Wrigley Gum: Not The Flavor Of The Month

With teens turning away from gum, Wrigley has to retool

Aaron Olsen, 18, is a gum maker's nightmare. He's checking out the gum selection at a New York City convenience store, but he's obviously looking for something else. "I really want mints," he says.

Gum, it seems, is ho-hum for a lot of teens these days. Sure, they're still chewing a lot of it--about seven sticks a week, reports Teenage Research Unlimited. But they're not chewing enough for the likes of venerable gum maker William Wrigley Jr. Co. Sales at the Chicago-based company rose just 3% last year, to $2.1 billion, while net earnings were up a scant 1%. Wrigley's share price has slipped 35% since its April high of $98.

The amazing thing about Wrigley is that it has survived so well for so long. William Wrigley, Jr. got into the gum business by accident, using it as a give-away to boost Wrigley's baking powder sales in the 1890s. When gum proved more popular, he switched gears, launching what would become a global gum empire with 9,300 employees. Thriving on the strength of decades-old brands like Doublemint and Juicy Fruit, Wrigley controls a commanding 50% share of the U.S. gum market.

Jump-starting growth is another matter. Wrigley's problem is attracting the huge youth market, which consumes the bulk of gum and candy in the U.S. But kids like Aaron Olson have gravitated to a host of non-gum products, especially mints such as Altoids, Mentos, and Tic Tacs. Meanwhile, other super-strong mint gums, such as Dentyne Ice and Ice Breakers, have come out. "Wrigley needs to become part of the scene," says Robin Austin of Fusion 5, a youth marketing outfit.

Fortunately for Wrigley, it has some young blood of its own. William "Bill" Wrigley Jr., the 36-year-old chief executive of the company and the founder's great-grandson, is determined to give his company a boost. He's introducing new products and has put in place a new management team, including executives from Procter & Gamble Co. and Gillette Co.

Wrigley could use the help. The company has long been slow introducing new products in the U.S. But that may be changing. At the annual meeting on Mar. 6, Wrigley insisted that the company will no longer "blindly follow old paths and patterns."

Easier said than done. For decades, Wrigley posted respectable growth by expanding into international markets and controlling costs. But the company's glacial pace of innovation means Wrigley has so far missed out on the mint candy boom. Traditional chewing gum's popularity has been tailing off for the past three years. Last year, sales fell 5%, excluding sugarless gum. Meanwhile, mint candy sales surged 10% in 1999, to $333 million, according to Information Resources Inc., which tracks sales in the consumer packaged goods market.

FRESH BREATH. Wrigley is trying to catch up with two new mint-flavored gums, Eclipse, introduced last summer, and Everest, made by a Wrigley subsidiary and packaged in an Altoids-like tin. Meanwhile, new TV ads are designed to sell another generation on such brands as Winterfresh and Big Red, stressing their breath-freshening, date-saving qualities. Winterfresh has also sponsored the extreme sports X-Games competition, while a Juicy Fruit Web site gave out trips to tapings of a popular MTV show.

Still, that hasn't been enough to get Juicy Fruit onto Teenage Research Unlimited's Top10 list, a key indicator of youth trends. What's more, retailers say Eclipse, while selling well, so far hasn't budged the mint loyalists.

With Wrigley shares at a 52-week low, investors aren't convinced that the shakeup will work. But they like the direction Bill Wrigley is moving--"from the Cadillac generation to the Porsche generation," says investor Ken Flammang of Kokopelli Associates LLC. Now, he just has to lure all those mint-crunching, skateboarding kids.

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