Supporting America's Sweetest Growers

NCA: Candy Companies Spend Little on Sugar, Other Commodities

  
The National Confectioners Association (NCA)—the lobbying arm of the candy business—has a handy profile of the U.S. confectionery industry on its website. And that page posted a few facts that really stood out.
  • “In 2010, NCA estimates that U.S. confectionery sales accounted for $29.4 billion, an increase of 2.8 percent over 2009.”
  • “Confectionery manufacturers spend more than $4 billion on commodities each year.”
  • This includes “more than 2.44 billion lbs of sugar at a cost of nearly $100 million.”
In other words, candy makers’ revenues are bringing in nearly $30 billion a year, while they are only spending $4 billion on commodities to make their product. Even more astounding is NCA’s admission that sugar only costs the industry $100 million, or 2 percent of its commodity purchases.
 
With figures like that, it’s little wonder that NCA also posted these statements on its site about profitability in recent years.
  • “Not only is confectionary a large product category…it is a high profit category.” January 2008
  • “The retail profit margin is approximately 35% for the confectionery category.” May 2009
  • “Confectionery [is] seen as a recession resistant category.” February 2010
  • “Despite a shaky economy for the past two and half years, sales continue to increase an average of 3% per year, with a nearly 4% gain this past year.” March 2011
Jack Roney, an economist with the American Sugar Alliance, said with the wide spread between revenue and cost, it seems odd that NCA has spent so much time and money lately on Capitol Hill lobbying for the annihilation of a sugar policy under which they are thriving.
 
This policy operates at no cost to taxpayers because sugar farmers don’t receive government subsidy checks, but large candy companies allege it leads to sugar prices that are too high.
 
If it has led to higher prices, it certainly hasn’t slowed these companies’ economic growth. Since the current U.S. sugar policy took hold in 2008, candy production in the United States has grown 2.5 percent, according to the U.S. Census Bureau. Roney also notes that U.S. candy companies are expanding their U.S. facilities and adding jobs.
 
“According to NCA’s figures, sugar costs represent just one-third of 1 percent of the confectionery industry’s revenue,” Roney said. “If true, that’s simply amazing.”
 
Although, Roney has some question about the accuracy of this figure.
 
“I would have thought that figure would have been closer to $1 billion,” he explained, “which is still miniscule and just 3 percent of confection revenue.”
 
Regardless of the right answer, Roney hopes Congress will take note.
 
“Clearly, sugar isn’t expensive,” he concluded. “Using NCA’s own numbers, it’s obvious they are thriving, and sugar has one of the few government policies out there that doesn’t cost taxpayers a dime.”
 
 
Screenshot taken Nov. 14, 2011.