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In 2008, Wrigley was acquired by Mars in partnership with Warren Buffett for $23 billion.[1]

The WM Wrigley Jr. Company (NYSE: WWY) is the world's leading chewing gum manufacturer Atop the chewing gum industry, Wrigley is looking to opportunistically expand products beyond its core chewing gum franchise and source additional growth from its already strong international division. It also faces particular challenges from main competitor Cadburyhorses(CSG), the number two chewing gum player.

While Wrigley earns approximately 90% of revenue from chewing gum, it has expanded into other confectionery products such as breath mints, hard candy and Chocolate. The company extended into non-gum confections by acquiring several brands from Kraft Foods (KFT), including Life Savers, Altoids, and Creme Savers. Wrigley also bought majority control of a premium Russian Chocolate company, A. Korkunov, in order to further diversify outside of chewing gum.

A large portion of revenue growth comes from outside North America, which accounts for only one-third of total sales. Key regions of focus include China, which remains largely untapped for chewing gum, and the U.K., a mature market where Wrigley's 99% market share eroded to 85% in a matter of months due to Cadbury's introduction of its Trident gum brand. Asia - especially China - remains a potentially lucrative market due to the large population size and relatively untapped customer base.

Company Overview

Wrigley was founded in 1891, when it introduced its first two brands of chewing gum: Juicy Fruit and Wrigley's Spearmint, both of which are still sold today. In addition to the original brands, Wrigley owns and sells chewing gum under the following brand names: Doublemint, BigRed, Boomer, Winterfresh, Extra, Orbit, Excel, Hubba Bubba, 5, and others.

Wrigley expanded into other confectionery products in 2004 by acquiring several brands from Kraft Foods (KFT), including Life Savers, Altoids, and Creme Savers. In February 2007, Wrigley acquired an 80% interest in the Russian premium Chocolate company A. Korkunov in order to further diversify its confectionery production outside of chewing gum.

Competition

One major difference between Wrigley and Cadbury Schweppes is their product mix of sugar sweetened and sugar free gum; an overwhelming 90% of Cadbury Schweppes' chewing gum is sugar free, while only 77% of Wrigley's chewing gum is sugar free. This gives Cadbury Schweppes an advantage as the current consumer prefers sugar free gum. Currently, Cadbury Schweppes is taking market share away from Wrigley, both domestically and internationally (notably in the U.K.). Cadbury Schweppes is a larger company than Wrigley counting revenue from beverages and non-gum confectionery products, potentially giving them scale advantages in purchasing power, marketing and other resources.

References

  1. Mars Acquisition of Wrigely: 3rd Biggest Deal of 2008. CNBC (April 28, 2008).
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