Wrigley ' s Acquisition of Joyco: A ' gum ' ptious move?
Kamalika Gangoly, Amritha Mohanty, Anubhuti Gupta, IIM- Kozhikode
KEYWORDS
Merger & Acquisition, Confectionary,
FMCG, Chewing-gum
ABSTRACT
Founded in 1891, Wrigley ' s has focused on the strategic task of boosting its core business while expanding into new geographies. It entered India in 1994 close on the heels of economic liberalization. The Indian market was significantly different from the international markets in the sense that it was a mono-pack market, new to sugar free confectionary and the concept of chewing gum. Although a major player in the global confectionary market, till 2003 Wrigley ' s lagged behind its competitors Perfetti Van Melle and Candico as a result of these striking market differences. Joyco, the Spanish giant, on the other hand, entered India at about the same time as Wrigleys ' but was able to turn around the Indian confectionary market by bringing in innovation upfront and making it vibrant enough to attract new players. This case analyses Joyco ' s strategy in the Indian market, all the existent competitors in the same segment and discusses the reasons behind and possible impacts of Wrigley ' s decision to acquire Joyco in the wake of a number of global acquisitions which have consolidated the industry. Can Wrigley and Joyco create enough value through combining their firms to unseat Perfetti and grab market leader position in the Indian confectionary Industry?
CASE STUDY
As Bill Wrigley stepped out of the boardroom after a long meeting with his senior executives and walked towards his chambers, he began thinking of the challenges and opportunities lying ahead. Although a clear market leader in the US, the largest market for chewing gum and bubble gum, Wrigley ' s Co. was yet to make an impact in other markets, especially the developing ones which had the highest potential for growth. The position of his company in India particularly concerned him, where despite being a player for nearly ten years, Wrigley just had 4 % of the market share.
As he sat down at his desk and saw the large pile of reports waiting to be read by him, he began wondering what could be done to change the situation and make Wrigley a significant player in markets such as India.
Wrigley like many other multinationals made its foray into India in 1994 in the aftermath of the economic liberalization. It began by establishing a factory in Bangalore, Karnataka. Despite being an early mover and having been in the market for close to a decade, Wrigley was unable to build a major market presence in the country ' s Rs. 1500 crore confectionery market. Its sales in 2003 were estimated to be just Rs. 15-20 crores, a very small number compared to rival Perfetti Van Melle ' s Rs. 400 crores and home-grown Candico ' s Rs. 150 crores.
As the world ' s leading manufacturer of gum, and having been in the business for close to a century, the current situation presented Wrigley with a challenge which it had no option but to overcome in order to maintain its leadership in the long run.
WRIGLEY- THE STORY SO FAR
Wrigley was founded by William Wrigley Jr., born in Philadelphia in 1862, the son of a soap manufacturer. As a teenager, he took a full-time job as a soap salesman for his father, but in the spring of 1891, William Wrigley Jr. struck out on his own to run his own business. Starting with a soap business, he switched to the baking powder business.
One day in 1892, William got the idea of offering two free packages of chewing gum with each can of baking powder. The offer was a big success and chewing gum seemed to be a more popular product. A year later, he introduced a new gum he called Juicy Fruit. And thus began one of the worlds ' most popular and successful chewing gum businesses.
Wrigley established its first factory outside US during 1910, in Canada. The product Double Mint was first launched in the US in 1914. Another factory was built in Australia in 1915, followed by Great Britain in 1927 and New Zealand, in 1939. Wrigley introduced a variety of new products such as non-stick, cinnamon and sugar free gums during the 1970s. In 1975, the company introduced Free Dent, the first non-stick alternative and Big Red, its first cinnamon gum.
During the year 1984, the company introduced its Extra brand, the sugar-free gum. The company introduced various new brands in 1990s such as, Winter Fresh and
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