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A billion jaws
chewing
By Todd Crowell
The Guangdong Fanyu Candy Co,
the once-prosperous maker of Yiqing chewing gum
and Dada bubble gum, folded its operations in
2002. Why? Because the company could not compete
with the famous gum that comes in the little green
package. Since 2000, the Wm Wrigley Jr Co, the
world's largest maker and marketer of 
chewing gum,
has quietly become the dominant player in the
Chinese market.
It may
be that no other American
product, save perhaps Coca-Cola, is as widely
available and ubiquitous in China as Doublemint
gum. The company has extended its reach into
almost every corner of the country. In fact,
Wrigley has probably the widest distribution and
sales network of any food manufacturing and
consumer packaging company in China, with a
staggering one million sales outlets - 30,000 in
Shanghai alone. Wrigley's share of China's chewing
gum market is an astounding 60%. Although the
company has competitors - primarily South Korea's
Lotte and Italian company Perfetti Van Melle - no
other gum company, foreign or domestic, comes
close to Wrigley's market share or sales volume.
Since 1999, China has become Wrigley's
second-largest market, behind only the United
States. If ever there was an American company that
has actually cashed in on the mythic slogan, "if
every one of China's billion people bought just
one ... ", it is Wrigley's. As a matter of fact,
they buy more than one: Chinese, on average, buy
10 sticks of gum a year. That's far behind the
American average of 160 or Taiwan's 70-80. But
with China's population five times that of the US,
there is plenty of room for growth.
The
Doublemint brand is the top-selling gum in China,
and Wrigley's has enjoyed consistent double-digit
sales growth there. "I don't think people know how
global [Wrigley's] is," fund manager Rose Papp
told Forbes.com. Wrigley's now counts 14% of its
global sales in Asia, up from 3.3% only five years
ago. Industry analysts estimate that the Chinese
chewing gum market is worth about $250 million now
and may reach more than $800 million by 2008.
Wrigley's entered China in a
big way in 1989, when it built its first wholly
owned chewing gum factory in Guangzhou. Last
October, Wrigley's opened a 50,000 square-foot
factory to make gum base - the material that gives
gum its chewiness - in Shanghai. Since 
the opening of the Shanghai
plant, the company has been able to produce all
the ingredients for chewing gum on the mainland.
In recognition of Wrigley's unassailable
position in China, Spanish food conglomerate
Agrolimen last year sold its Joyco confectionery
division's operations in China and India and
several other countries to Wrigley for 220 million
euros (US$274 million). Joyco had established the
joint venture with Guangdong Fanyu Candy Co that
went broke in 2002. But it was still the leading
seller of bubble gum and lollipops in China. As
part of this deal, Wrigley ended up with Cafosa,
Joyco's chewing and bubble gum base business.
"With the addition of the Joyco brands, we
have been able to add complementary confectionery
products to our portfolio and take advantage of
our robust sales force," said Wrigley's
spokesperson Kelly McGrail. "That will make these
products widely available in China. The Ta Ta
Bubble gum and Pim Pom lollipops also give us
great-tasting and affordable single-piece
confections for kids - widening Wrigley's product
portfolio to this younger market. China is
Wrigley's second-largest [market by] volume
outside the US, and the acquisition of these
additional brands has contributed to volume growth
over the past year," she added.
The Joyco
deal also gave Wrigley's a boost in India, where
Joyco enjoyed a leading position in confectionery
products. Before the sale, Wrigley's gum sales in
India accounted for only about 3.5% of the market.
The acquisition boosted combined confectionery
sales to approximately 35%. The industry leader,
however, is still the Italian firm of Perfetti Van
Melle, which has 47% of the market, according to
Euromonitor International, an industry analyst.
Compared with many other consumer packaged
goods sold in China, counterfeiting has not been a
serious problem, according to the company. "There
are sporadic cases, and when they arise we work
closely with local authorities," said McGrail.
Wrigley's is also a member of the Quality Brand
Protection Committee, an anti-counterfeiting
coalition in China which has more than 100
multinational corporations as members, and lobbies
the government for stricter laws and regulations
for intellectual property violations and better
enforcement systems.
Wm Wrigley Jr Co was
founded in 1891, originally to sell soap and
baking powder. In 1892, company founder William
Wrigley Jr began offering chewing gum with each
can of baking powder. The gum eventually became
more popular, and the company reoriented itself to
make and sell gum. It is still a family-run
business based in Chicago.
Fighting the
Singapore gum ban
Wrigley's is slowly
working its way back into Singapore after having
been shut out, along with every other gum maker,
after the island country famously banned the
import and sale of chewing gum for sanitary
reasons in 1992. The company was deeply involved
in the negotiations leading to the city-state's
2003 Free Trade Agreement with the United States.
Two issues dominated the negotiations: Singapore's
participation in the Iraq coalition, and chewing
gum. Of the two, gum was the stickiest.
Somewhat grudgingly, Singapore
compromised, agreeing to allow the importation and
sale of what it called "therapeutic" gum. "They
were tough," said former Congressman Philip Crane
of Illinois, who was involved in the negotiations.
The deal opened the way for sales of Wrigley's
Orbit brand of sugar-free gum, which contains
calcium lactate, intended to strengthen tooth
enamel. Another beneficiary of the deal was
pharmaceutical giant Pfizer, which makes
Nicorette, a nicotine gum meant to help smokers
kick the habit. Both gums can only be sold by a
dentist or a pharmacist.
Why did Wrigley's
invest so much energy into what seems to be such a
small market? Christopher Perille, Wrigley's
senior director of corporate communications, said:
"There are many examples in our [company's]
history of things that may not have made
short-term financial sense but [were] the right
thing to do in the long-term."
At the
moment, Wrigley's gum can only be bought through a
licensed pharmacist, and the buyer must provide
his name and identity card number. In Singapore,
chewing gum is still very much a controlled
substance.
Veteran Asia correspondent
Todd Crowell comments on Asian affairs at Asia Cable.
(Copyright 2005 Asia Times Online Ltd. All
rights reserved. Please contact us for information
on sales, syndication and republishing.) |
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