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By Rozanovitch
November 14, 2003

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Wrigley Corporate Overview
The Wrigley Company is a recognized leader in the confectionery field and the world's largest manufacturer and marketer of chewing gum, with global sales of over $2.7 billion. The Company markets its world-famous brands in over 150 countries. Wrigley is the dominant chewing gum maker in the world, with a U.S. market share greater than 50%, and 80% share in parts of Europe. It currently manages 14 manufacturing factories worldwide, including three in North America and four in Europe.

Wrigley's products include such popular brands as Doublemint, Extra, Freedent, Juicy Fruit, Big Red, and Spearmint. Wrigley's subsidiaries include Amurol Confections, maker of novelty gums and candies (Bubble Tape, Everest, Squeeze Pop, Velamints); L.A. Dreyfus, producer of chewing-gum base; and Northwestern Flavors. New flavors last quarter: Grapermelon and Strappleberry, as well as Wildberry Frost Extra gums and two new Orbit flavors, Cinnamint and Bubblemint. The company plans to bring out a new mint in the U.S. under the Eclipse brands in January. Wrigley has been defined by it's brands for over a century.

The Wrigley and Offield families own about 35% of the company and control about 60% of the voting shares. Chewing gum became Wrigley's company product with a formula that has generated a 20.3% return on assets over the past 10 years.

The Wrigley Healthcare Division was established in 2000 to develop and market products that use chewing gum to deliver active ingredients that provide health benefits.
1. Wm. Wrigley Jr. has been granted a U.S. government patent to develop a gum that contains a dose of the generic chemical in Viagra.
2. Job Ad: The Wm. Wrigley Jr. Company, global leader in the manufacturing and marketing of high-quality chewing gum products has an immediate opening for a Technology Scientist-Dental Benefits in the Research & Development department in Chicago. (Propose, develop and execute dental benefit research programs, which lead to new technologies and product improvements.)
3. First product, Surpass, a great-tasting, fast-acting way to treat heartburn.

Business Model
Marketing and selling gum generates the bulk of revenues. Expenses are very low cost per package of gum for a company that creates a lot of cash flow, an indicator of competitive advantage. International presence is a market plus. Despite its dominance, Wrigley has it share of challenges. Cadbury's purchase of Dandy (a Danish gum maker and competitor in Russia) and Adams confectionery ( competitor in the United States) is something of concern to Wrigley. Topps does a fine job with their bubblegum containing cards. The Wrigley website says the Wrigley way is quality, innovation, and integrity.

One Hundred Years+, a Family Business
Lions know it by nature. The strong and the powerful become sturdier and mightier in numbers strengthening a strong position. With a history of over 100 years in the chewing gum and confectionery business, Wrigley has established its brand globally seeking to satisfy the market's sweet tooth by building on an expanding confectionery sector with new products and international growth.

One hundred years+ in a family business establishes a strategic advantage, blood lines according to BusinessWeek. Family companies in the S&P far outstripped that of non-family companies. "Brought up with a sense of family history stretching back generations, CEOs such as Wrigley have a keen desire to expand and improve what they've inherited before passing it on to a new generation, as well as a reflexive willingness to put corporate interests before personal ones."

The family advantage may diminish over time but my guess is the family legacy is alive and well with 39 year old CEO William Wrigley Jr. who has been with the company since about 1988. He is well aware of his family that nurtured and grew a business through the years. It could be argued that Wrigley, Jr. has been in training to lead the company all his life.

The Founder
A few factoids on founder William Wrigley, Jr. (1861-1932). He arrived in Chicago in 1891 with $32 in his pocket selling soap, then baking powder offering a premium of two sticks of gum with purchase.
-Expelled from school at age 11 for throwing a pie at a building.
-Gave free chewing gum to customers who bought Wrigley's Baking Power (Pioneering in marketing)
-Sent samples of gum to millions of consumers listed in the 1915 telephone directory.
-Managed to buy the Cubs and the now Wrigley Field in 1914.
-Been called an ego maniac for naming the company after himself.
-Overcame bankruptcy on several occasions.
-Wrigley building is famous historical landmark in Chicago (1919).
-Purchased Santa Catalina Island (1919).
-Quote: "When two men in business always agree, one of them is unnecessary."
1893 Juicy Fruit gum and Wrigley's Spearmint gum are introduced by William Wrigley Jr.
1923 The stock was first listed on the New York Stock Exchange in 1919 and the Midwest Stock Exchange.

A Few Examples of Innovation and Integrity at Wrigley Through the Years
-One of the first companies in U.S. to give workers Saturdays off believing what was good for executives was good for the workers.
-Revolutionary tear strips on chewing gum products, 1932.
-Doublemint twins first appear, 1932.
-Global manufacturer, new production facilities in Canada (1910), Austrailia (1915), Great Britain (1927), and New Zealand (1939) introducing chewing gum to millions of new consumers aroudn the world..
-World War ll led the company to aid in the war effort: gum was found to relieve tension, promote alertness, and improve morale so large quantities were supplied the U.S. troops. Because demand exceeded supply, Wrigley removed Spearmint, Doublemint and Juicy Fruit gums off the civilian market in 1944, developing a wartime brand for civilians. Sales fell so a unique advertising campaign was initiated featuring an empty Wrigley's Spearmint gum wrapper with the slogan "Remember this Wrapper." This was hugely successful when the gum brands returned after the war.
-First manufacturer to use product UPC code in 1974.

