Wm. Wrigley Jr. Company Investor Presentation First Quarter 2005 April 27-29, 2005 New York, Boston
Index 120 First Quarter Volume 148 133 129 +17% 175 2001 2002 2003 2004 2005
First Quarter 2005 Highlights Strong volume shipment growth around the globe North America +6% EMEAI +16% Asia +42% Latin America +69%
Millions of Dollars First Quarter Sales 812 672 599 556 +17% 950 2001 2002 2003 2004 2005
North America North America sales up 7% U.S. sales up 5% Strong performance of Orbit, Orbit White and Extra Despite lapping last year s first quarter launch of Eclipse mints Canada sales up 28% Shipment volume growth Currency
Asia Region Sales up 39% China Extra in new bottle packaging Doublemint Vietnam and Taiwan Approximately a third of the sales gain from Joyco
EMEAI Region EMEAI sales up 16% Strong double-digit growth in Eastern and Central Europe Russia, Ukraine and Poland Joyco contributed slightly over one third of sales gain Currency also made favorable contribution
Dollars.36 First Quarter Earnings Per Share.49.43.38 +18%.58 2001 2002 2003 2004 2005
First Quarter 2005 Highlights Gross Margins increased to 56.6% 20 basis point improvement Positive contribution from lower product costs, offset by current margins on Joyco products
Global Confectionery Overview Gum and sugar confectionery represent approximately $55 billion of the estimated $118.8 billion global confectionery business Non-Chocolate, Sugar Confectionery 33% Gum 13% Chocolate 54% Source: National Confectioners Association: World Confectionery Report and Export Handbook
Global Confectionery Overview 2004 year over year dollar sales increased across all product segments Total Confectionery +10% Gum +11.2% Chocolate +10.4% Non-chocolate confectionery +8.8% Source: National Confectioners Association: World Confectionery Report and Export Handbook
Global Confectionery Sales Growth Region Western Europe Eastern Europe North America Latin America Asia Pacific Australasia Africa & ME Percent of Global Sales 38.8% 8.3% 24.1% 8.2% 15.0% 2.3% 3.3% Percent Change 2004 vs. 2003 +15.0% +8.8% +2.5% +11.6% +8.4% +26% +8.9% Source: National Confectioners Association: World Confectionery Report and Export Handbook
Top 10 Global Confectionery Geographies Almost 3X bigger than next leading geography Geography USA Germany UK Japan Russia France China Italy Brazil Mexico Approximate Percent of World Total 23.1% 8.5% 7.7% 7.1% 4.6% 4.3% 3.9% 3.8% 3.0% 2.5% Source: Euromonitor International The World Market for Confectionery, 2004
U.S. Confectionery Business Ex Convenience and Wal-Mart, IRI estimated total U.S. confectionery market at 10.4 billion Confectionery sales through FDMX up 1.6% 2004 vs. 2003 But these numbers are not complete: Non-traditional and untracked retail outlets are responsible for an increasingly larger percentage of candy sales Convenience stores represent a large portion of gum sales Dollar stores are the fastest growing retail segment in the U.S. Wal-Mart continues to outperform retailers in general Confectionery business is stronger than reported numbers would indicate IRI data for 52 weeks ended Dec. 26, 2004
