Mondelez: ‘Long before COVID, gum has been a difficult category … but it’s important to us,’ snacking
“Long before COVID, gum has been a difficult category, but it does play an important role in snacking,” and even though it is a “relatively smaller” business in North America, “it’s important to us,” Glen Walter, executive VP and president of North America, told investors earlier this week at Jefferies Virtual Consumer Conference.
He explained that while the company’s review of the gum segment is still in “early stages,” the business is showing “some positive outcomes.”
For example, Walter said, Trident – which he characterized as an “incredibly strong brand” – has “very clear positioning that resonates with consumers,” and “very strong equity.”
He held up the brand’s “Chew Through” campaign, which was unveiled in February 2020 just before most of the US locked down due to the coronavirus outbreak.
The campaign positioned Trident as providing “a bit of fresh, go-to support” for life’s tense moments – which at the time, included as a primary example consumers' daily commutes. As part of the campaign, Trident took over commuting destinations, including subway stations and various transit locations in key cities to remind commuters to ‘chew through everyday annoyances.’
Gum sales overall – not just for Mondelez – fell dramatically during the pandemic
Just over a month after the campaign launched, most Americans were no longer commuting but they did face a slew of new challenges related to the pandemic and were in desperate need of relief.
While Walter said the “idea of delivering relief through chewing” continued to resonate with consumers, gum sales overall – not just for Mondelez – fell dramatically during the pandemic. According to IRI, the gum category brought in only $2.88bn in sales in year ending June 14, 2020, which represented an 8.2% drop from the prior year. Unit sales also fell 14.6% to 1.52bn in the period.
But strong consumer communication is not the only thing that Mondelez’s gum portfolio has going for it, according to Walter.
He also praised the company’s focus on fundamentals when it comes to gum and ensuring that “we are executing with excellence in front of store,” and “arresting any of our GDP declines” by focusing on recent innovations, such as Trident Vibes, which launched several years ago. He added the company has “good innovation around flavor.”
Finally, Walter said, Mondelez has seen that its gum brands are “on trend with where shoppers and consumers are” by offering different pack sizes and formats to meet different needs, such as a larger Pocket Pack, which he described a multipack that is “doing well.”
The #1 gum on Amazon
Finally, Walter touted Trident as “the No. 1 gum” on Amazon, and said that Mondelez is investing in other channels to ensure its success in traditional food and mass in the front and back of store, and in c-stores.
The ultimate goal, he said, is that once the economy and nation fully recover Mondelez’s gum business will be “in position to be a strong choice for consumers.”
Walter’s reassurances about Mondelez’s faith in its gum business come less than a month after CFO Luca Zaramella told investors that it was conducting a strategic review of the business with a primary goal “to fix the business and allow the business to return back close to 2019 levels, ie. Pre-COVID levels.”
Once that happens, Zaramella said, Mondelez will be in a better position to “potentially assess whether there are other avenues for us to create more value of Mondelez shareholders.”
