Down to Business: Fewer jobs, fewer ‘gum occasions’

Chewing gum is a multibillion-dollar industry that still has room to grow in developing countries ar

Consider for a moment, if you will, a stick of chewing gum.

The confection dates to ancient civilizations — Greeks in 50 A.D., Mayans in the second century — that chomped on tree resin to clean their teeth. Native Americans introduced spruce resin to settlers in New England, who then created the first commercial chewing gum by selling and trading the lumps, according to the International Chewing Gum Association.

Today, chewing gum is a multibillion-dollar industry that still has room to grow in developing countries around the world.

But the financial meltdown and slow recovery of the past few years haven’t been kind to the product, says Jim Cali, senior vice president for gum and candy at Mondelez International.

Research shows that 26 percent of gum is consumed at work and 16 percent is consumed traveling to and from work. “So,” he told stock analysts in Boston earlier this month, “if you don’t have a job, you’re probably chewing less gum.” Mondelez is one of two new public companies that will debut Oct. 1 when Kraft Foods Inc. spins off its North American grocery business. That segment, with such well-known products as Kraft cheeses, Oscar Mayer meats and Maxwell House coffee, will become Kraft Foods Group. Mondelez (pronounced mohn-dah-LEEZ) will house the company’s snack business: Trident gum, Cadbury chocolates, Nabisco and Oreo cookies. The name is a mash-up of “monde” (world) and “delez” (delicious).

The split was proposed more than a year ago as a way to take advantage of the brand recognition and geographic reach of the snack business. Mondelez, which would have had sales of $36 billion as a standalone company last year, ranks as No. 1 or No. 2 in market share for cookies, candy and gum internationally.

Gum, though, has been struggling, Cali said at the meeting in Boston, which was webcast. From “robust” annual growth between 1998 and 2008, sales have been “essentially flat” since then.

Why? “Unemployment and GDP softness resulted in lower purchasing power for gum consumers as well as lost gum occasions,” he said.

“Gum disproportionately skews to impulse channels, and these have been the hardest hit during the recession,” Cali said. In Spain, 7 percent of street kiosks selling gum closed between 2008 and 2011; in Greece, 13 percent were shuttered. And in the United States, “convenience store shopping visits have also declined.” He admitted that some of the pain was “self-inflicted”: gum producers overextended their brands and made their products too expensive. “Our challenge: encourage consumers to chew more,” he said.

Despite the recent softness, “I remain excited about the strong fundamentals in this category,” Cali said.

He outlined a gum and candy strategy at Mondelez focused on power brands (Trident, Stride and Chiclets in gum; Cadbury and Halls in candy) and priority markets (Brazil, U.S., China). China is the largest growth market for gum, with a projected annual growth rate of 16 percent.

In this country, ID by Stride is a new gum “by teens for teens,” Cali said. It has bold, teen-drawn art on the packaging, which features a magnetic closing. That not only keeps the sticks in place, but “they [teens] like to fiddle with it,” he said.

Inside, flavor swirls are printed on the gum and no two pieces are alike — a far cry from our forebears’ gnawing on tree resin.

“It’s about teen entertainment, not simply a piece of gum,” Cali said. “Quite simply, it’s really cool.”

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