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Rising Costs, Health Perception Challenge Industry

May 27, 2014
by Candy & Snack TODAY

Chicago — 

Unstable commodity costs, a push to raise the minimum wage and the pressure of lobbyists criticizing ingredients such as sugar, are among the biggest challenges facing the category, industry leaders tell Candy & Snack TODAY on the Sweets & Snacks Expo show floor.

While the cost of sugar is in constant flux, Eric Atkinson, president of Atkinson Candy Co., said from the Expo show floor yesterday the attack on the ingredient should be top of mind. “It dawned on me, we have been fighting with sugar producers, but that is playing into the hands of the people who want to demonize sugar. We all need to be conveying the same message.”

The industry must continue its efforts to rail against negative health perceptions by talking about serving sizes and portions, according to Kim Kristofer, category development manager for KeHE Distributors, LLC. “We need to continue to do what we are doing — working with government agencies and building awareness that candy is a special treat.”

Keith McDaniel, First Source, LLC CEO, said offsetting negative attacks on candy can be accomplished by initiatives such as educating industry members on the actual contribution candy makes in diets. “Larry Graham just sent out a great article that highlights candy’s role in the diet, noting it only contributes two percent to the average American’s daily caloric intake,” he noted.

Front-of-pack calorie labeling programs are another way the industry can change those negative opinions, McDaniel said. “As a private label packer we offer the option of front-of-pack labels to our customers so they can help spread the message that candy is a small treat in a balanced diet,” he added.

A symbiotic relationship among stakeholders, including confectionery suppliers, bakers and growers, could go to besting sugar’s negative press, according to Joseph Dutra, president and CEO of Kimmie Candy Co., who added that by stabilizing prices everyone can benefit. 

“We have to look toward the future and all work together as a vertically integrated supply chain,” he said, noting cost challenges hit the small and medium size manufacturers the hardest as a result of economy of scale.

Dutra added moves to increase the minimum wage are also of concern, as raising the hourly pay of the lowest paid employees would have an ascending effect through all the staff.

Holding costs and rising fuel expenses are other challenges facing the industry, noted Eric Ostrow, vice-president of sales and marketing for Smarties Candy Co., making it difficult to maintain current price levels. He explained that moving products into more cost-effective packaging is one way to alleviate this burden.

“We need to keep sharpening those pencils and looking for ways to cut,” he explained.



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