The Wm. Wrigley Jr. Company is a Delaware corporation. From 1891 to 1903, the Company was operated as a partnership until its incorporation in Illinois as Wm. Wrigley Jr. Co. in December 1903. In November 1910, the Company was reincorporated under West Virginia law as Wm. Wrigley Jr. Company, and in October 1927, was reincorporated under the same name under Delaware law. Wrigley is a recognized leader in the confectionery field and the world’s largest manufacturer and marketer of chewing gum.
Wrigley products are sold in over 180 countries and, in the over 110 years since Wrigley introduced its first two products, Juicy Fruit® and Wrigley’s Spearmint®, its portfolio of products has grown to include many innovative brands that provide consumers with a variety of benefits, including breath freshening and tooth whitening. The Company’s principal business remains manufacturing and marketing chewing gum and other confectionery products worldwide. All other businesses constitute less than 10% of its consolidated revenues, operating profit and identifiable assets.
For financial reporting purposes, management organizes the Company’s chewing gum and other confectionery business based principally on geographic regions. Descriptions of the Company’s reportable segments are as follows.
North America—These operations manufacture and market gum and other confectionery products in the U.S. and Canada.
EMEAI—These operations manufacture and market gum and other confectionery products principally in Europe as well as in the Middle East, Africa and India.
Asia—These operations manufacture and market gum and other confectionery products in a number of Asian geographies, including China, Taiwan and the Philippines.
Other Geographic Regions—These operations manufacture and market gum and other confectionery products in the Pacific and Latin American regions.
In addition to internal product development, the Company has continued to enhance the portfolio of products it offers through the diversification of its business within the broader confectionery category.
On January 31, 2007, the Company acquired an 80 percent initial interest in A. Korkunov®, a privately held premium chocolate company in Russia. This acquisition provided the Company with an opportunity to enter the chocolate confectionery marketplace with a well recognized brand in a growing region.
In 2005, the Company acquired certain non-chocolate confectionery assets from Kraft Foods Global, Inc., including the purchase of the Life Savers®, Altoids®, Crème Savers®, and Sugus® brands. The purchase provided additional diversification in the key categories of mints and hard and chewy candy, expanded the Company’s product offering to customers worldwide, added scale and brand depth to the innovation pipeline and increased efficiency across the Company’s supply chain.
In 2007, chewing gum and other confectionery products were manufactured in three factories in the United States and sixteen factories in other countries. Northwestern Flavors, LLC, a domestic wholly-owned subsidiary of the Company, processes flavorings and refined mint oil for the Company. In addition, four foreign facilities also manufacture gum base for the Company’s international production facilities and for third-party gum product manufacturers. Two others produce gum base for their own use. In 2005, the Company announced plans to restructure its North American production network in order to maximize supply chain efficiencies. As a result, in late 2006 the Company closed its chewing gum plant in Chicago, Illinois and its L.A. Dreyfus gum base subsidiary in Edison, New Jersey, and transferred production to remaining facilities. Also, in April, 2006, the Company closed the facility located in Bridgend, Wales which was acquired in the transaction with Kraft Foods Global, Inc.
Raw materials such as sugar, corn syrup, flavoring oils, polyols and high-intensity sweeteners blended to make chewing gum are readily available in the open market. Other ingredients and necessary packaging materials are also available and purchased in the open market. Inventory requirements of the Company are not materially affected by seasonal or other factors.
The Company markets chewing gum and other confectionery products primarily through distributors, wholesalers, corporate chains and cooperative buying groups that distribute the product through retail outlets with consumer purchases at the retail level generated primarily through the Company’s advertisements on television as well as in newspapers, magazines and other media, all designed to best reach consumers. Additional direct customers are vending distributors, concessionaires and other established customers purchasing in wholesale quantities.
Customer orders are usually received electronically, by mail, telephone, facsimile or e-mail and are generally shipped by truck from factory warehouses or leased warehousing facilities. In general, the Company does not offer its customers extended payment terms. It is typical for the general customer of the wholesale trade to purchase chewing gum and other confectionery requirements at intervals of approximately ten days to two weeks to assure fresh stocks and good turnover. The Company believes these conditions are not materially different from those of its competitors. On a consolidated basis, sales are relatively consistent throughout the year.
In 2007, the Company’s ten largest revenue producing countries outside of the United States were, in alphabetical order: Australia, Canada, China, France, Germany, Poland, Romania, Russia, Spain and the United Kingdom.
Innovation has been a key element of Wrigley’s success. The Company holds numerous patents and patent applications relating to packaging, manufacturing processes and product formulas, including approximately 200 significant patents relating to packaging, chewing gum confection processing, product formula and sweetener encapsulation. Most of these patents expire in the countries in which they are registered at various times through the year 2021. While the Company considers its patent portfolio to be valuable, the Company does not believe that its business is dependent upon any single patent or group of related patents.
In addition, trademarks are of material importance to the Company globally. Generally, Wrigley products are marketed under trademarks owned by the Company. These trademarks are registered and maintained for brands of the Company’s products where appropriate. Generally, trademarks are valid as long as they are in use and/or their registrations are properly maintained. The Company actively monitors the registrations of its trademark and patent portfolios to ensure that the intellectual property is appropriately protected and maintained.
The Company maintains an active in-house research and development program, and also contracts with outside services for developing and improving Wrigley products, machinery and operations. In 2005, the Company opened its Global Innovation Center which is a state-of-the-art facility dedicated to the development of new products and the enhancement of the Company’s existing product lines.