This industry consists of establishments primarily engaged in manufacturing chewing gum or chewing gum base.
311340 (Non-Chocolate Confectionery Manufacturing)
The American chewing gum industry has been marked by strong periods of growth and decline throughout the twentieth century. Since the 1970s this industry has been growing at a faster pace overseas than within the United States. The industry's overall success has been the result of low manufacturing costs and aggressive marketing campaigns. In 2001 there were 10 U.S. manufacturers in this industry, according to the National Association of Chewing Gum Manufacturers.
As one of the best performers in the candy industry, chewing gum continues to be a favorite among American consumers. Overall domestic gum sales, however, were flat in the late 1990s, though sales of sugar and sugar-free gum continued to rise steadily. Consumers, adults, seniors, and children alike continue chewing various types of gum for a variety of reasons, thereby adding to the market demand in this industry. Innovations such as smoking-cessation gums and dental gums, which offered promises to clean teeth, entered the industry in the late 1990s. Retail chewing gum sales in 2001 totaled $2.8 billion.
Chewing gum companies use two main channels of distribution: one channel is through wholesalers, who supply retail stores in the areas they serve; the other channel is the delivery of boxes of chewing gum directly to large retail outlets from the manufacturers' warehouses and factories. The retail distribution chain includes food, drug, variety, and convenience stores, gas stations, newsstands, and restaurants. Another important channel for these manufacturers has been distributors who stock vending machines.
History. Though chewing gum bases are primarily synthetic today, gum was originally derived from natural sources such as tree resins and saps. The use of chewing gum made from tree resin dates back to ancient Greek and Mayan civilizations. In North America, Wampanoag Indians introduced chewing gum to European settlers. The gum was made from the resin of spruce trees.
Americans began manufacturing gum in the mid-1800s, adding paraffin wax, which was used to make the gum softer and last longer. At about this time flavors such as mint were added to the gum, helping to increase the product's popularity. In 1848 John Curtis of Maine started producing the first commercial spruce gum.
American settlers traveling west learned about chewing chicle, the hardened sap of sapodilla trees, from the Osage Indians. The sapodilla tree is found mainly in the tropical rain forests of the Yucatan Peninsula of Mexico and Guatemala. By 1869 the first commercial chicle was manufactured, and in 1906 paraffin was added to chicle.
During the late 1800s, companies that would become the industry leaders entered this business, making valuable contributions to the industry as a whole. William Wrigley Jr. was a baking soda salesman who started offering two packages of chewing gum with each can of baking soda. When this promotion proved successful, Mr. Wrigley decided to enter the relatively undeveloped chewing gum business. His first two brands were Lotta and Vassar; later in 1893 he introduced Juicy Fruit and Wrigley's Spearmint. In the early days Wrigley used premiums to encourage merchants to stock his chewing gum. The success of this method of marketing led to a published catalog of premiums for retailers. Wrigley was also one of the pioneers in the use of advertising to promote brand-name merchandise. Advertisements for Wrigley's gum ran in newspapers, magazines, and on outdoor posters. Even during industry slumps, Wrigley continued advertising.
By 1910 Wrigley's Spearmint gum was the largest selling chewing gum in the United States. Later that year the company expanded by opening a factory in Canada. By 1927 Wrigley plants were being built in Great Britain and Australia. The different preferences in international markets led to new types of products and flavors. Perhaps the most successful product for the company outside the United States was the pellet-shaped chewing gum sold under the PK brand.
Another industry leader, Franklin Channing, invented the first dental gum, Dentyne, in 1899. About the same time, Henry Fleer created Chiclets, the first candy-coated chewing gum.
Bubble gum was first developed in 1906, but early batches were too sticky to sell, and it was not until 1928 that bubble gum was first marketed. Another important development in this industry was the first sugarless gum, which was created in the late 1940s (but not marketed until the 1950s). LifeSavers' CareFree and American Chicle's Trident appeared in the mid-1960s and dominated the sugarless gum market early on. In the 1980s Wrigley's Extra gum was launched, and by 1990 it controlled 40 percent of the $480 million sugar-free gum market.
Sugar-free gums began using xylitol, an artificial sweetener, in the late 1970s. However, in 1978, the U.S. Food and Drug Administration began investigating possible links between xylitol and cancer; though no link was ever established, products made with xylitol were reformulated using other artificial sweeteners. In the early 1990s xylitol was reintroduced by Leaf Specialty Products, who manufactured Xyli Fresh, a chewing gum intended for fighting plaque.
