Todd Stitzer, CEO of parent Cadbury Schweppes, has pegged the fast-growing gum category as a priority for company growth and Stride, with its super-hip heavy-up marketing plan, is the clearest sign since acquiring Adams from Pfizer that he is serious.
A sugarless gum in glowing blue flip packages, Stride will ship this May with a $50 million year-one marketing campaign that begins in June with TV, print, radio, Internet and viral-marketing efforts all centered humorously around Stride's "ridiculously long-lasting flavor."
One East Coast retail executive suggested that the high-priced marketing blitz for Stride was "freakin' crazy." After all, he said, despite Cadbury's intention of taking youthful Red Bull-swilling, iPod-listening and Axe deodorant devotees by storm, "it's just another pack of regular gum ... in spearmint and winter blue."
But if there's a time for gutsy moves in gum, it's now. Sales in the $1.4 billion sugarless segment especially are taking off like wildfire. Wm. Wrigley Jr. Co.'s sales in food, drug, convenience and mass outlets excluding Wal-Mart jumped 14% to $743 million and Cadbury's sales shot up 15% to $506 million for the 52 weeks ended Jan. 22, according to Information Resources Inc. Wrigley still has a hold on the regular gum segment, with sales up 3% to $480 million vs. Cadbury's 4% sales slip to $84 million for the same time period and outlets.
For Cadbury, gum represents about 30% of its global confection sales, a percentage that equates to $4 billion, and the decision to focus on it is a clear no-brainer as "it is growing at twice the rate of sugar and chocolate confectionary and they see huge potential there," said Sanford Bernstein analyst Andrew Wood.
Mr. Wood and other industry observers note that the gum category, dominated by Wrigley and Cadbury, has just recently begun innovating after a long hiatus. Cadbury is expected to push hard this year on its Trident Splash-a liquid-filled soft chew with a hard outer coating-that Mr. Wood credits for much of Trident's recent 21% growth globally.
Wrigley continues to innovate with new flavors of its existing brands such as Wintermint Orbit White and, in general, to ramp up new products to levels where they now make up 20% of annual sales vs. 5% in 1999. CEO William Wrigley Jr. has also ramped up efforts to update advertising creative as part of his mandate to refresh long-staid core brands.
According to Scott Hess, VP of Northbrook, Ill.-based market research firm Teenage Research Unlimited, part of gum's appeal to today's youth is that "it's an awesome computer snack." Mr. Hess, who has done work for Cadbury and other gum marketers, said that both hands being engaged by gaming-crazy teens home from school has definitely "not been a bad thing for the gum category" and the influx of product innovation and more youthful marketing efforts will only add to the category's growth.
That is, of course, just what Cadbury is hoping for with Stride, and wholesale distributors seem bullish that the brand will be highly incremental to the category. TV ads, from Interpublic Group of Cos.' McCann Erickson, New York, feature sitcom-like scenes with characters played by upside-down mouths and chins. In one, a young man visits his therapist to complain that he feels his Stride gum has run out of flavor, to which the therapist responds sharply, "But it lasts a ridiculously long time..." His diagnosis? The patient is crazy.
Though McCann and Cadbury declined to comment about the launch of Stride, executives close to the company said the quirky mouth characters are expected to be ubiquitous over the next few years as Cadbury tries to turn the category on its ear. Cadbury spent $65 million on its gum brands from January through November of 2005, according to TNS Media Intelligence/CMR.