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THE BACKGROUND

UK consumers may be turning their backs on mints, but bubblegum is still a firm favourite among children and chewing gum has been bolstered by a sugar-free repositioning as an oral-care product promising users cleaner and whiter teeth. The looming smoking ban is also likely to boost sales of gum among smokers trying to ease cravings.

The decline in the mint market has prompted manufacturers to invest in innovative new textures and flavours, and Mintel expects the combined sector to grow by 9% in real terms by 2010.

While chocolate is deemed unhealthy and mints considered old-fashioned, chewing gum has taken off due to its repositioning as an oral-care product.

British consumers chewed their way through an estimated £552m worth of chewing gum and mints in 2005, but it is gum rather than mints that is maintaining growth rates, according to Mintel.

Although heavy users of chewing gum are among younger age groups, more than half the adult population chews gum and accounts for two-thirds of the market, with sales growing 8% in the past two years.

In the same period mints, which tend to be eaten more by older adults, have suffered a 4% fall in sales and are expected to drop below £200m in 2005.

In the chewing-gum sector, consumers have been won over by sugar-free products, which are responsible for 86% of sales, while regular gum sales are declining, down 11% in value since 2001. Manufacturers have focused on the dental health aspect of sugar-free gum, which has continued to boost sales.

This market also benefits from adults quitting smoking. Sales often increase in the new year and during Lent, when smokers turn to gum and mints to ease cravings. With a smoking ban in many public places due to be enforced from April, this market looks set for a further boost this year.

Bubblegum remains a favourite for children, with soft gum especially popular and largely responsible for the 8% growth of the sub-sector since 2003.

The mint market is in decline, however, with boiled mints suffering the biggest drop in sales, down 19% since 2003, though the extra-strong and soft (chewy) mint markets have rallied in the past two years. Packaging in this sector has traditionally been roll-pack, but the brands that have been performing better have been those using more innovative packaging to stimulate interest.

Controlling duopoly

The combined chewing gum and mint market is a duopoly between Wrigley and Cadbury Trebor Bassett.

Wrigley has more than 50% of the market and its Extra brand of gum, mints and mint strips is worth £170m. It has operated in the UK since 1911; the US family-owned firm has its British headquarters in Plymouth. Its core business is gum, although it has recently expanded to include Extra Mints, worth £5m, and its innovative breath-freshening mint strip Extra Thin Ice.

Recent NPD has focused on flavours and textures such as Strappleberry Juicy Fruit gum, crunchy Sour Raspberry and Watermelon Hubba Bubba bubblegum, and Professional Orbit gum with micro-granules to make teeth feel cleaner.

Last year Wrigley announced it had bought the Altoid mint brand from Kraft Jacobs Suchard and that it was opening a global innovation centre in Chicago to develop wider confectionery brands beyond its core mint market.

Innovation will be especially important in the face of serious global competi-tion from Cadbury Schweppes, which bought the Adams gum brand from Pfizer two years ago and is building share in markets including the US, where it has the Trident gum brand, Canada and France.

However, in the UK its gums have not taken off and it delisted its 24-7 brand in April 2004. It has instead a firmer, although shrinking, footing in the mint sector. Cadbury Schweppes subsidiary Cadbury Trebor Bassett's mint brands include Trebor, Extra Strong, Murray Mints and Softmints.

The latter have gained share with a modest 3% growth since 2003, but Trebor Extra Strong Mints has suffered a decline. Its bubblegum brands Bubbaloo and Bubblicious have also grown and now make about £8m a year.

Big Bear, owner of Fox's Glacier Mints, has enjoyed the biggest growth since 2001. A management buy-in secured the Fox's brand from Northern Foods in 2003 and the XXX Extra Strong Mints brand is one of the few in the mints sector to increase sales, although it remains a small player.

Niche players

Other brands operating in this sector include Spanish firm Chupa Chups with its Smint brand, Italian company Ferrero Rocher's Tic Tacs, which have performed well since 2003 when it returned to TV advertising, and the iconic Polo brand owned by Nestle. The Swiss food giant has tried a range of Polo brand extensions and also linked with Colgate-Palmolive, which led to the launch in 2003 of the functional gum brand Colgate Dental Gum.

The gum and mints market is rare within FMCG in that multiples do not dominate sales. Just over half of the market is through the impulse sector, with multiples taking 48%.

