You heard it here first — China has officially passed peak gum.
That’s right, the Chinese chewing gum market has begun to dip precipitously since it hit peak sales back in 2016, with sales dropping from RMB 11.3 billion to 10.1 billion over the course of two years, according to Chinese marketing blog Meihua.
The culprit? Mobile internet. That’s according to finance talk show Caijing Langyan. A recent episode explores three primary factors contributing to the drop:
- The prevalence of home delivery apps has reduced the amount of time consumers spend in checkout lines, so consumers have less contact with sales points for impulse purchases, like gum and candy.
- Spare time that was once spent with a book and a snack has been replaced with time spent texting and gaming.
- The proliferation of mobile payment platforms, like WeChat Wallet and Alipay, has eliminated the necessity to carry coins around. Gum purchases are more easily justified with additional benefit of ditching loose pocket change.
The U.S. gum market has been seeing a similar decline over the past decade, only picking back up slightly last year thanks to a series of herculean marketing efforts and innovative product launches. But the industry recognizes it may be in long-term trouble. Hershey, in particular, is exploring two ways to keep impulse buying alive on e-commerce platforms by (Business Insider):
- Targeting customers who are waiting to pick up grocery orders: Hershey is considering using a smartphone app to ping shoppers who are waiting at the store — at a kiosk or a drive-up pickup point, for example — for their online grocery orders.
- Working on quick on-demand delivery: Hershey is working with goPuff, a company that provides on-demand delivery of convenience products within 30 minutes.
But the success of those measures remains to be seen, and quick arrival times haven’t saved the industry in China, where most cities have already achieved 30-minute delivery.
Why it matters
Entire industries were created around interactions with physical currency and the physical presence of a consumer in a store. Newspaper and tabloid sales, vending machine purchases, even donations to panhandlers –all of these developed on the expectation that most people are hitting the streets with pockets full of small coins. That reality no longer exists, especially in China, and the industries driven by those financial and social interactions will have to adapt or die.
- 财经朗眼: Watch the episode on iQiyi (Chinese)
- Meihua: 有种现象叫跨界“打劫”口香糖败给微信
- Business Insider Hershey is dealing with an impulse buy issue