Gum: A $18.6 billion industry!
A blast from Snickers, Boomer, Doublemint, M&Ms' mouthwatering past.
When you go essential shopping to any retail store, how many times have you picked up chewing gum while you’re at the billing counter? Lost count? Haha, same.
The chewing gum industry is worth $18.6 billion, as of 2020. And today we are going to talk about Wrigley’s, a company that has owned 25% of this market since 2015.
Ehh? 25% of the market, but can’t recall having any gum from the brand, right?
Well, well. You definitely must have heard of Boomer, Orbit, Doublemint and Skittles. Not just those, even Snickers, M&M and Twix come from the stables of Wrigley’s parent company, Mars.
Their array of brands have become household names. However, the story of Wrigley and his chewing gum factory is very unusual.
Over a century, the brand has survived wars, recessions and what not.
Grab a Snickers and read on...
In 1891, William Wrigley Jr started a soap business. However, the soap market wasn’t that attractive. Thus, to lure customers, he started giving baking soda as a free side product.
Ironically, baking soda became more popular than soap! Hitting a mauke pe chauka, Wrigley also started selling baking soda. And to complement these two products, he started providing chewing gum as a freebie.
As luck would have it, his free chewing gums became more popular. So he shut down the shop for soaps and baking soda, and launched his own chewing gum in the flavours of Spearmint and Juicy Fruit. (Talk about side-kicks taking over the show :P)
This careful observation of market trends and deft movements in strategy made Wrigley’s a global leader. A brand that truly survived the test of times.
The first real challenge that Wrigley’s faced was the 1907 Banker’s Panic. This was the time when the NYSE fell by almost 50% and the entire USA was in a state of havoc. Quite naturally, the demand for impulsive products went down, and our star product was one of them.
Companies began adopting cost-cutting measures to cope with the crisis. And of course, the luxurious advertising expenses are the easiest ones to scratch from the list. This led to a fall in the demand and prices of advertisement spaces.
Now, Wrigley’s felt differently from all these companies. Instead of panicking like the others, he took advantage of the lower ad spaces, mortgaged everything he had, and purchased $2,50,000 worth of advertising. Absolutely crazy, no?
Well, the trick worked, as sales surged up from $1,70,000 to $3 million in 3 years. (Still wanna call advertising an expense and not an investment?)
This was his expansion period. He spread to Canada, Australia, Britain; took over companies, and even introduced Doublemint.
But, dilli abhi bhi dur thi.
To transform gum from an impulsive to a habitual product, something revolutionary had to be done. Wrigley’s needed to show how their product could play a good role in people's day-to-day lives. And that’s exactly what Wrigley’s did.
They started citing the product’s health benefits and completely changed the product perception. Wrigley’s broadcasted chewing gum as an after-meal product that helps in cleaning the mouth, thus encouraging everyone to buy it by the box.
Once this healthy message was sent across, there came his masterstroke. Freebies again. Life comes full circle, no?
He believed that those who could afford a telephone could afford chewing gum. So, he sent a pack of Wrigley’s to every home in the US telephone directory (a whopping 1.5 million homes!) along with extras on children’s birthdays.
As more people tasted it, sales rose. A pure volume game, keeping prices reasonable.
With the thunderous success and popularity, Wrigley’s went public in 1919. But the strategies didn’t stop. Wrigley’s tried everything. He broadcasted sports and took over a team, spending massive amounts, all leading to growth.
Man with a mission. Man with a passion.
And, he did not stop there. He even linked chewing gum to war! The case he made was that his product helps delay thirst. And in fact, just like that, this became essential for all soldiers protecting their country.
However, the company that shone through the crisis of 1907, even survived the wars, was sold off to Mars in the financial crisis of 2008.
Warren Buffett famously said,
I don't know what oil or wheat or soybeans or cocoa or anything like that's going to be selling for next week or next month or next year. I do know people are going to be chewing Wrigley’s gum and eating Mars bars.
And, rightly so. Wrigley’s continues to shine under Mars. And Warren Buffett more than doubled the money that he invested in Wrigley’s.
Never knew that a pack of chewing gum could wrap so much history, heritage and lessons, no?
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Incredible
phenomenal