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Confectionery :«üv .^ Sé pii Agricultural Economic Report No. 37 0 M JUN2 4J963 m- -'^'mu. «com , .;í >-. CONFECTIONERY ■,:--á*" tonomic Research Service Ifc U.S. DEPARTMENT OF AGRICULTURE PREFACE This is the fifth of a group of reports dealing with the competitive posi- tion pf sweeteners in food processing industries. Prior publications are: 1. Sweeteners Used "by Food Processing Industries in the United States: Their Conrpetitive Position in the Canning Industry. Agricultioral Economic Report No. 20^ November I962. 2. Sweeteners Used by the Dairy Industry: Their Competitive Position in the United States. Agricultural Economic Report No. 30, April 1963* 3. Sweeteners Used by the Beverage Industry: Their Competitive Position in the United States. Agricultural Economic Report No. 31j May 1963* k. Sweeteners Used by the Bailing Industry: Their Competitive Position in the United States. Agricultural Economic Report No. 32^ May 1963* A final report summarizing the principal findings for each industry is planned. Research analyzing and evaluating trends in the production and consumption of various sweeteners and in competition among sweeteners has been recommended by the Sugar Research and Marketing Advisory Committee CONTENTS Page Summaary ^ Introduction 1 Size and location of the confectionery industry 2 ' Quantities of sweeteners used • ^ Geographic distribution of the use of sweeteners by the confectionery industry T Government regulation of sweetener use by the confectionery industry .... 10 Industry practices in the use of sweeteners 11 Use of noncaloric sweeteners • 11 Forms of sweeteners used 13 Sweetener procurement practices 1^ Cost of sweeteners relative to other raw materials used in confectionery products 15 Economic implications 16 Washington, D. C. J'une I963 - iii - SUMMARY Thç confectionery industry--candy, candied fruits and other confectionery products, cheving gum^ chocolate and cocoa products--U3es a larger quantity of corn sirup, more than one-third of the total consumption, than any other food industry in the United States. It also uses nearly one-tenth of the sugar and mpre than one-tventieth of the dextrose consuoied in the United States. The total quantity of sTifeeteners delivered to the confectionery industry has increased sincç 1952, "but at a slover rate than for other major food proc- essing industries. Consequently, the proportion of total deliveries of sweet- eners going to the confectionery industry in I96I vas slightly smaller than in 1952. This is of greatest importance to producers of corn sirup because of the larger proportion of sirup used by confectioners, and also because the pro- duction of the type of confections—hard candies, in the manufacture of vhich the largest proportion of corn siriip is used—has increased more slovly than certain other types, especially chocolate products. Plants vhere confectionery products are manufactured are concentrated in the Middle Atlantic and East North Central States, although several nev fac- tories have been established in California in recent years. Availability of important raw materials at relatively favorable prices, in coiiqparison with prices in other areas, and local concentrations of population are among the important considerations determining plant locations in the industry. The total quantity of sugar, corn sirup, and dextrose delivered to con- fectionery industry increased during the period 1952-61 at an average rate of about 25,000 tons a year, of which 20,000 tons were sugar, 5,000 corn sirup, and 360 dextrose. The increase in the use of these products was only slightly faster than the growth of population in the United States. Per capita use in- creased only about 6 percent from 1952 to 1961. The consimiption of s^gar by the confectionery industry increased more rapidly, from I952 to I961, in the Western States than in any other region. The increase was slowest in Ifew England. These trends, are related to pop\ila- tion shifts, new confectionery plants in California, and increasing competition from imported confections in the Kortheastern States, including Hew England. The need for maintaining quality and constmer acceptance of their products has been an inrportant factor restricting the siibstitution of corn sirup or dex- trose for STOgar as price differentials between sugar and the corn sweeteners have widened. However, a number of confectioners have indicated an interest in using a larger proportion of corn sirup if the price disadvantage of using sugar shoiald become much greater. Some substitution has occurred since 1952, although this is not apparent from the overall statistics of consumption be- cause of the greater effect of shifts in product lines. There has been a marked trend since 1952 toward the use of sugar in diy