Chewing gum market shrinks in Brazil

The Brazilian market for chewing gum is shrinking in volume, getting more focused and targeted towards products with higher added value. Some small manufacturers have left the thread, but competition has increased for the industry leader, the American Mondelez International (formerly Kraft Foods), owner of Trident and Buballoo brands. Since 2007, with the arrival of Dutch-Italian Perfetti Van Melle, the Mondelez has to deal with more contention in sugar-free chewing gum, which was practically the only competitor, with the brands Trident and Clorets. Changes in habits of Brazilians made the demand by sugary lines decrease. The Mondelez has six brands with this profile in the country-Buballoo, Chiclets, Certs, Freshen-Up, and Plets Clorets sweetened.
The global Mondelez recipe with candies and chewing gum retreated 2 percent in 2012, "mainly due to bubble gum," said in a conference with analysts Irene Rosenfeld, Chairman and CEO of Mondelez, during the presentation of results in Illinois, United States, in February this year. The Brazil was cited several times in the event. Irene said that the fall in revenue with chewing gum in Brazil, as well as in Japan, had already been discussed in the Conference last year, and that its impact was not worse only because other markets such as China, offset the movement.
The challenges faced by the Mondelez in Brazil are not restricted to the company. Are reflections of an industry that, like other consumer goods, goes through profound transformations in the Brazilian market, with rising incomes and demand for higher value-added products.
Between 2008 and 2012, the chewing gum market shrank 13.2% in volume in the country, whereas in the world, grew by 6.25%. The data from Euromonitor consulting, also show that, during the same period, the industry's revenue increased 25% in Brazil and 15% in the world. "The market has this movement, falls in volume and grows in value," says Henry Romero, President of Perfetti Van Melle in Brazil. Only in 2012, the volume shrank by 4.4%, and the value rose 2.6%, he says.
Hiran Chatterjee, Vice President of the Brazilian Association of Chocolates, cocoa, peanuts, hard candies and derivatives (Abicab), says that this movement is "a reflection of the industry as a whole", and also affects candies and lollipops. Considering the three types of products, the volume produced in the country fell 6.7% in the past year, he says.
Changes in the marketplace of gum are not today. Between 2008 and 2012 downturn in production of "bricks are combined" (rectangular and soft, type Ping Pong), and the manufacturers felt the thud, according to Chatterjee. "Some came out of the thread not to compensate."
From small businesses to multinational corporations, about 15 manufacturers had affected business, says keys. "Some have stopped manufacture, others decided to migrate and others have reduced production." The Brazilian Dori and Parati manufacturers, for example, are producing chewing gum, but prefer to allocate new investments for other categories such as snack foods.
The chewing gum with sugar are its main public today in the country's North and northeast regions of Brazil and argentina focus Arcor-this, leader in the segment. "Our line is focused on wholesale and Northeast. Chewing gum is popular, but today the parents don't want the child to consume gum with sugar, "says Deborah Grobe, Parati. "The North and Northeast have high consumption, but the curve is tied to the income of those States also" says Loredana Mariotto, Director of marketing for Arcor of Brazil.
The Northeast has been the main market of Dori, post today occupied by the Midwest. The company sells only the gum "bricks are combined", manufactured in one of its four factories, in Rolândia, Paraná. "The product has low added value, but the Northeast drive, increased income, made the sale lose strength," says marketing manager of Dori Jean Paiva. "Dori ceased to take an interest in this niche, the product does not return, and who sells, works just to make up the mix. We are reviewing and analyzing other formats. "
Chaves Abicab, says that the sugar-free gum held sales of the category in the past five years-without the thread, the fall would be even greater. The framework is the result of a migration in consumption: the Brazilian purchase less sugary gum and pay more expensive by sugar-free. And matches the input of Perfetti Van Melle in gum in Brazil, in 2007. Before, the company produced only bullets in the country.
"Grow double digits since I started using chewing gum. And this on the basis of product, brand communication, experience, and packaging ", says Henry Romero. The gum is now at least 30% of the revenue of the Perfetti Van Melle in Brazil, compared with 15% in the first year of operation, he says. Since the arrival of Mentos, the Mondelez has released other versions of Trident, with different flavors and formats.
Sought by Value, the Mondelez in Brazil declined to comment on the topic.
Develop products with technology is essential to survive in this industry, said all executives heard the report. The Dori, for example, is investing $ 15 million in a center of innovations on the highway Castello Branco. On site, will study the development of new formats of gum and analyze a possible return to the market-this time, with higher value-added products, says Jean Paiva.
At the Conference with analysts in February, CEO Irene Rosenfeld said that innovation is the solution for Mondelez around the world: "the loss of participation [in the bubble gum market] is clearly fixable. We have implemented various sales tactics, marketing initiatives and launched strong innovations ".
But the prospects are not of immediate recovery, she said, talking about the global operation. "The decline of category will take longer to be fixed. We continue to expect that the turnaround in chewing gum to happen over the next two years, before we start to see ' low single digit growth. This is a slower recovery than we would like. "