Sticking Around

Gum continues to struggle, but suppliers are taking steps to reverse the trend this year

Thirteen might be considered an unlucky number by many, but some industry insiders are banking on 2013 to be a lucky year for gum, which has struggled to find its way out of negative sales numbers in recent years. With fewer product introductions and less innovation, the gum segment has gotten stale, but developments on the horizon are setting the stage for a turnaround.

One positive sign appeared several months ago when the Convenience Store News 2013 Industry Forecast Study showed that gum is expected to see a 2.3-percent increase in dollar sales per store this year. Unit volume, however, is still expected to remain negative.

"Gum seems to be an unexciting category," said Rocky Lee, owner of Lee's Kar-Go, a two-store convenience chain in Virginia. "For us, sales have declined in gum about 4 percent a year for the past three years, while overall store sales have grown."

Lee isn't alone. Renee Zelenka, category director for The Pantry Inc., operator of the Kangaroo Express chain, noted during the recent CSNews 2013 Industry Forecast Council meeting that the company has seen minimal impact from the latest new product introductions in the gum segment.

How can suppliers and convenience store operators get gum going again?

The first step is understanding where the problem started. "There's no doubt that gum has been challenged in the past year," said Larry Wilson, vice president of customer relations for the National Confectioners Association (NCA). The economy is one factor, he explained. As consumers have struggled in recent years, they've been conditioned to be more disciplined about how and where they spend their dollars, and gum is a product purchased with purely disposable income.

Teenagers, who are traditionally strong gum consumers, are also having money troubles as many jobs that would normally be available to their age range are now being occupied by older workers who would seek employment elsewhere in a better economic climate.

Additionally, convenience stores are likely to take a hit in gum sales when gas prices are high as customers are less likely to come into the store when they've already spent their cash at the pump.

Some of gum's struggles may also be cyclical, Wilson explained. In 2007 to 2008, the gum industry experienced "aggressive innovation in items, in flavors [and] in packaging," resulting in a natural leveling-off period during which consumers react and determine which products have staying power.

STARTING FRESH

That doesn't mean it's enough to wait for a continuation of the cycle. Both retailers and suppliers should be making an effort now to refine what gum they're offering consumers, Wilson said. "In challenging times, driving a balance of effectiveness and efficiency is critically important. Fixing the mix is one of the first places you start — making sure you have the right items that shoppers most value."

To do that, gum suppliers are taking a hard look at what today's consumers want from the segment.

"Our data indicates that current innovations in the gum segment aren't relevant to consumer needs," acknowledged The Hershey Co.'s Jeff Beckman, director of corporate communications. "In fact, consumers see the new offerings as 'noise' in the market."

As a result, consumers who can't find their standard gum are giving up and leaving the segment altogether, according to Beckman. When gum assortments on store shelves grow to the point that the product consumers seek is lost within the set, potential buyers feel overwhelmed.

This may be part of why mints, which have faced similar struggles to gum, are seeing a strong resurgence. In addition to price being a factor, Beckman noted that consumers are increasingly seeking mints to provide the benefit of freshened breath without the need for disposal.

For the rest of this year, Hershey plans to focus on its Ice Breakers gum, which combines mint with a fruit blend, and extend the line to include a watermelon flavor. Regarding segment innovation in general, Beckman advised that " future innovation in the gum category should solve a specific consumer need that is currently not being addressed by other products, or can deliver on a need better than other products."

ENERGETIC OFFERINGS

Other gum suppliers are working to engage consumers by providing more functional occasions, such as crossing gum with the more-successful energy products segment. Wrigley is getting into the act with the debut of Alert Energy Caffeine Gum, which targets energy users aged 25 and older.

Wrigley launched the product in April, but has since temporarily suspended sales and marketing of the caf-feinated gum after the Food and Drug Administration announced it is investigating the potential effects of caffeine-added foods on children and adolescents. Wrigley said it wants to give the agency time to regulate caffeine-added products. One pellet of Alert Energy contains 40 milligrams of caffeine, the equivalent of half a cup of coffee or a whole dark chocolate bar.

The company's focus on function goes beyond this particular product launch. Increasing the amount of functional or occasion-based reasons to chew gum is an "essential restoration element of the category," said Kurt Laufer, vice president of U.S. sales for Chicago-based Wm. Wrigley Jr. Co.

Alert Energy is designed to give consumers a portable product that is free of complicated ingredients, Laufer stated. When it comes to restoring energy, consumers want something that is discreet and controllable. "People need to think about gum beyond breath-freshening flavor," he added.

Of course, a number of steps are needed to prompt the gum category to change course, according to Wrigley. Along with identifying new occasions and functions, retailers need to experiment in order to offer the right mix of products at the right prices. But while some amount of variety is important, it shouldn't be too complicated for customers to pick the gum they want.

Making sure gum is available where transactions take place is also important in order to capitalize on impulse purchases. Finally, retailers should keep reminding their customers about new products and deals. Sampling can also make a difference, something Laufer said will be critical to the success of Alert Energy.

Wrigley has its eyes on more than the success of just its own products. As a category leader, the company is focused on restoring growth to the overall segment. "That's our obligation," said Laufer.

Industry insiders agree it will take a combined effort to create a consistently successful climate for gum, rather than focusing solely on what products to offer or how to market them. "We're seeing a high level of collaboration with retailers toward driving improvement," observed Wilson of the NCA.

Considering the value of the gum segment — due to its profitability and high purchase frequency — retailers and suppliers alike are motivated to work together to find a winning solution. As a result, there's a decent chance that by the end of 2013, gum will find itself in less of a sticky situation.