Mintel predicts that the next five years will see the combined market increasing 18%, reaching £652m by 2010 - growth of 9% taking inflation into account. The growth will come from chewing gum and bubblegum, with mints continuing to decline, albeit at a slightly slower rate than it has experienced.

CHEWING GUM AND MINT SALES BY BRAND 2005 (est) 2003 03-05 pounds m % pounds m % % chng 1 Wrigley total 290 52.5 265 49.5 9.4 Extra 155 28.1 146 27.3 6.2 Airwaves 47 8.5 39 7.3 20.5 Orbit 45 8.1 40 7.5 12.5 Extra mints 10 1.8 n/a n/a n/a Classic brands* 15 2.7 16 3 -6.3 Hubba Bubba 13 2.4 10 1.9 30 Extra Thin Ice 5 0.9 4 0.7 25 X-Cite n/a n/a 10 1.9 n/a 2 Cadbury Trebor Bassett total 115 20.8 125 23.4 -8 Extra Strong Mints 30 5.4 31 5.8 -3.2 Softmints 30 5.4 29 5.4 3.4 Bubbaloo/Bubbalicious 8 1.4 7 1.3 14.3 24-Jul n/a n/a 4 0.8 n/a Other & own-label 47 8.5 54 10 -13.0 3 Big Bear 15 2.7 8 1.5 87.5 XXX Mints 5 0.9 2 0.4 150.0 Fox's Glacier Mints 10 1.8 6 1.1 66.7 4 Nestle Polo 32 5.8 42 7.8 -23.8 5 Ferrero Tic Tac 17 3.1 14 2.6 21.4 6 Chupa Chups Smint 6 1.1 5 0.9 20.0 7 Other/Own-label 77 13.9 76 14.2 1.3 Total 552 100 535 100 3.2 Source: Mintel * Wrigley Spearmint, Doublemint and Juicy Fruit CHEWING GUM AND BUBBLEGUM COMPANIES BY ADSPEND (£000) 2005* 2004 2003 2002 2001 2000 1 Wrigley 7426 15,071 19,042 17,095 16,045 17,471 2 Cadbury Trebor 0 3 1,560 87 58 5 Bassett 3 Other brands 0 32* 1 0 20 0 Source: Nielsen Media Research/Mintel *Jan-Aug **includes MasterFoods Skittles Gum MINT MANUFACTURERS BY ADSPEND (£000) 2005* 2004 2003 1 Wrigley (Extra Mints) 2200.8 1775.8 1414.6 2 Ferrero (Tic Tac) 833.8 1124.5 3321.9 3 Chupa Chups (Smint) 139.8 265.3 1365.5 4 Nestle (Polo) 17.5 1234.3 1.9 5 Cadbury Trebor Bassett 4.7 1461.40 0 Total 3196.6 5861.3 6103.9 Source: Nielsen Media Research/Mintel *Jan-Aug

ANALYST COMMENT - JOHN BAND, SENIOR ANALYST, CONSUMER MARKETS DATAMONITOR

British consumers spent £284m on chewing gum in 2005, up 3.1% on 2004, according to Datamonitor. Gum sales in the UK have grown more than 2% every year since 2002, and this is expected to continue. However, the UK is only 11th out of 20 European countries for gum spend per head, although it comes fifth out of 20 in terms of overall confectionery spend.

The main reasons for the difference are historical: gum only arrived from the US in the past 50 years, whereas chocolate and sweets are part of British culture, accounting for 68% and 23% of Brits' confectionery spending respectively. This is changing slowly, with gum's share of the market set to rise by 0.1% to reach 4.6% by 2010.

Mints are almost as important as gum to British consumers, with sales reaching £238m in 2004. However, the category is losing share - mint sales rose by just 1.4% last year, and are expected to show annual growth of about1% over the next five years.

The problem is perception: despite the introduction of exotic products such as Fox's Foosh Power Mints, they still carry a staid, traditional image, which restricts them to a niche market and makes launches less likely to succeed. Indeed, whereas British-made Altoid mints have had great cult success in the US, perceptions about the category make this unlikely to be repeated in the UK.

Instead, chewing gum has gained sales from time-pressed consumers demanding mint-based refreshment.

Gum manufacturers were quick to adjust to consumers' desires for sugar-free and other needs, and perceptions of gum as novel and innovative have helped ensure that new products have struck a chord with the public.