SIC 5145
CONFECTIONERY



This industry classification includes wholesale distributors of confectionery and related products such as candy, chewing gum, salted or roasted nuts, popcorn, soda fountain syrups and toppings, and potato and corn chips.

NAICS Code(s)

422450 (Confectionery Wholesalers)

In 2001, according to the U.S. Census Bureau, there were a total of 2,381 confectionery wholesalers. That same year, the industry employed 46,929 workers and posted an annual payroll of $1.7 million. In 2003, there were approximately 4,130 confectionery wholesalers, and about 47,630 workers. The industry generated about $10.4 billion in sales. The average sales per establishment were $3.2 million. The states controlling most of the confectionery market were California, Florida, New York, Pennsylvania, and Texas. Combined, they represented more than 36 percent of the total market.

According to a market study on confectionery sales conducted in the mid-2000s, supermarkets generated 40 percent of total sales in this industry. Mass merchandisers and convenience stores accounted for 15 and 14 percent, respectively. Small retailers, drug stores, vending machines, wholesale clubs, fundraising, and the military accounted for the remaining sales, each generating less than ten percent. The trend continued into 2003, where supermarket sales for confectionery products increased by three percent. Mass merchandisers, not counting Wal-Mart, declined 3.1 percent.

Candy consumption continued to increase throughout the decade. Up from 16.0 pounds per capita in 1986, it stood at 20.7 pounds in 1990, and, according to the National Confectioners Association (NCA), reached 23.4 pounds by 1995. Candy trade products were classified in two categories: chocolate and non-chocolate. In 1995, chocolate, the top-selling category, accounted for more

SIC 5145 Confectionery

than 50 percent of the nation's candy sales. The U.S. Census Bureau reported candy consumption increased to 5.8 billion pounds by 2002. According to Direct magazine, the United States held the fifth position in the world for candy consumption.

Gum consumption and chewing gum sales also experienced tremendous growth in the U.S. market during the 1990s. According to statistics released by the National Association of Chewing Gum Manufacturers, total domestic factory sales increased from $716.0 million in 1980 to $1.3 billion in 1990, and sales passed $1.4 billion in 1994. A decade later, sugarless gum was gaining popularity with a 13 percent increase.

Even vending distributors, which saw a substantial loss of sales in the early 1990s, were experiencing an upward swing by the mid- to late 1990s. In 1997 total confectionery sales, excluding chewing and bubble gum, destined for vending machines increased by 14.4 percent. Vending machines of confectionery products had declined three percent to $239 million by 2000.

The largest number of firms, however, were in the mid-range of sales—1,618 firms had sales between $250,000 and $499,000, while another 1,255 firms had sales between $1 million and $4.9 million. Only 78 firms had sales below $49,000.

The leading candy makers in 2002 reported in the Market Share Reporter, were Hershey with 30 percent, Mars with 17.1 percent, Wrigley with 6.7 percent, Nestle with 6.5 percent, Philip Morris with 6.3 percent, Russell Stover Candies with 4.8 percent, Pfizer with 3.5 percent, and other companies with 25.1 percent shared. The leading gum makers in 2002 reported in the Market Share Reporter, were William Wrigley Jr. Co. with 54.8 percent, Adams with 26.5 percent, Hershey' Foods Corp. with 16 percent, Topps Co. with 0.9 percent, Concord Confections Inc. with 0.5 percent, Philadelphia Chewing Gum with 0.4 percent, and other companies with 1.8 percent shared.

According to the Food Institute, the confectionery industry underwent more consolidation in 2003 than it had since 1992, with nine consolidations reported. There were a total of 11 mergers and acquisitions in 2003. A few were Farley & Sathers Candy Co., which purchased gum brands from Hershey's Foods Corp., and Just Born Inc., of Bethlehem, Pennsylvania which acquired Goldenberg Candy Company in April of 2003. Another, Alpine Confections Inc. of Alpine, Utah, was awaiting a pending transaction to acquire brands Fannie May and Fanny Farmer Candy from Archibald Candy Corp.

In 2003, most of the businesses in this industry had a small number of employees—1,212 establishments had one to four employees, while an additional 412 establishments had five to nine employees. Only 97 firms had more than 100 staff members.

According to the National Confectioners Association (NCA), the Asian markets had imported close to $700 million in confectionery products into the United States in 2002. Combined, China and Hong Kong accounted for $175 million in imports. The United States manufacturers represented $90 million in exports during the same period. In 2003, the United States represented $665 million in exports, which made the United States the third largest exporter of confectionery products. This trend was expected to continue as the Asian economy intensified.

Further Reading

D&B Sales & Marketing Solutions, 2003. Available from http://www.zapdata.com .

Deardorff, Ellie and Milena DeLuca. "Just Born Completes Acquisition of Goldenberg Candy Company." 28 April 2003. Available from http://www.justborn.com/news/press_jb_042403.html .

"December 28, 2003 Retail Summary Information Resources, Inc." 28 December 2003. Available from http://www.ecandy.com/content.aspx?SectionID=2&ParentID=6&ContentID=5571 .

Emerson, Jim. "Candy Lovers." Direct, 1 December 2000. Available from http://www.keepmedia.com/pubs/Direct/2000/12/01/113858 .

"Food Industry Merger Activity in 2003 On Par With Prior Year." Food Institute Report, 19 January 2004. Available from http://www.foodinstitute.com

"Food Security: Information and Resources." 8 April 2004. Available from http://www.ecandy.com/content.aspx?SectionID=4&ParentID=77&ContentID=5119 .

Groeneveld, Benno. "Farley's & Sathers Candy Buys Gum Brands from Hershey." The Business Journal, 29 August 2003. Available from http://www.bizjournals.com/twincities/stories/2003/08/25/daily45.html .

Lazich, Robert S. Market Share Reporter, Detroit, MI: Gale Group, 2004.

National Confectioners Association. "NCA Announces U.S.A. Confectionery Pavillion at the New Sweets China Trade Show Lovers." Press release, Candy USA, March 2004. Available from http://www.candyusa.org/Media/Trade/intl/2004_sweetchina.asp .

U.S. Census Bureau. Statistics of U.S. Businesses 2001. Available from http://www.census.gov/epcd/susb/2001/us/US421420.HTM .

——. Current Industrial Reports 2003. Available from http://www.census.gov/cir/www/ind_num.html .

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