Wrigley lifted by innovation and acquisitions

- Last updated on GMT

Related tags: Wrigley, Confectionery, Gum, Chewing gum

Continuing moves into new segments of the confectionery market have
helped US gum maker Wrigley end 2004 with record sales and profits.
And the acquisition of Spain's Joyco, with strong market shares in
India and China, should continue to drive growth in emerging
markets in 2005, writes Chris Jones.

Wrigley reported 2004 sales of $3.65 billion, a 19 per cent increase on the previous year, helped by a 14 per cent rise in global volume sales and beneficial exchange rates. Joyco contributed 5 per cent to the increase in turnover, while a shift towards higher added value products - such as functional confectionery - also helped.

Sales in North America were up 9 per cent for the year driven primarily by sales of Orbit and Eclipse gum brands and the new Eclipse mints product lines. In Europe, sales were boosted 23 per cent by good performances in Russia, Ukraine, the UK and Spain, as well as the benefit of favourable currency translation.

In Asia, sales were up 25 per cent, primarily due to double-digit volume growth, with especially strong contributions from China, Vietnam and Taiwan. In both Europe and Asia, the Joyco acquisition contributed around one-third of regional sales increases.

Wrigley declined to give value or volume figures for any of its regional operations.

Operating profits in the year grew by 11 per cent to $720 million, despite increased marketing expenditure and costs related to the Joyco acquisition.

Already the world's biggest producer of chewing gum, the January 2004 acquisition of Joyco gave Wrigley strong positions in the bubble gum, candies and lollipops sectors, as well as boosting its presence in Europe and major emerging markets such as China and India.

Both India and China are expected to be among the most important gum markets in the world over the next few years, according to Euromonitor​ figures. Indian value sales are predicted to reach $86.5 million by 2008, while the Chinese gum market will top $809 million.

New product development also played a major role in developing Wrigley's business in 2004. Building on the success of the 2002 launch of Eclipse Flash strips, the first non-chewing gum products to be launched under the Wrigley banner and an extension of the Eclipse brand of breath freshening gum, Wrigley began to move into other non-gum areas, in particular mints.

This move into the wider sugar confectionery market in 2004 involved not only the launch of its own Eclipse mint line - another first for Wrigley - but also the acquisition of the Altoids business of compatriot Kraft, moving it resolutely into the sugar confectionery market in the US.

Although less international than Joyco, the Altoids business should give a further boost to Wrigley as it seeks to build on its massive brand awareness to develop sales outside the core gum market. Certainly, Wrigley's determination to become a leading player in the broader confectionery market throws down the gauntlet to more established players such as Cadbury Schweppes - itself struggling to integrate the Adams acquistion of 2003 - and Perfetti Van Melle.

Related topics: Market Trends

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