Too little NPD, or perhaps too much in gum

When the going gets tough, the tough get chewing. That, at least, is what Cadbury and Mars, new owner of Wrigley, will be counting on after an eventful but disappointing year in gum.

Warren Buffett, the man Forbes ranks as the richest person in the world, certainly thinks so. On the same day Buffett said the US recession would be worse than first anticipated, he contributed $4.4bn to fund Mars' landmark purchase of Wrigley, a deal that went through in October. Wrigley thrived during the great US depression of 1907, as workers still found money to spend on gum. Perhaps Mars is hoping for a repeat performance.

That Wrigley's Extra remains the dominant brand, at a value of £175.3m and more than twice that of its closest rival Haribo, will give Mars only little cheer this year. Value sales of Extra fell 3.1% despite the backing of a £30m spend this year, and sales of the UK's second-biggest gum brand, Wrigley's Airwaves, plummeted 11% in value.

Overall, the sugar confectionery market performed slightly better, with value sales stagnant at last year's figure of just over £1.2bn and volume up 2.2%. However, with inflation running at about 5%, in real terms this constitutes a fall, with a reduction in pack weight to maintain 2007 pricing levels and a switch to cheaper own label taking its toll on the market. But all eyes are understandably on gum, as the market looks to see what a Mars-owned Wrigley will do.

If 2007 marked the beginning of the gum wars, with Cadbury's Trident entering the UK, 2008 saw hostilities intensify. In March two new lines were added to Wrigley's Orbit, backed by a strong TV spend. Cadbury retaliated with four Trident flavours and two new sub-brands, Fresh and Sweet Kicks.

On the face of it Trident has had the better run, having overtaken Wrigley's Orbit to take ninth spot in the brands table and growing sales by 10.3% to £26m. Yet it is falling behind Cadbury's projections of £20m value growth each year for the first five years and the signs are that when Trident is less heavily advertised sales are not as strong.

"Confusion is perhaps setting in for consumers and retailers alike due to a large number of products being available from both Trident and Wrigley," says Jonathan Summerley, senior buyer at leading confectionery wholesaler Hancocks. "This could potentially develop into a problem for the category if not properly addressed and has already led to Trident's performance falling back after its first year."

Top Launch - Jelly Belly Sports Beans (Best Imports) 
In a category bereft of meaningful NPD, Jelly Belly Sports Beans stick out like an American footballer in Swan Lake. The beans, which were previously only available in the US, are formulated with carbohydrates, electrolytes and vitamins B and C for a fast source of energy. The flavours - orange, lemon & lime, berry blue and fruit punch - are more suited to US taste buds, but that doesn't stop us admiring them.
If too much NPD is turning off gum consumers, a lack of innovation is having a similar effect elsewhere in the category. Sales of own label have risen 5.1% in value, driven by an increasing amount bought on promotion, such as the ubiquitous three-for-£1 mechanism used in the multiples, and consumers turning away from brands to cheaper alternatives.

With the notable exception of Starburst Twisted - which combined two flavours in one chew - branded NPD has been very poor, says Summerley. Tellingly, the sugar confectionery launch that got the most publicity this year was Opal Fruits - returning Starburst to its original form for 12 weeks at selected Asda stores - contributing to a 17.3% sales hike. NPD for Skittles, another Mars brand, has come in the form of Confused, where the colours and the corresponding flavours have been muddled up, but no new flavours or colours created.

"The lack of innovation from the core brand manufacturers is a notable weakness in sugar confectionery," says Summerley. "We have experienced huge growth in own label and lesser-known branded ranges that offer value to the customers."

The earliest Easter since 1913 didn't help. Easter is a particularly tough time for sugar confectionery, as consumers switch to chocolate, but its early date hit first-half sales harder than many anticipated.

Ofcom's ban on advertising confectionery to children also continues to take its toll, as have press reports about e-numbers in confectionery being linked to hyperactivity in children. In March, The Food Commission outed brands such as Trident Splash for containing suspect ingredients and seven additives were highlighted in an FSA study into the effect of colours and preservatives on children's health.

Although the European Food Safety Authority later concluded that they did not put children at risk, such publicity has no doubt changed how adults shop the category for their children. Healthier products, and in particular those that have shouted about their healthier reformulations, have put in the best performances this year. Nestlé Rowntrees' gums and jellies, for example, grew by just shy of 10% this year, indicating that the brand's early switch to include more fruit juice continues to win favour among consumers. Maynards' gums and jellies sales grew by almost 6%, helped by its half-sugar variant and the rerunning of its retro Set the Juice Loose campaign this year.

Cadbury also stepped up its focus on The Natural Confectionery Company brand with a multimillion campaign across the summer including a heavily weighted TV campaign. Its Bassett's Babies, which has also made a strong play on the fact it doesn't contain any artificial colours or preservatives, performed well this year, with sales up 12.3%.

Haribo, a brand ostensibly for children, has fared less well, with value falling 1.8% in spite of TV ads promoting to adults. The brand played down the fact it has removed artificial colours, with its ads concentrating on the fun side of confectionery. It's a tactic that clearly hasn't worked.

View The Grocer's definitive Top Products 2008 survey