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Author: longtermguy One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 36488  
Subject: Re: Wrigely Date: 8/27/1999 12:55 AM
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I'm no expert on Wrigley but I think they have plenty of growth opportunities left.

They are the world's largest gum maker and that will not change. Being the largest, they can spend more on adversing and expansion than their rivals which will only increase their dominance and will help promote the brand name and generate pricing power.

According to the website, they are building a plant in Russia which will help expand business in eastern Europe.

Also according to the web site, they haven't raised prices on thier gum in Asia in over ten years. They concentrate on building brand loyalty first and only many years later do they attempt to raise prices. So, much of their recent growth may be do to volume only rather than price increases.

In addition, according to the chairman, consumption of gum internationally is many times lower than in the US which indicates future growth opportunities similar to Coke and Pepsi.

The low price point of their product certainly is a plus in international distribution. Most people won't care if the price of a pack of gum goes up 10 to 15 cents. They have a lot more pricing power.

Because of their expansion plans overseas, capital spending overstates maintainance spending. Once the expansion spending slows, they will have a very large cash flow to spend on share repuchases, dividends etc.

They can also grow by acquiring smaller internation gum makers.

As their international production and distribution system evolves, it will be come more efficient and will lead to better operating, margins.

I don't know what all of this adds up to in terms of future revenue growth, but I think they still some growth left.

Regards

Longtermguy










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