Chewing gum manufacturers have also enjoyed heightened success during war times. The Wm. Wrigley Jr. Company recorded an increase in chewing gum demand during World War I and II and during the 1990-91 conflict in the Persian Gulf. In fact, during World War II, when top-grade ingredients were scarce, production was limited to the armed forces, and civilians were sold a lesser quality gum under the brand name Orbit.
Marketing and Product Trends. Since it was first sold in America, gum has been packaged with novelties, such as sports cards, toys, and comic strips. In the twentieth century, companies launched novelty bubble gums, which were packaged in a variety of shapes and unusual forms, such as school lockers and toothpaste tubes.
In the early 1990s sour gum became popular with children. These chewing gums have an extremely sour taste that becomes sweet and eventually has a neutral or tangy taste. Children often used these gums to play jokes on friends or to prove their mettle. In 1992 sour gum brought in an estimated $70 million in retail sales. Moreover, as the demand for sour gum caught suppliers by surprise, a "black market" for the product emerged.
In the 1980s chewing gum sales were boosted by campaigns that promoted chewing gum as an alternative to smoking. Other advertisements have endorsed sugarfree gums as being good for teeth. In addition to advertisements on television, radio, and in newspapers, companies in this industry use sales representatives to market their products. These representatives regularly visit retailers and assist them with display designs and layouts.
In 1993 LifeSavers made industry news with its innovative approach to selling bubble gum. Its Bubble Yum product was promoted through a traveling virtual reality arcade game, and LifeSavers was the first company to use the game as a marketing tool. The game, called Planet Bubble Yum, featured chunks of bubble gum flying around in three-dimensional animation. Bubble Yum charged proof of purchase seals for admission. The tour traveled to shopping malls in major U.S. cities, with an average attendance of 1,100 people per location.
After a slump during the 1970s and early 1980s, chewing gum manufacturers entered the 1990s on a slight upswing. A new interest in chewing gum emerged in the United States since gum was promoted as an alternative to smoking when more public places began to prohibit smoking. Domestic per capita consumption of chewing gum increased from 168 sticks in 1986 to 183 in 1992, resulting in a 1.3 percent average annual rise in gum sales.
Production. The cost of producing chewing gum has always been low. High demand for chewing gum, allowing for high volume production, and advances in automation have helped to reduce costs further. The price of ingredients, such as corn syrup and gum base, has also declined since the 1970s, thus reducing costs and increasing profit margins.
Modern methods and new materials have changed the character of chewing gum. Natural ingredients have become scarce due to changing climatic conditions, demand, and development in regions where the ingredients were harvested. Chicle and other products from trees are now used in conjunction with synthetic materials. Most chewing gums are made with five basic ingredients: chewing gum base, sugar, corn syrup, softeners (such as glycerin and other vegetable oils), and flavors (mostly extracted from mint plants). In sugar-free gums, sugar and corn syrup are usually replaced with aspartame, mannitol, and/or sorbitol.
Manufacturers typically employ food chemists to inspect and test all ingredients and materials. The Wm. Wrigley Jr. Company maintains a central quality assurance laboratory where samples from each factory are tested regularly so that flavor and texture are consistent in their products throughout the world.
According to the U.S. Census Bureau, Americans eat about 1.8 pounds of gum per capita each year. The growth rate of gum fell slightly in the late 1990s, and the $1 billion U.S. gum market showed little signs of growth. To blame were increasing sales of mints, including new intensely flavored mints. Mint sales skyrocketed by 40 percent in the second half of the decade. To combat declining sales, gum manufacturers introduced new, intensely flavored products. Wrigley launched a brand called Everest Powerful Mint Gum through subsidiary Amurol Confections Co. The strong mint gum was targeted toward adults hooked on strong mints. Wrigley also launched Eclipse gum in the summer of 1999, its first new product in five years. Eclipse, a mint gum, was marketed as a breath-deodorizing gum.
