- The Washington Times - Wednesday, September 13, 2000

CHICAGO American teen-agers aren't using as much gum these days. In fact, compared with big chomping years of the past, they are downright eschewing it.

That's a problem for Wm. Wrigley Jr. Co., which hopes a series of new products will put the snap back in U.S. gum sales that have been flat for the past decade.

"They've lost share with teen-agers and don't know how to get it back," said John McMillin, an analyst for Prudential Securities.

While it may not be able to make gum cool again, ultraconservative Wrigley is embracing innovation after long relying almost exclusively on such standbys as century-old Spearmint and Juicy Fruit.

With its year-old Eclipse pellet gum, Everest high-intensity gum and some still-unfolding strategies under a younger leadership team, the 108-year-old company has finally shown it is willing to change its flavor with the times.

"In this day and age you've got to bring excitement to the consumer," said analyst Andrew Lazar of Lehman Brothers.

As the world's No. 1 chewing gum manufacturer, "it's up to them to innovate and drive growth in the category and they're stepping up their innovation across the board."

Like a well-mannered gum chewer, the Chicago company is famously close-mouthed; officials declined to be interviewed. But they have let it be known they are pleased with the results of their latest efforts, which helped generate a 10 percent increase in U.S. revenue in the April-June quarter.

Industry experts called that a promising development for Wrigley. Still, gum growth remains a sticky proposition and the company has yet to prove it has put the permanent pizazz back in U.S. sales.

The youth market is critical. American teens chew an average of seven sticks of gum a week, based on interviews conducted in April by Teenage Research Unlimited with 2,000 youths nationwide ages 12 to 19. That's the smallest amount in the seven years the Northbrook, Ill., market research firm has been keeping tabs, and well off the high of 10 sticks reached in 1996.

The problem is that mints and candies are increasingly being popped into young mouths instead of gum.

"When I was a kid, you could get Lifesavers, Hershey bars and Wrigley gum at the candy counter that's it," said Mr. McMillin, who covers the food industry. "Now teen-agers go into a store and they have a lot more choices.

"A lot of other companies have done a better job with those choices."

Wrigley's reluctance to either join or aggressively combat the mint boom sweeping the candy business is in one sense easy to understand. Why mess with success?

The company has achieved phenomenal results with essentially one product and one family owner since its founding in 1892 by William Wrigley Jr., who got his start giving away chewing gum to merchants as an inducement to buy his soap and baking soda.

Today Wrigley generates nearly all its revenue from gum, produced in 14 factories worldwide. The company controls about half the global and domestic markets. It had $2.1 billion in sales last year in over 140 countries, using one of the world's most recognizable brand names to continue its impressive growth abroad.

But recent times have been unsettling.

Wrigley's third-generation family ruler, longtime Chief Executive William Wrigley, died unexpectedly last year at 66. Sales of traditional chewing gum, excluding sugarless, fell 5 percent. Rivals Warner-Lambert, Nabisco and others continued nibbling away at Wrigley's sluggish U.S. business.

The stock fell sharply after Mr. Wrigley's death, losing a third of its value in seven months before recovering. Like many other Old Economy stocks, it has lost ground in 2000 and sits roughly where it was three years ago.

Then there is the problem of mints, particularly those sold under the brands Altoids, Tic Tacs and Mentos.

Teresa Tarantino, editor of Professional Candy Buyer magazine, said mints have grown increasingly popular because they are more socially acceptable than gum. And as Americans grow fonder of spicy foods, she said, eating high-intensity breath mints afterward has caught on.

True to family tradition, 36-year-old Bill Wrigley Jr., who succeeded his father, remains wary of this upstart product. Asked by a shareholder at the annual meeting last March in Wrigley's stately downtown headquarters whether the company would push into mints, he said it was being evaluated but sounded skeptical.

"One potential downside is that the mint market is not all that large relative to the chewing gum market," Mr. Wrigley said. "However, it is growing at a healthy pace, so we will be evaluating it as part of our overall strategic planning process."

One thing about the new strategy is certain: Wrigley won't try to peddle just the same old gum any more.

While U.S. per-capita use of gum is among the world's highest the average person chews 190 sticks a year the company can no longer count on Americans' love of the stuff guaranteeing it strong profit growth.

But Wrigley is currently pushing two new mint-flavored gums.

Eclipse, introduced last summer as a response to Philip Morris' brisk-selling Altoids, was its first new U.S. product since 1994, when the company brought out Winterfresh now the nation's top-selling sugar gum. More recently it launched Everest, made by a Wrigley subsidiary, which is packaged in a tin similar to Altoids.

The company also is testing a cough-suppressant gum in Canada and teeth-whitening gum in Europe innovations now seen likely to make their way to the United States soon.

Putting his stamp on the venerable firm, Mr. Wrigley has hired high-level marketing executives from Procter & Gamble and Gillette to form his own team.

Now the market is eager to see third-quarter results in October. If the surge in U.S. sales has continued, it might be time to proclaim a turnaround.

"Eclipse has been a step in the right direction," said Mr. McMillin. "But they need even more innovation to leave everyone convinced."

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