Home>News Center>Life

A billion jaws chewing in China
By Todd Crowell (Asia Times Online)
Updated: 2005-08-15 08:52

The Guangdong Fanyu Candy Co, the once-prosperous maker of Yiqing chewing gum and Dada bubble gum, folded its operations in 2002. Why?

Because the company could not compete with the famous gum that comes in the little green package.

Since 2000, the Wm Wrigley Jr Co, the world's largest maker and marketer of chewing gum, has quietly become the dominant player in the Chinese market.

It may be that no other American product, save perhaps Coca-Cola, is as widely available and ubiquitous in China as Doublemint gum.

The company has extended its reach into almost every corner of the country. In fact, Wrigley has probably the widest distribution and sales network of any food manufacturing and consumer packaging company in China, with a staggering one million sales outlets - 30,000 in Shanghai alone.

Wrigley's share of China's chewing gum market is an astounding 60%. Although the company has competitors - primarily South Korea's Lotte and Italian company Perfetti Van Melle - no other gum company, foreign or domestic, comes close to Wrigley's market share or sales volume.

Since 1999, China has become Wrigley's second-largest market, behind only the United States. If ever there was an American company that has actually cashed in on the mythic slogan, "if every one of China's billion people bought just one ... ", it is Wrigley's.

As a matter of fact, they buy more than one: Chinese, on average, buy 10 sticks of gum a year. That's far behind the American average of 160 or Taiwan's 70-80. But with China's population five times that of the US, there is plenty of room for growth.

The Doublemint brand is the top-selling gum in China, and Wrigley's has enjoyed consistent double-digit sales growth there.

"I don't think people know how global [Wrigley's] is," fund manager Rose Papp told Forbes.com. Wrigley's now counts 14% of its global sales in Asia, up from 3.3% only five years ago. Industry analysts estimate that the Chinese chewing gum market is worth about $250 million now and may reach more than $800 million by 2008.

Wrigley's entered China in a big way in 1989, when it built its first wholly owned chewing gum factory in Guangzhou. Last October, Wrigley's opened a 50,000 square-foot factory to make gum base - the material that gives gum its chewiness - in Shanghai. Since the opening of the Shanghai plant, the company has been able to produce all the ingredients for chewing gum on the mainland.

In recognition of Wrigley's unassailable position in China, Spanish food conglomerate Agrolimen last year sold its Joyco confectionery division's operations in China and India and several other countries to Wrigley for 220 million euros (US$274 million). Joyco had established the joint venture with Guangdong Fanyu Candy Co that went broke in 2002. But it was still the leading seller of bubble gum and lollipops in China. As part of this deal, Wrigley ended up with Cafosa, Joyco's chewing and bubble gum base business.

"With the addition of the Joyco brands, we have been able to add complementary confectionery products to our portfolio and take advantage of our robust sales force," said Wrigley's spokesperson Kelly McGrail. "That will make these products widely available in China. The Ta Ta Bubble gum and Pim Pom lollipops also give us great-tasting and affordable single-piece confections for kids - widening Wrigley's product portfolio to this younger market. China is Wrigley's second-largest [market by] volume outside the US, and the acquisition of these additional brands has contributed to volume growth over the past year," she added.

The Joyco deal also gave Wrigley's a boost in India, where Joyco enjoyed a leading position in confectionery products. Before the sale, Wrigley's gum sales in India accounted for only about 3.5% of the market. The acquisition boosted combined confectionery sales to approximately 35%. The industry leader, however, is still the Italian firm of Perfetti Van Melle, which has 47% of the market, according to Euromonitor International, an industry analyst.

Compared with many other consumer packaged goods sold in China, counterfeiting has not been a serious problem, according to the company. "There are sporadic cases, and when they arise we work closely with local authorities," said McGrail. Wrigley's is also a member of the Quality Brand Protection Committee, an anti-counterfeiting coalition in China which has more than 100 multinational corporations as members, and lobbies the government for stricter laws and regulations for intellectual property violations and better enforcement systems.

Wm Wrigley Jr Co was founded in 1891, originally to sell soap and baking powder. In 1892, company founder William Wrigley Jr began offering chewing gum with each can of baking powder. The gum eventually became more popular, and the company reoriented itself to make and sell gum. It is still a family-run business based in Chicago.

Fighting the Singapore gum ban
Wrigley's is slowly working its way back into Singapore after having been shut out, along with every other gum maker, after the island country famously banned the import and sale of chewing gum for sanitary reasons in 1992. The company was deeply involved in the negotiations leading to the city-state's 2003 Free Trade Agreement with the United States. Two issues dominated the negotiations: Singapore's participation in the Iraq coalition, and chewing gum. Of the two, gum was the stickiest.

Somewhat grudgingly, Singapore compromised, agreeing to allow the importation and sale of what it called "therapeutic" gum. "They were tough," said former Congressman Philip Crane of Illinois, who was involved in the negotiations. The deal opened the way for sales of Wrigley's Orbit brand of sugar-free gum, which contains calcium lactate, intended to strengthen tooth enamel. Another beneficiary of the deal was pharmaceutical giant Pfizer, which makes Nicorette, a nicotine gum meant to help smokers kick the habit. Both gums can only be sold by a dentist or a pharmacist.

Why did Wrigley's invest so much energy into what seems to be such a small market? Christopher Perille, Wrigley's senior director of corporate communications, said: "There are many examples in our [company's] history of things that may not have made short-term financial sense but [were] the right thing to do in the long-term."

At the moment, Wrigley's gum can only be bought through a licensed pharmacist, and the buyer must provide his name and identity card number. In Singapore, chewing gum is still very much a controlled substance.

MTV to air trip by Jolie to Africa
Wild orgies leave the Great Wall in mess, and tears
Zhou Xun parts with agent company
  Today's Top News     Top Life News

Singapore: China-India ties to anchor new Asia century



China, Russia start joint military exercises



US, China said close to broad textile deal



Foreign banks to buy Guangdong bank shares



Mainland scrambles to help Taiwan airlines



US in touch with N. Korea ahead of nuke talks


  City offers free premarital check-ups
  No mad scurry for HK Mouseland tickets
  Mother Cindy keeps vigil
  Simulation marriages on Internet in vogue
  Last living Marilyn Monroe husband dies in Calif
  Rural kids 'need better healthcare'
  Go to Another Section  
  Story Tools  
  Wild orgies leave the Great Wall in mess, and tears