A Fancy for Candy, that Sweet Indulgence: A Brief Look at the Confectionery Industry

Money is tight, and everyone is looking at ways to cut costs. But everyone also is making exceptions, noting that some things are vital to keep on going with your own life and with maintaining a reasonably happy family. For example, can you give up coffee in the morning? Probably not, although maybe you will decide to try the cheaper store brand, if available, rather than automatically select your usual nationally known choice. What about chocolate bars, chewing gum, and other candies? Would you trade down or decide that a premium dark chocolate bar, especially one marketed for its health benefits or its use of Fair-Trade ingredients, is exactly the prescription for soothing nerves frayed by merely glancing at a stock market ticker or at a mutual funds statement?

Although the confectionery industry is not entirely recession-proof, it is one manufacturing category not currently posting sizable losses or predicting serious repercussions from the worldwide economic downturn. Not that restructuring and consolidation is on hold for candymakers, as these astute businesses are steadily preparing for a future which will surely encompass higher costs for labor and for bank loans, as well as for sugar and flavorings. Mars' recent purchase of Wrigley's is expected to boost the competitiveness of the two famous confectionery brands against rivals like Hershey, UK-based Cadbury, Kraft, and Swiss giant Nestle. Yet, both Mars and its new subsidiary Wrigley's are laying off people. Rumors of a Hershey-Cadbury merger have also been aired recently. Hershey's decision to outsource some manufacturing jobs to Mexico has disturbed some of its candy bar fans and most members of the Chocolate Workers Union.

California-based Jelly Belly, maker of gourmet candies popular at Eastertime and even year-round, is reporting reasonable sales both in the U.S. and internationally. The one glitch, and it is a big one, is that the company recently had to issue a recall related to the salmonella-laced peanut products scare that is tripping up many food manufacturers around the country. Other candy companies, including Hershey and Mars, not having purchased ingredients from the Peanut Corporation of America, have advertised nationally that their candy items are safe. Happier marketing campaigns to look forward to are Cadbury's for the 2012 Olympics set for London and Mars' landing of a sponsorship deal for NASCAR races. Mars also plans to produce candies bearing NFL team logos as a gametime snack for football aficionados.

Other than dark chocolate, most candies are not praised for their health benefits. Still, one physician's insistence on tacking on taxes for food items featuring few nutritional attributes is going a bit far. Peter Ubel proposes this idea--taxing snack foods, candy, and even beer-- in a book titled "Free Market Madness," published this January by the Harvard Business School Press. For sure, this idea is not likely to impress people out looking for Easter candy bargains this year. Candy manufacturers are probably not too worried either. Chocolate bunny anyone?

"A Sweet Deal", The Economist
Mike Hughlett, "Wm. Wrigley Jr. Co. begins layoffs of up to 10% of workforce", Chicago Tribune
"Jelly Belly Candy Company Recalls Chocolate Peanuts ... Due To Possible Health Risk", FDA.gov
"London Olympics gets sponsorship deals from Cadbury, Trident", Sports Illustrated/AP
'US: Hershey, Mars, Tastykake peanut butter products "safe"', Just-Food.com
"MY M&M'S(R) Helps NFL Fans Celebrate the Super Bowl With a Sweet Deal", Reuters
Peter Ubel, "Free Market Madness", official website for the book