CEO Cites Generational Growth for Wrigley
An interview with BusinessWeek focuses on "Generational Growth" of the Wrigleys. William Wrigley, Jr. focuses on family and business. He is passionate about the business, interested in the people who work for Wrigley, focusing on the culture, strengthening the business, taking a risk he says businesses today must do, he attempted to acquire Hershey unsuccessfully, will mostly likely be expanding the business into the broader confectionery category, our governing board has leaders of family businesses on it and is an added plus.


Wrigley management strategy offers powerful brand, marketing strength, and well established global distribution systems. Wrigley Jr .reported an updating of corporate strategy so as not to underestimate the effects of competition. Recent realignment of the company's leadership team was designed to better meet the demands of an evolving, global marketplace. CFO Waters says they are pursuing a strategy of diversification that includes organic development and acquisition and that they have the sales and distribution infrastructure it needs to support bringing new products to market efficiently and cost effectively.

Marketing, Branding, and Moat
Wrigley has traditionally been a very strong investor in its brands, is known to have spent over $100 million advertising their gum and is known as a pioneer and one of the first people to use ads to increase sales of their brandname product. Keep your ABC (already been chewed) gum fresh overnight by putting it in a glass of water. Besides the billboards and the magazine and TV ads, Wrigley perks it's stockholders with a holiday gift of free chewing gum. And in flight at 37,000 feet, you might hear your stewardess announce that the kind folks at the Wrigley Corporation have provided you free Eclipse Flash Strips. These breath freshener strips have held the taste advantage, as they were significantly preferred over competitors.

Branding is not owned by the company, it is owned by the customer. A brand should define the value proposition offered to customers. How good is the Wrigley brand? Good enough that China managed to counterfeit and copy Wrigley's products, Wrigley had 70 percent share of the Chinese market. The Chinese copied the Wrigley truck, drove the distribution routes, and when they called on Wrigley accounts, they paid premiums to the shopowners for acceptance of the counterfeit gum.

Wrigley is out of the ballpark in marketing, pun intended. What might the appropriate figure for tangible and intangible benefits that a sponsor gets in return for putting its name on a sports stadium? Wrigley Field in Chicago has free TV exposure with nationally televised events and been around since the owner Mr. Wrigley of the Chicago Cubs team renamed Cubs Park as Wrigley Field in 1914. Now it sits in the middle of a residential neighborhood referred to 'Wrigleyville.' The Wrigley name is heard by thousands over the airwaves and seen in newspaper sports pages during the days of summer with some 81 home games. The Cubs were sold 1981 to the Tribune Company with an option to buy the field, which they exercised. Subliminal advertising.

In March, Morningstar said that if they had a super wide moat rating, Wrigley would be on that list.Assigning moats is complicated as it refers to how likely companies are to keep competitors at bay for an extended period. Market share, low cost production, patents, and corporate culture are a few of the attributes favored at Morningstar.

When a company's products set the industry standard, that company has a competitive advantage. When that company continues to evolve it's products, and thus evolve the industry standard, that company has a sustainable competitive advantage. At issue is how durable is the competitive advantage for Wrigley?

Mission at Wrigley from their Website
Wrigley is committed to achieving generational growth and prosperity for our stakeholders. To achieve this mission, we are executing against a long-term strategic business plan based on six key objectives. Those objectives or core strategic choices include:
  Boosting our core chewing gum business�
  Expanding business� geographically and into new channels
  Diversifying our product lines in� "close to home" areas
  Focusing on innovation in our products, marketing� and business processes
  Delivering the highest quality at lowest costs�
  Growing and developing our Wrigley people around the world�
We will achieve our growth through both internal development and strategic acquisitions. To gain sustainable global competitive advantage, we will pursue excellence in execution, innovation, brand building, worldwide distribution, and merchandising.

To me their mission is to ensure that their brands are woven into the fabric of everyday life around the world. Ever been sitting next to somebody popping a Wrigley spearmint, Doublemint or Juicy Fruit gum into their mouth with the flavor wafting through the air making your mouth water? Industry watchers describe the company as conservative, I believe the younger CEO may be less conservative in spending money with product changes looking to some new horizons. They were unsuccessful in their attempt to buy Hershey.

Wrigley has managed to keep the chewing gum market more than a little sticky for the competition.

Ro

Some References:
Wrigley on the web http://www.wrigley.com/wrigley/index.asp
Wrigley Healthcare http://www.wrigley.com/wrigley/about/about_healthcare.asp
Patent anti-impotence gum http://www.msnbc.com/news/925783.asp
Businessweek
Family http://www.businessweek.com:/print/magazine/content/03_45/b3857002.htm?mz
-Generational growth http://yahoo.businessweek.com/magazine/content/03_45/b3857020.htm
-Family http://www.businessweek.com/magazine/content/03_45/b3857002.htm
History of Wrigley http://www.newswire1.net/NW1_2002/A_GHA_CH/GHA_07_01_2/Evolution.pdf
Resume of founder http://www.amiannoying.com/(iu5z1v553ferfe45d0lbr2il)/view.aspx?id=9606&collection=34
China and counterfiet gum http://www.crosswalk.com/news/1227604.html
Morningstar and moats http://news.morningstar.com/doc/article/0,1,88362,00.html
http://news.morningstar.com/news/PR/M10/D22/1066834264432.html
Corporate Overview http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=WWY&script=2100
Competitive advantage discussed in WM analysis http://boards.fool.com/Message.asp?mid=17855372


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