Here's something to chew on: You don't need a blockbuster product to build a dynamic, successful company.Take the Wm. Wrigley Jr. Company ( WWY). Chewing gum isn't exactly a high-profile category; innovation in the candy industry doesn't prompt the same gushing headlines as tech toys like the iPhone or Wii game system. But Wrigley has been so successful within its niche that it drew attention from some major players. This week, global candy manufacturer Mars joined with investor Warren Buffett to buy Wrigley for $23 billion, creating the world's largest confectionary company. The deal was impressive enough to goad two of the other big candy companies -- U.K.-based Cadbury Schweppes ( CSG) and Hershey ( HSY) -- into merger talks of their own, so don't be surprised if another major candy deal is announced soon.
Focus on Strengths; Go GlobalHow does a company based on lowly sticks of chewing gum grow into a multibillion-dollar powerhouse? Any small business can follow the Wrigley model. First, focus on your strengths, but keep the category constantly refreshed with new products that appeal to different segments of consumers. Second, go global. International sales can keep the bottom line healthy even when domestic sales slow down. Matt Arnold, an analyst at Edward Jones, points to Wrigley's history of innovation as a key to its success. "It's a core part of their strategy," he says. Gum used to be sold only in paper-wrapped sticks; when Wrigley introduced gum in candy-covered pellets, it was enormously successful. Other Wrigley developments included sugarless gum and longer-lasting flavors.
More recently, as Americans have become more concerned with health and wellness, the company has been smart about marketing the benefits of its gum. The company touts the Seal of Approval given to its Orbit and Extra sugarless gum by the American Dental Association. A new product, Orbit White, promises to whiten teeth while you chew. Other brands were developed to appeal to specific demographics. Winterfresh is aimed at the teen market, complete with its own quirky Web site. The black-and-neon-colored packaging of 5, a new sugar-free gum, is geared toward young adults; it comes in flavors like "Cobalt" or "Flare" rather than plain old spearmint or peppermint. "They've added value to the category," says Arnold. "All these little things drove an increase in consumption." Arnold notes that chewing gum in general is a stable consumption product. Even when consumer spending slows overall, gum sales don't tend to drop dramatically, because it remains affordable. Nonetheless, Wrigley knew that it had to look overseas to keep growing. And that's probably why Mars came calling. "Wrigley has been so smart in how they positioned themselves globally," says Arnold. They built sales networks in countries such as China and India -- places with booming emerging economies and a growing middle class. In all, Wrigley sells its products in 180 countries. "Mars will be getting that established distribution network around the globe," says Arnold. "They can use that to accelerate their own product growth."
While the dollar's plunge hasn't been good news for the U.S. as a whole, there's no question it has helped companies such as Wrigley. When the company reported last week that first-quarter sales were up 16% over last year, roughly half the increase was credited to the "positive impact of currency" (i.e., exchanging high-value foreign currencies back into lowly dollars). Will Wrigley be able to maintain its innovative strategy after being gobbled up by a candy mega-brand? It's far too soon to tell. But the next time you reach for a stick of Extra gum or an Altoid breath mint (both Wrigley brands), remember that even the most humble products can be the building blocks of a great company.