How important is confections to Retailers? Confections is purchased by 98% of all households On average, consumers spend $80 per year on the Confections Category This is more than Milk 97% Fresh Bread 97% Fresh Produce 96% Soup 95% Cereal 95% Eggs 94% This is more than Fresh Produce $74 Cereal $74 Cheese $71 Dry Dog Food $66 Regular Cola $61 SS Juice $58 Source: AC Nielsen, Homescan Panel A ll Outlets, CY2003
Confections is a top 10 category in all major retail channels r ank Grocery Drug Mass SuperCenter Cl ub Dollar Convenience 1 CARBONA TED BEVERA GES CONFECTIONS CONFECTIONS CARBONA TED BEVERAGES CONFECTIONS CONFECTIONS CIGARETTES 2 MILK VITAMINS CIGARETTES CONFECTIONS CIGA RETTES HOUSEHOLD CLEA NER FOODSERVICE 3 FZ DINNERS/ ENTREES CA RBONATED BEVERA GES PET SUPPLIES MILK LAUNDRY DETERGENT LA UNDRY DETERGENT PKG BEVERA GES 4 COLD CEREA L HOME HEA LTH CA RE/KITS DIA PERS DOG FOOD VITAMINS SA LTY SNA CKS BEER 5 FRESH BREA D & ROLLS CIGARETTES VITAMINS SALTY SNACKS CA RBONATED BEVERA GES FOOD & TRASH BAGS GENERAL MERCHANDISE 6 SALTY SNA CKS INTERNAL ANA LGESICS DOG FOOD FZ DINNERS/ ENTREES TOILET TISSUE COOKIES CONFECTIONS 7 ICE CREA M/SHERBET SKIN CA RE LA UNDRY DETERGENT COLD CEREAL FZ POULTRY SOAP SALTY SNACKS 8 NATURA L CHEESE HAIR COLORING TOILET TISSUE PET SUPPLIES SALTY SNACKS TOILET TISSUE OTHER TOBA CCO CA RBONA TED FRESH BREA D & SNACK BARS/ FLUID MILK 9 SOUP BA TTERIES BEVERAGES ROLLS GRA NOLA BA RS BATTERIES PRODUCTS 10 CONFECTIONS GA STRO. - TABLETS TIGHTS/SOCKS VITA MINS DOG FOOD VITA MINS PKG SWEET SNACKS Confections is a Routine, or Destination category in all major channels. Source: IRI Cross-Channel Differentiation Study, Dollar Sal es May 2003/C-Store: 2004 NACS State of the Industry
Wrigley has grown through both new item innovation and strong base business Total US Gum/Mint/Strips sales in 2004 up approximately 3% vs YA $103 $47 $56 $21 $11 $10 $16 $11 $5 $6 -$38 -$54 Wrigley G/M/S Cadbury G/M/S Hershey G/M/S* Kraft G/M/S Total Business Base Business 2004 New Items Dollar Growth 2004 vs. YA ($MM) Source: IRI InfoScan, Total US FDMxC YTD ending 11/ 21/ 04 * Includes Liquid Ice data for FDMx ), C-Store is not available
Flavor variety is a key factor for consumers and critical to new product success 2 of the top 3 Purchase Drivers for Gum Consumers focus on FLAVOR 1. Longer Lasting Flavor 2. More Flavor Options 3. Better Packaging Source: Spencer Hall/ Wrigley Gum & Mint Exploratory Qualitative Research Studies of successful new product launches stress that offering FLAVOR VARIETY for a brand is a critical success factor for a new item s future! Variety stimulates and sustains consumer interest and broadens product appeal Offering a full line of different flavors is a critical success factor for many Food Pacesetters (i.e. Successful new products) Source: IRI New Product Pacesetters 2002 Source: Gallup St udy, 2002
Meeting consumer needs New Offerings from Wrigley in Second Half of the Year Across 4 brands Orbit Juicy Fruit Hubba Bubba Eclipse Addressing both adult and kid consumers
Orbit has contributed nearly 7X the absolute dollar sales growth of any other Sugarfree brand FDMxC Dollar Share of Sugarfree Gum FDMxC Dollar Growth of Sugarfree Gum Source: IRI FDMxC - 52 weeks ending 11/ 21/ 04 Dollar Chg vs YAG -FDMxC YTD ending 11/21/04
Orbit has grown to the # 2 brand in Gum in less than 4 years and is still the fastest growing brand in the category Total Orbit Brand FDMxC Dollar Share of Total Gum $ $ Share Growth Rank Rank FDMxC #2 #1 Food #2 #1 Drug #2 #1 Mass-x #1(tie) #1 C-Store #2(tie) #1 Source: IRI FDMxC 12 Weeks endi ng 11/ 23/01, 12/ 22/ 02, 12/21/ 03, 11/21/ 04
