Wrigley Solves Sticky Problem of Price Hikes
How do you increase chewing gum sales? By raising the price of a stick of gum, of course.
Well, at least that’s the strategy of the William Wrigley Jr. Co. in raising chewing gum prices to 5 cents a stick.
And industry analysts seem to think it will work.
On March 30, the company that sells Wrigley Doublemint (the nation’s best-selling chewing gum), Spearmint, Juicy Fruit and Big Red brands introduced not only a new price but a new, smaller pack with five sticks for 25 cents. It also raised the price of its seven-stick pack to 35 cents.
Although the price of a single stick of gum is higher, Wrigley says consumers are more concerned with the price of the pack. The nation’s largest gum manufacturer thinks consumers will buy more packs at 25 cents--even with a higher price per stick.
But Wrigley’s smaller packs of gum and higher prices were quickly criticized by competitor American Chicle Group, a division of Warner Lambert Co. and maker of Chicklets, Trident and Dentine brands.
“The trend in the confectionary industry has been to offer consumers more for less; Wrigley is giving them less for more,” said John F. Walsh, president of American Chicle in a statement released this week.
In its defense, Wrigley says its price increases are the first in four years. American Chicle and Nabisco Brands, maker of Bubble Yum gum, also have raised the prices on their chewing gums twice in the past two years, the company noted.
Higher pack prices have hurt sales of seven-stick packs: The average price of seven-stick pack of gum has risen 50% during the past six years while sales volume has declined 39% industrywide, say Wrigley officials.
Overall, the amount of chewing gum sold annually has increased by about 1%. But thanks to price increases, the dollar volume of chewing gum sales has increased by an average of 14% a year, reaching $2.8 billion last year.
Wrigley’s 25-cent pack might help boost sales volume, analysts say. “The consumer is ready to plunk down a quarter for a pack of gum,” said retailing analyst David S. Leibowitz with American Securities Corp. “At 35 cents a pack, there is more resistance.”
The lower price per pack is also a “good incentive to attract new gum chewers,” said Orlando, Fla., snack food consultant Lisbeth Echeandia.
The strategy paid off in test marketing, said Wrigley’s corporate secretary William M. Piet. “At the lower price point, we actually increased unit sales--that’s what it is all about.”
THE CHEWING GUM MARKET Market share based on total gum industry sales in 1986 of $2.8 billion. William Wrigley Jr. Co.: Wrigley’s Spearmint, Doublemint, Juicy Fruit, Extra . . . 50% American Chicle Group: Dentyne, Trident . . . 28% Nabisco: Bubble Yum . . . 20% Others . . . 2% Source William Wrigley Jr. Co.
