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March 25, 2010

In the spotlight: consumer insights

What does the chewing gum category look like from a consumer point of view? What matters, and how has their behaviour changed during the financial recession? These are some of the issues we will discuss in this article.

The basic dynamics of the chewing gum category:

1)   The chewing gum category is characterised by being extremely impulse driven.

  • More than 80% of chewing gum is bought on impulse, i.e. the decision is made inside the store, which explains why 75% is picked up at the checkout line.

2)   To many people, chewing gum is nice to have on them in case they need to refresh themselves, but they can easily live without. The general rule of thumb is therefore: if they can’t find what they are looking for, they just walk away.

  • Visibility, clear and easy-to-understand signalling, avoidance of out-off-stock situations, eye-level merchandising and broad distribution are tactical disciplines that branders need to master.
  • According to studies carried out by GCC, potential loss of sales due to out-of-stock situations alone are 40%.

3)   Innovation is key to unlocking this category. Research shows that consumers value being able to choose from a wide variety of gum, and they love to be inspired by new and exciting products.

  • In the Netherlands, the share of chewing gum sales in 2008 and 2009 from new items reached 30-40%. (IRI scanner data)

4)   Chewing gum is traditionally not a very price-sensitive category. This is mainly due to the fact that its value in terms of the overall shopping basket value is very limited. On top of this, the buying process in most cases is triggered by impulse.

  • Price promotions/coupons are not normally enough to engage the shopper, unless connected with a campaign for a new brand/variant. Promotions have to be supported by eye-catching POS material at the checkout zone to work efficiently.

5)   Heavy chewing gum users are young people from 15-24, and penetration is highest among women. Contrary to what you would expect in a target group like this, brand loyalty is high (between 60-75% according to ACNielsen Household panel data and GCC customer survey).

 

Changing shopping behaviour

The financial crisis has impacted the way we run our households and shop. Nevertheless, the last 12-15 months have shown that the consumers still need a little extra treat – especially in times like these – to keep them going.

The question regarding chewing gum is not so much related to what the consumers buy, but rather a question of where they buy and how often.


1.  
Discounters have enjoyed massive growth

  • Scandinavian consumers (and those of other countries) are still affected by the recession, and the economic climate is playing a key role in the consumer's choice of retailer and products. This has led to more conscious behavior towards special offers and shopping more  at discounters. (Europanel)



2.   The number of grocery shopping trips has decreased (e.g. -3% drop in Germany in the 3rd quarter 2009 versus the same period in 2008)

  • Households are shopping less often for FMCG products, suggesting that they are keeping their expenditure under strict control.(Europanel)

3.   Shift from national brands toward Private Label

  • In Spain, Private-label chewing gum has grown from barely 1.5% in 2008 up to 8.7% in the last quarter 2009.

4.    Health and well-being concerns are growing
(GfK Roper Reports Worldwide 2009, based on a survey of 30,000 consumers in 25 countries + Health & Wellness: Redefining Healthy Living, IRI Nov 2009)

 

Chewing gum research carried out by GCC reveals that chewing gum is seen to fit perfectly with consumer desire for a more healthy way of living.

Examples:

  • Chewing gum is used as a replacement for unhealthy snacks/sweets + suppresses hunger by 20% for regular gum users – especially women
    (GCC consumer study in NL, Nov. 2007)

  • Mental well-being is becoming popular. Wrigley Orbit Balance with Papaya & Aloe Vera in Germany has been well received by end consumers.

 

Future trend: Going from value to values?

Household panel data from Europanel shows that discounter market shares in the “discount stronghold” of Germany has started to decline after several years of constant growth.  Furthermore, the entire confectionery category has moved from being volume to value driven, for example in Germany (growth of -2.0% versus +1.3%), according to the latest market data from IRI (4th quarter, 2009). In addition, we also see fair trade booming around Europe, especially within chocolate. Consumers are shifting away from focusing solely on price, to making more meaningful and holistic shopping choices. Since confectionery and chewing gum is perceived by consumers as an affordable luxury item in their everyday life, brand equity and taste sensations play an increasingly important role.


A prime example is shown below, from Germany

Another example, from Denmark illustrate how a national brander is allowed to charge a premium price for the same type of product, as long as they add some natural benefits to it.



 

Let us share our extensive knowledge about consumer behaviour with you. Contact your Gumlink Confectionery Company sales manager for more insights.

 
Gumlink Confectionery Company A/S - Dandyvej 19 - 7100 VEJLE - DENMARK - T +45 4647 5400 - F +45 4647 5449 - info@gumlinkcc.com
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