Despite its cheerful wrapping, cheeky chipmunk logo and multi-hued candy, the future is not so rosy for Chappies, the bubblegum that, for nearly half a century, South Africans have loved to chew.
Chappies is SA's best-selling brand of chewing gum, and has been for the past 40 years. It sells 5m pieces of gum a day, more than 7,5 t/year, and generates retail revenue of more than R400m/year. The half-inch squares of gum are typically sold individually through a network of about 80 000 hawkers, cafés and spazas.
However, Chappies' dominant position is now being challenged. Cheap bubblegum products are flooding into the country from countries like Brazil and China, and the price disparity makes the imports irresistible.
Chappies are at present sold in bags of 288 pieces for R27,99; the imports are sold in bags of 100 for R5.
The customer base is also changing. As the middle-income market develops, more people travel in cars and shopping malls mushroom in areas where hawkers and spazas previously dominated - so Chappies' ability to reach its upwardly mobile customers is being curtailed. Though parent company Cadbury estimates that these changes would affect just 10% of its market, this could translate into 500 000 fewer sales each day.
The challenge is magnified by the fact that the bubblegum market is not growing. "We might have 58% of the market and our nearest competitor, Big Time, 18,4%," says brand manager Ian Jeffrey, "but the real problem is that Chappies is sustaining the market. Low-cost imports and lower-priced competitors are devaluing the market."
To protect and grow its market share will require a combination of savvy marketing and innovation, he says.
Jeffrey is wary of giving too much away, but innovation will revolve around the product itself he says. New flavours will be introduced; new sizes and shapes will be developed in order to penetrate the chain stores, who typically wouldn't stock individual Chappies squares; and new bubblegum "experiences" will be developed.
This refers to the fact that parent company Cadbury owns Bubbaloo, a liquid-centred bubblegum which, when it was incorporated under the Chappies brand last year, increased its sales by 300%. "We want to provide consumers with a multisensorial chewing experience," says Jeffrey. "Liquid centres give the Chappies masterbrand a strategic advantage in the market as it is not easily replicated and the technology does not exist in SA."
While competitors are focused on bringing regular bubblegum flavours in the single-piece offering to the market, Chappies plans to diversify this one-dimensional offering.
The new product offerings will be supported by strong marketing. Though Chappies is mostly sold through a network of wholesalers, the company distributes directly to about 5 000 hawkers and spaza shops. "A key part of our business model involves business support and advice. We add value by helping the traders stock the correct basket of products and our business input is aimed at helping them to become successful entrepreneurs."
Innovative marketing is a feature of the brand.
In 2003 Chappies was recognised by the Guinness Book of World Records for sponsoring the largest football tournament in the world - the Chappies Little League.
With an entry of 6 023 teams comprising more than 100 000 participants, it has the largest participation in a sporting event in the world. Chappies is now in the 4th year of this sponsorship.
Some things, however, will remain the same. The Chappies logo with its chipmunk and yellow-striped wrapper has achieved iconic status.
The chipmunk, which is trademarked, was introduced to help customers differentiate Chappies from rip-off products. "In a market where biscuits, low-price sweets, chocolates and bubblegum are all competing for the R2 spend of the average customer, brand recognition is essential," says Jeffrey.
This is why management's idea of doing away with Chappies' "Did You Know?" feature on the inside of the Chappies wrapper was short lived. It's a marketing innovation that was introduced in the 1950s and has been a powerful tool in the building of brand and market presence.
"People buy Chappies because they are looking for a distraction," says Jeffrey. " Did You Know?' is part of that distraction - if we stop printing them people will stop buying the brand."
This insight - that its customers are looking for a distraction - has helped focus the product development team over the past halfcentury. And it is for this reasonthat Chappies remains focused on developing and introducing new fruit flavours. "People wanting a distraction prefer fruity flavours to mint ones," says Jeffrey.
The company recently launched the cool cherry flavour, which scored the highest ratings in flavour research conducted by market research company Management Sciences Group. The research also revealed that out of 46 local and global flavours, Chappies has 12 flavours in the top 15.
Having enjoyed such success in Southern Africa, it seems surprising that Chappies is not exported more widely. This is because parent Cadbury has other bubblegum brands in its other markets, mostly with local manufacturing facilities.
Chappies' future success, it seems, will depend on its ability to maintain its position in SA and to grow its business in Southern Africa.
