Business Studies/writing

Cadbury Schweppes' £10 million launch of Trident gum in February this year has called into question Wrigley's domination of the chewing gum market.

The launch of Trident chewing gum is Cadbury Schweppes' biggest ever marketing campaign. The company is playing for high stakes, hoping to secure some of the 98.4% market share which Wrigley's Orbit and Spearmint chewing gum brands command in Britain. The statistics indicate Trident has yet to make a significant impact in the UK market, but public opinion suggests otherwise. The successes the company is having in the US could soon be reflected in the UK confectionary market.

The last two years saw an annual drop of 4% in gum sales in Britain, but this belies sector growth of 47% over the last 8 years. John Sunderland, Cadbury Schweppes' former Chief Executive, claimed in 2003 that Cadbury Schweppes's $4.2bn acquisition of Adams Confectionary would give Cadbury's global leadership of the confectionary market. Although some analysts valued Adams Confectionary at only $4bn, suggesting Cadbury's had overpaid, chewing gum is the world's fastest growing confectionary sector, making the takeover a strategic move.

Wrigley's welcomes competition: its UK Managing Director Gharry Eccles suggests 'it sharpens our edge and fuels our drive to win'. Last month Wrigley's launched new products Extra Ice and Orbit Complete, and Wrigley's Extra became the official chewing gum of the Premier League. Clearly, the company is upping the ante in the battle for the UK gum market. Nonetheless, Simon Baldry, the managing director of Cadbury Schweppes' UK told Reuters that the 'gum revolution' is a Trident tag line highlighting the need for innovation in the market. This is a clear jibe at the stranglehold Wrigley's has over the UK market. Analysts at Reuters have warned that it could take significant time and money to overturn Wrigley's domination of the UK gum market. Yet with Cadbury Schweppes' sales power and potent worldwide brand image the company is well-positioned to take on Wrigley's. Figures from AC Nielsen indicate that Trident has already captured 12% of the UK gum market just one month since its launch. With overall sales of chewing gum having increased by 13.2% since February, this would suggest Wrigley's have only a 1.2% share of the rise in sales.

The profile of Wrigley's main competitor is rising, with Trident having come under public fire for their recent advertising campaign. 'Mastification for the Nation', the slogan for several television advertisements has been criticized by minority groups for allegedly mocking the Jamaican accent. Recent case studies also suggest that Trident gum represents better value for money because of its long lasting flavour.

In the US Cadbury Schweppes' new product Stride has secured 3% of the market since its launch in June. Conversely, Wrigley's market share has decreased from 67% to 63% since September 2005 according to figures from Bear Sterns. Just as Cadbury Schweppes has done in Britain, the company 'have come out with a new brand altogether, not just a new flavour', says Morningstar Inc. analyst Mitch Corwin. Cadbury Schweppes has adopted a relentless promotional drive, giving out samples of Stride at college campuses, after film showings and at other events. Recent reports by Credit Suisse indicate that Wal Mart has been promoting Cadbury Schweppes more than Wrigley's by dedicating extra shelf space to the company's products.

It remains to be seen whether Cadbury Schweppes can mount a sustained threat to Wrigley's in the UK. However, the 2006 lawsuit Wrigley's filed against Cadbury Schweppes for 'violation of its trade dress' may foreshadow share prices. Wrigley's last year claimed that Cadbury Schweppes intentionally replicated its packaging, and are seeking extensive damages because of this alleged violation and their loss of sales.

Given Cadbury Schweppes' soaring sales in the US, the company may see their successes in the US reflected in the UK in due course. The statistics indicate then that Wrigley's may well be feeling the pressure of what Cadbury Schweppes are calling the 'gum revolution'. .