Emerging economies drive gum sales
Global retail value sales of gum totalled $26.4 billion (€19.5bn) in 2012, up two per cent on 2011 (constant 2012 prices/fixed 2012 exchange rates). Eastern Europe recorded the strongest growth (nine per cent), followed by Middle East and Africa (four per cent) and Asia Pacific (three per cent).
Asia Pacific was the most important region in terms of actual sales, accounting for 25 per cent of global retail value in 2012. Western Europe and North America are also big players in the global gum industry. Put together, both of these regions accounted for 38 per cent of total retail value at a global level in 2012. Meanwhile, Latin America and Eastern Europe commanded total global value shares of 20 per cent and ten per cent, respectively.
Sugar free formats boom in Brazil and Russia
In Brazil, retail value sales of sugar free gum rose by nine per cent in constant value in 2012. Research indicates that this growth was mostly down to strong investments from leading companies, such as Cadbury Adams Brasil and Perfetti Van Melle Brasil, in marketing campaigns. In recent years, both companies have aimed their communication towards teenagers and young consumers instead of children.
Russia is another market where demand for gum has expanded strongly in recent years. In 2012, retail value sales increased by 16 per cent in constant value, fuelled by strong economic growth and the expansion of snack sales in large cities. Innovation has been partly responsible for the success of gum in the country. Whitening and breath freshening gum products have been successfully introduced in the market. The main audience for such products is young people looking to maintain fresh breath and white teeth.
Long lasting flavours
Maturing consumer demand and competition from other categories have depressed sales of gum in developed regions such as Western Europe. Most of this decline was driven by shrinking demand for sugarised gum, which is regarded as unhealthy and old fashioned by most Western European consumers. As a result of this, sales declined by six per cent in constant value in 2012, in sharp contrast with the performance of other indulgence products. Sales of sweet and savoury snacks and snack bars, for instance, rose by two six per cent each in 2012. This growth was driven by strong innovation, with European manufacturers focusing on the introduction of lines that added value through the combination of health and indulgence properties.
Gum manufacturers in Western Europe have strived to regain some of the lost ground to other snack categories by stepping up the pace of innovation. In the UK, for instance, 2011 saw the arrival of sugar free Mentos Fruity Fresh 3-layer (Perfetti Van Melle) chewing gum with the long lasting flavours of strawberry/apple/raspberry and Pure Fresh with green tea extract, retailing at 59p (€0.68) per pack of seven pieces of gum. In 2012, a blackberry/kiwi/strawberry Fruity Fresh variant was launched, with Mentos sponsoring American Idol as part of its advertising campaign.
More advertising and sales in China
The performance of gum shows a marked distinction between developed and developing economies in Asia Pacific. In Japan, for instance, retail value sales declined by three per cent in constant value in 2012. In China, by contrast, sales rose by seven per cent in constant retail value, driven by the expansion of the snacking culture among middle class consumers in urban areas. Sugar free gum registered the highest retail growth in gum in China in 2012, with sales rising by ten per cent in volume terms and 11 per cent in constant value terms. Thus, sugar free gum accounted for a 59 per cent share of retail value sales of gum in the country in 2012. Television advertising remains vital to gum manufacturers. Several new gum advertisements were launched over 2011 and 2012. The advertising of Extra, for example, was divided into four stories, namely ‘sour’, ‘sweet’, ‘bitter’ and ‘spicy’, with the advertisement combining Extra’s products with each story.
Future directions
Global gum sales are expected to rise by 11 per cent in constant value over the 2012-2017 period, according to Euromonitor International’s projections. Emerging economies will continue to lead this growth. Demand will be specifically strong in regions like Latin America and Eastern Europe, which are projected to see sales rise by 20 per cent and 17 per cent (retail constant value), respectively, over the 2012-2017 period.
Innovation is bound to continue focusing on the expansion of flavours and the development of smaller packaging formats. In developing countries, the fight to add value is therefore likely to come in the form of natural and functional ingredients such as green tea extracts. The gradual expansion of energy boosting ingredients like taurine in mature markets, a concept already present in countries like Germany and the UK, will accelerate in line with the need to add value by gum manufacturers.
By Francisco Redruello, senior food analyst at Euromonitor International
