Recession, High Commodity Prices Hurting...the Gum Ball Machine Industry?

Okay, it's guilty pleasure confession time. I am one of those not fully mature adults who from time to time cannot resist when passing by a gumball machine. If I've got a quarter in my pocket when it happens, that sucker is as good as spent. I guess the childhood nostalgia rush that comes with the momentary sugar high is what causes me to do it.

Thinking about it though, I guess I haven't noticed as many gum ball machines around in recent years. This article from the Los Angeles Times explains why:

Amid shifts in the gum industry, a bit of Americana might be going away — the colorful gum balls once sold for a penny from machines at drugstores, arcades and supermarkets.

The main problem with the classic, round gum balls is that although they're available in many flavors and colors, almost all of them have one thing in common — a heavy dose of sugar. Long the scourge of dentists, this product has come in for a drubbing at a time when child obesity has focused attention on sweets.

"More gum ball operators are finding it harder to make a living," said Spencer Williams, president of Gumball.com, an Irvine gum, candy and vending machine wholesaler.

The struggles in the gum ball business mirror the challenges facing the entire chewing gum industry. The amount of all gum sold in the U.S. was expected to be static in 2011 compared with the previous year, according to a September report from research group Euromonitor International. Overall revenue was expected to rise slightly.

Many gum ball machines aren't even being used for gum balls anymore.

Williams said that about 45% of the gum ball machines operated by his clients now dispense small toys. Only about 27% dole out gum balls, with the rest stocked with candy and other items.

Research figures on gum balls are hard to come by, but Richard Ackerberg — whose American Gumball Machine Co. in Marina del Rey sells the machines to vendors — said he has seen the decline firsthand.

Although machine sales are still strong — mostly to entrepreneurs hoping to use them for part-time income — each unit is now pulling in only about half the money it did a decade ago, Ackerberg said.

"The industry has tried many different things — sugar-free gum balls, organic versions — but those have over and over again been unsuccessful," Ackerberg said. "We've tried to elevate the taste, and quite frankly, it hasn't changed anything. Customers still don't want it."

Add the rising price of sugar to those woes.

Unlike more technologically advanced vending machines for which prices can be easily adjusted, old-fashioned gum ball machines usually accept only one kind of coin — once a penny, now typically a quarter. And that makes it tough to implement incremental price hikes.

I must say, the very idea of a sugarless gumball fills me with profound loathing. The real problem here, of course, is that the industry needs to raise prices, but very few people carry half-dollar or dollar coins around with them. So they are kind of (ahem) stuck, so to speak.

But gum ball machines are not the only part of the industry that is hurting:

But gum ball sellers aren't the only ones in a rut. Chewing gum makers are also trying to boost sales.

"We're certainly not satisfied with our gum results," said Irene Rosenfeld, chief executive of Kraft Foods Inc., one of the country's top gum producers. In a conference call with food industry analysts in August, she blamed the slide on "the decline of pocket money among teens, our biggest consumer segment," as well as on disappointing sales of some new products.

Kraft — whose brands include Dentyne, Trident and Stride through its Cadbury subsidiary — said its North American gum and candy division suffered a double-digit revenue tumble midway through 2011.

Mars Inc., the top gum manufacturer in the U.S., owns Wrigley and its brands, which include Doublemint and Extra. As a privately held company, it doesn't publicly disclose much about its business.

Vic Mehren, a senior marketing director for Wrigley, said that keeping gum desirable for consumers is an industrywide challenge.

"Gum is a discretionary purchase, an impulse purchase," Mehren said. "We need to evolve along with how consumers' lifestyles are evolving. We need to be bringing new reasons for people to be chewing gum."

It's still early, but that last paragraph is likely to make my list of the 10 dumbest utterances from a Corporate Flack for 2012. Chewing gum isn't a "lifestyle choice," Mr. Mehren...it's a cheap way to pass the time and soothe your sweet tooth. If gum isn't cheap any more, your industry is doomed. Nobody is going to pay five bucks for a pack of Doublemint. Those are the facts, and there is no use crying about it.


Bonus: speaking of which, the new Doublemint commercial with a surprise ending (warning: NSFW)