Bubblemint & Cinnamint have provided incremental sales to the already growing Orbit brand FDMxC Trended Dollar Sales Source: IRI FDMxC 25 quadweeks ending 11/21/ 04
Introducing Orbit Sweet Mint & Orbit Citrusmint Single Serve Offerings Unique Sweet Mint and Citrusmint flavors 14 tab individual package Suggested retail price of $0.99 3 Pack Multi-Pack Offerings Suggested retail price of $2.29
New Orbit White represents a quarter of all dental gum Dollar Share of Dental Gum FDMxC Source: IRI FDMxC 12 Weeks endi ng 11/ 21/04
The sales from New Orbit White have been incremental to the Whitening Gum segment Orbit White Adds Incremental Sales to Whitening ACN FDMxC Dollar Sales $M M 11 10 9 8 7 6 5 Whitening ex Orbit White ORBIT WHITE GM 4 4 W EEKS ENDING 03/ 20/ 04 4 W EEKS ENDING 04/17/ 04 4 W EEKS ENDING 05/15/0 4 4 WEEKS ENDING 06/12/04 4 W EEKS ENDING 07/10/04 4 WEEKS ENDING 08 /07/04 4 W EEKS ENDING 09 /04/ 04 4 WEEKS ENDING 10 /02/ 04 4 W EEKS ENDING 10 /30/ 04 4 WEEKS ENDING 11/27/04 4 WEEKS ENDING 12/ 25/ 04 4 WEEKS ENDING 01/ 22/ 05 4 WEEKS ENDING 02/19/ 05
Introducing Orbit White Bubblemint Single Serve Offerings Available in great tasting Bubblemint flavor with appearance enhancing speckles, a key driver of purchase preference! 12 pellet single serve blister pack at a Suggested Retail Price of $0.89 3 Pack Multi-Pack Offerings 3 Pak will have a Suggested Retail Price of $1.99
Juicy Fruit is an iconic brand and leads the charge among fruit-flavored gum based on dollar sales Fruit-Flavored Gum accounts for more than $150 million in retail sales All Other Brands Juicy Fruit
Juicy Fruit is the #1 contributor to Fruit-flavored gum growth Almost $50MM Total Fruit-Flavored Gum Growth in 2004 Juicy Fruit contributed 35% of Total Fruit-flavored Gum growth in 2004 All Other Fruit Gums Juicy Fruit Source: IRI FDMxC Year To Date ending 11/21/ 2004
Juicy Fruit is #1 in unaided brand awareness #1 Fruit-flavored Gum (Dollar and Unit Sales) #1 Un-Aided and Total Brand Awareness (all Gum brands) #1 Past Week Usage among Tweens (all Gum brands) Source: IRI 52 weeks endi ng 11/21/04 and Brand Monitor Sept Dec 2004
Juicy Fruit pellets were highly incremental to the brand and ignited overall growth $8 $7 $6 $5 Millions $4 $3 $2 $1 $0 July 2003 Nov 2004 Juicy Fruit Stick Dollar Sales ($MM) Juicy Fruit Pellet Dollar Sales ($MM) Source: IRI FDMxC 4 weeks ending 11/ 21/2004
Introducing Juicy Fruit Tropikiwi Kick Multi Pack Suggested retail of $1.99 Single Serve 12 pellets per unit Suggested retail of $0.89
The Hubba Bubba brand has grown nearly 30% vs. YA FDMxC Dollar Share of Kids Targeted Gum FDMxC Dollar Growth of Kids Targeted Gum +11% + 11% All Other 35% Hubba Bubba 21% + 29% NA Skittles Gum 7% Bubble Yum 16% Bubblicious 21% - 3% - 13% Total KTG Hubba Bubba Bubblicious Bubble Yum Skittles Gum $1.1MM from lay dow n bags @ Halloween Source: IRI FDMxC - 12 weeks ending 11/21/04
Kids basics New and improved flavors are the #1 purchase driver of gum among kids 7-17 New Flavor 62% Improved flavor 62% Sale 60% Instant Win 59% In-pack give-away 51% New form of gum 49% Source: 2004 Kids N ews Study
