has been over the last couple of years,” he said.
According to the NCA & IRI Worldwide Multi-Outlet plus convenience stores sales data, dollar sales in the latest 12 weeks for gum in the US were up 2.6%.
But Euromonitor still does not expect the category to return to growth in North America in the long-term. It has forecast a negative compound annual growth rate (CAGR) up to 2019 of 2.1%, but does expect the global market to record a positive CAGR of 1.5%.