Total retail sales of gum in the U.S. in 2001 reached $2.8 billion, compared to $2.2 billion in 1997. In terms of retail sales at food stores, sales of gum for the year ended April 17, 1999, broke down as follows: bubble gum had sales of $79.1 million, a decline of 3.8 percent compared to the previous year; sugar-free bubble gum had sales of $40.2 million, down 4.1 percent; chewing gum enjoyed sales of $237.6 million, down 1.7 percent; and sugar-free chewing gum had sales of $237 million, up 15.4 percent. Overall gum sales in retail food outlets were $594 million, up 4 percent, according to ACNielsen. Of all confectionery items, gum placed second. Sugar-free chewing gum also sold well in drug stores, increasing an impressive 23.2 percent. Though other gum types suffered from declines in sales, the strong performance by sugar-free chewing gum boosted overall gum sales in drug stores by 6.6 percent.
The top gum brands in terms of dollar share, according to Management Science Associates, Inc., were Extra, Trident, Winterfresh, Doublemint, Big Red, Bubblicious, Ice Breakers, Juicy Fruit, Dentyne Ice, and Carefree. Other types of gum gaining popularity in the late 1990s included smoking-cessation gum, dental gum, and breath-refreshing gum.
Gum manufacturers continued to introduce new products, especially to cater to one of their biggest groups of consumers—kids. It was found that kids make 270 visits to stores a year averaging 5.2 purchases a week. Therefore, gum manufacturers spent a lot of money and time researching new products that would appeal to kids. Packaging played an important role in gum purchases. Innovative products like gum squeezed out of a tube, Roller Racer Bubble Gum, Bubble Cube, a 3-D puzzle toy filled with bubble bits, and gum rolled up like ribbon several feet long were some of the hot gum products on the market. Increasingly popular in the late 1990s were sour and intensely flavored gums. In the early 2000s, more than 1,000 varieties of gum were both made and marketed in the United States.
Wm. Wrigley Jr. Company was the world's leading manufacturer of chewing gum. The company commanded about 50 percent of the U.S. gum market and had strong operations overseas as well, with about 60 percent of revenues coming from international operations. Wrigley sold its gum products in more than 140 countries. Wrigley's subsidiaries produced chewing gum base and manufactured novelty gums. The company suffered through the late 1990s as it faced increased competition, particularly from the mints category, and profits were stagnant. In late 1999, however, Wrigley showed indications of recovery. Wrigley's 1998 sales were $2 billion.
Warner-Lambert Company was the second-ranked industry leader, with more than $10.2 billion in overall sales revenues and 41,000 employees in 1999. Its American Chicle Company, maker of Chiclets, was founded in 1856. The company also manufactured breath mints and other confectioneries. In addition to Chiclets, the company's chewing gum brands included Trident and Dentyne.
Other industry leaders included Nabisco Group Holdings Corp., maker of the Carefree and Bubble Yum brands, and the Topps Company, Inc., with 1999 sales of $229.4 million. Topps Company, was also a leader in commercial printing (see SIC 2759: Commercial Printing, Gravure ) for their bubble gum sports cards. This company has been most noted in the gum industry for producing Bazooka Bubble Gum.
Much of American-produced chewing gum is sold overseas. Wrigley has operated in Europe since the 1910s and has had 80 percent of the chewing gum market in Britain and Germany. A growing market was Russia, where gum chewing had once been forbidden. Wrigley, according to ACNielsen, commanded about 60 percent of the $180 million Russian chewing gum market in the late 1990s. Its main competitor was a Danish company named Dandy.
Though Wrigley's international sales grew significantly through the 1990s, the company did not position itself in Latin America, where many governments required joint ventures. In the mid-1990s Wrigley's business abroad was rising over 10 percent annually; during that time the company opened a factory in China, where people had already been introduced to chewing gum through shipments from Singapore.
Warner-Lambert also fared well in overseas markets. In the late 1990s about 60 percent of its overall sales were from overseas. The company's markets included Canada, Europe, Asia, the Middle East, and Latin America. In the mid-1990s Warner-Lambert launched an aggressive advertising campaign in Latin America, which included materials to help their products stand out in crowded street kiosks.
Companies in this industry are continually seeking ingredients and processes that can improve product quality and packaging. In the 1980s new synthetic gum bases were developed to overcome the limitations of previously used natural ingredients. These new materials are aimed at increasing gum flavor, improving texture, and reducing stickiness.
The environmental impact of the packaging used for chewing gum has been of considerable concern for companies in this industry. These companies rely on the wrappers and plastic packaging to keep gum fresh, yet these materials result in considerable waste. Scientists at gum companies have been evaluating and making changes to packaging and researching materials to meet future disposal and recycling requirements.
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