b\iLk form. Most confectioners prefer dry to liquid sugar because of the ex- pense of evaporating excess water from liquid sugar. Most finas continued to use some bagged sugar because of special circumstances or the need for special quality sugar for certain of the products manufactured. Prospects for increased sales pf corn sirup to confectioners may haye been improved somewhat by the recent introduction of nev types of com sirup which are reported to i32rprove the quality of hard candies. VI - SWEETENERS USED BY TBE COHFECTIOKERY IHDUSTRY Their Cqmpetitive Position in the United States By Roy A. Ballinger and L. C. Larkin Agricult-ural Economists Marketing Economics Division Economic Research Service IIÎTRODUCTIOIÎ Producers of confectionery products—candy^ candied friiits and other con- fectionery products^ cheTifing gum^ and chocolate and cocoa products—in the United States have long been important users of sweeteners. In 19^1^ ahout 9»6 percent of the sugar, 36.8 percent of the corn sirup, and 5*8 percent of the dextrose consumed in the United States vas delivered to the confectionery industry, l/ In addition, the industry uses some noncaloric sweeteners (prin- cipally saccharin and sucaryl) in certain of its products, although statistics shoving the quantity used are not available. Sveeteners are an essential ingredient, in many cases the dominant one, in mo^t products of the confectionery industry. In addition to providing the desired sveetness, various combinations of sveeteners are used to produce de- sirable body and texture in the product, to prevent graining, and to prolong the shelf life of confectionery products. Certain combinations of sveeteners also are used to improve the appearance of products, especially in cases vhere visual appeal is an important factor in making sales. Changing conditions in the confectionery industry—particularly vith ref- erence to competition among sugar, dextrose, corn sirup, and other sveeteners— have created a need for additional information concerning these shifts and their probable effects on the sveetener industries and consumers generally. A previous publication of the U. S. Department of Agriculture contains related information for an earlier period. 2/ The proportions of the various sveeteners used in the confectionery in- dustry have not changed greatly since 1952. The rate of increase in the use of sveeteners from 1952 through 1961, hovever, vas slover than that for other major industrial food processors. As a consequence, the relative importance of the confectionery industry in the use of sveeteners by food industries de- clined slightly from I952 to I961. This shift is of greater importance to the 1/ The vords "delivered" and "used" are synonymous in this report. 2/ Jones, P. E., and Thomason, F. G. Competitive Relationships Betveen Sugar and Corn Sveeteners. Agr. Infgim. Bui. No. ko, 2^5 p., 1951« prodiicérs of corn sirup than to the producers of other sweeteners because the confectionery industry uses a larger proportion of the United States total consuisption of corn sirup than it does of the other sweeteners. The specific purposes of this report are (l) to determine trends in the quantity of each type of sweetener used; (2) to provide information concerning the problems and practices of various segments of the confectionery industry in their purchase .and Use of sweeteners; and (3) to analyze the competition among producers of different sweeteners in selling their products to the con- fectionery industry. The information on which this report is based was obtained from a sample survey of firms in the cpnfectionery industry and from various secondary sources. The industry survey covered, firms in seven States and included repre- sentative producers of each of the principal confectionery products. SIZE Am LOCAEtOH OF TEE OOîïFECTIOIîERY lîlDUSTRY Most of the sweeteners purchased by producers of confectionery products are used in the production of candies^ chocolate and cpcoa products^ and chew- ing gum. The output of candy and chewing gura has increased, since World War II at approximately the same rate as the population of the United States as indi- cated by the per capita production of major industry items (table l). The pro- duction of chocolate and cocoa products has increased rapidly; per capita production rose about 32 percent from I9Í4-7 to I958. Candy accounted for about 67 percent of the physical output of the confectionery industry in 1958^ com- pared with 61 percent in 19if7r while chocolate and cocoa products increased from 27 percent in 19kl to 33 percent in 1958. Table 1.—Production of confectionery products by census years Year Candy Chocolate and cocoa Chewing gimi Total : Per capita ; Total ; Per capita ; Total : Per capita 1^000 1,000 1,000 pounds
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