Wrigley: Sweetening The Pot With New Products

Oct. 24, 2005
Wrigley buys popular candy brands and explores new product development.

When people think of the name Wrigley, chewing gum and the famed ballpark on Chicago's North Side typically come to mind. But with the recent purchase of various confectionary brands from Kraft Foods Global Inc., the Chicago-based Wm. Wrigley Jr. Co. hopes consumers will start thinking about the company's candy products, too.

The $1.46 billion purchase in June gave Wrigley ownership of established brands that include Altoids, Life Savers, Creme Savers and Sugus, a chewy fruit candy that was Kraft's best-selling confectionary brand in Asia. The company expects the transaction will help it compete with the nation's top candy makers.

"With our confectionary expertise and focus, we look for these newly acquired brands to flourish under Wrigley's global umbrella," said Bill Wrigley Jr., CEO, in a June 29 press release. . . . "This transaction represents a significant reinforcement of our position as a world-class confectionary company."

But the purchase didn't come without some tough decisions for the Wrigley Co., which appears on IndustryWeek's IW 50 Best Manufacturing Companies list for 2005. In an effort to realign its global supply chain, the company closed its 94-year-old Chicago factory and transferred operations there to its Yorkville, Ill. plant. It's also phasing out production at its South Side plant, resulting in the reduction of 600 jobs.

Wm. Wrigley Jr. Co.
At A Glance

Wm. Wrigley Jr. Co.
Primary Industry: Food
Number of employees: 15,000

2004 In Review
Revenue: $3.6 billion
Profit Margin: 13.5%
Sales Turnover: 1.2
Inventory Turnover: 4.3
Revenue Growth: 18.9%
"Additionally, the company transferred operations from its Edison, N.J.-based subsidiary the L.A. Dreyfus Co. to the company's largest gum-making facility in Gainesville, Ga. and moved production of Altoid mints from the United Kingdom to a newly acquired facility in Chattanooga, Tenn.

"While these were hard choices to make, we believe these decisions are in the best interests of our overall business and are necessary to make our production network as efficient as possible and ensure the company remains competitive in the marketplace," said Darrell Splithoff, senior vice president of the company's Worldwide Supply Chain, in the June 29 press release.

Despite the moves, the company still maintains a strong presence in Chicago with its corporate headquarters there and the newly built Global Innovation and Research Center, which opened in September 2005. Located on Chicago's Goose Island, the new $45 million R&D facility now serves as the company's creative hub for the development of new products.

The 153,000-square-foot building features a flexible laboratory and office space designed to maximize collaboration with the ability to support new projects and equipment. Adjacent to the east of the building is a 40,000-square-foot pilot plant.

The pilot plant is designed to help the company scale up from lab-size batches to commercial production of new products. The plant is utilizing machinery that the company moved from its New Jersey factory after the Kraft acquisition.

In a Sept. 13 press release, Wrigley notes that new-product development is critical for the company's growth. During the past four years, 20% of the company's global sales have come from new products -- up from 5% to 6% in the late 1990s.

"As a company, we have established a track record of innovation as a key driver of our success," Wrigley said. "For us, it's not just about how many new products we launch -- it's about delivering products and solutions that truly add value, create excitement in the marketplace and have long-term sustainability."

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