Introducing Hubba Bubba Max Cherry-Lemonade 5 Piece Pack Unique blended Cherry-Lemonade flavor 5 chunks per package Suggested retail of $0.49 10 Piece Pack Suggested retail of $ 0.89
Hubba Bubba Max Cherry Lemonade Nationally Supported Marketing Plan TV Print Online In-store Consumer Sampling
Bubble Tape has the #1 selling Kids Targeted Gum item, and 2 in the top 5 Total FDMxC Dollar Sales Bubble Tape Orig $16.1MM Bubblicious Stbrry $9.6MM Bubblicious Wtrmln $9.0MM Bubble Y um Orig $6.3MM Bubble Tape Sr Apple $6.1MM Source: IRI Total US FDMx, 52 weeks ending 11/21/ 04
Introducing Bubble Tape Triple Treat Triple Treat provides true innovation & variety Triple Treat combines Strawberry, Watermelon and Blueberry flavors The unique blend of v isible flavor crystals provides a three-in-one flavor combination that looks and tastes unlike anything else on the market Provides additional flavor variety to the #1 Kids Targeted Gum brand Triple Treat is available in Single Serve size 6 feet of gum tape per package, 12 packages per box Suggested retail of $0.89
Eclipse is a power brand in Gum/Mints/Strips #4 Extra Gum Total Trident Total Orbit Gum Total Eclipse G/M/S Total De ntyne Total Altioids G/M/S Total Ice Bre ak ers G/M/S Tic Tac Mints Juicy Fruit Gum Winterfresh Gum Source: IRI FDMxC 12 weeks endi ng 11/ 21/ 2004
Eclipse Mints have driven dollar sales growth Total Mints Growth Eclipse 87% Eclipse Dollar Sales Eclipse All Other Brands Source: IRI FDMxC YTD ending 11/21/ 2004; Mints dollar sales is a cume of data beginning 1/ 1/04 and ending 11/21/ 04 and does not compare dollar sales versus year ago
Eclipse is incremental to the mint segment Eclipse Mints Source of Volume Increased Mint Consumption 19% New Mint Buyers 26% Brand Switching 55% Source: IRI Multi-outlet panel, Total US FDM, 24 weeks endi ng 6/6/ 2004
Introducing Eclipse Mints Cinnamon Flavor Eclipse Mints delivers on 3 of the topranking attributes for breath fresheners superior breath freshening intense flavor portability / convenience Available in 50 Mint Tin Same unique Eclipse packaging Suggested retail of $1.49
Packaging drives mint purchase intent and Eclipse rates highly with consumers 90% of Mint users rate it as Important when buying Mints! % of consumers saying Eclipse Mints Package is after In-Home Use Reusable 85% Easy to Handle 84% Durable 80% Portable/convenient 78% Unique 74% After in-home use: 60% of consumers said Eclipse Mints unique tin increased their purchase interest 41% of consumers cited Packaging as a driver for purchase interest Source: CPIHUT January 2003, Gallup St udy 2002
Introducing New and Improved Eclipse Lemon Burst Re-formulated to broaden consumer appeal More zest More lemon flavor Better taste Signature Eclipse cooling Package graphics will feature a new look
POWERFUL FRESH BREATH Mata el mal aliento http://www.wrigleyseclipse.com
Wrigley named Best in Class! Wrigley is proud to be named as Progressive Grocer s 2003 and 2004 Category Captain Best of Class award winner for the Candy and Gum Category We continue to strive for excellence!
Wal-Mart vendor of the year in the confectionery category for the third year in a row Three-peat to be proud of
Just announced Vendor of the Year Consumables for Target Target has recognized Wrigley as the best of the best against CPG companies like P&G, Coke, Pepsi, etc.