Candy Companies Still Sweet in Sour Economy By: American Sugar Alliance With Easter just around the corner, one would think the makers of chocolate bunnies, marshmallow peeps, and other Easter basket staples would be in high spirits. But lobbyists for big candy companies aren't spreading joy on Capitol Hill these days. Instead, they're selling lawmakers the same story they have for decades: candy profits could be larger but U.S. sugar farmers are standing in their way. Never mind the fact that sugar prices have fallen over the years while candy prices—and profits—have risen. Currently, these lobbyists are pushing for more subsidized foreign sugar to be let into the U.S. market—a move that would further oversupply the U.S. market, depress U.S. sugar prices, and harm American farmers. To help make their case, these lobbyists are spinning tales of economic hardship brought about by sugar policies in the popular 2008 farm bill. Too bad the lobbyists' colleagues in the candy business aren't singing the same tune. "Not only is confectionery a large product category at $28.2 billion in retail sales, it is a high profit category. Margins average more than 35% for the category." That's how the National Confectioners Association described the candy business on their website. This analysis, released in 2008, appears to be holding true even in today's economic crisis. Hershey's chief executive had this to say on a January 27 conference call with investors: "The financial market and credit crisis has not had a material effect on our business operations or liquidity, to date." In fact, Hershey's proudly told investors that its fourth quarter net income was up a staggering 51 percent from a year ago. Just one day later, another candy company had some exciting news. "DeMet's Candy Company is looking to hire 100 people for its new plant," proclaimed the local news station in Big Flats, NY. New hires…plant expansion…increased income. These are not the signs of a struggling industry. And this good news isn't isolated to a few candy companies. Other large sugar buyers are getting into the act. A new Sconza Candy Co. plant officially opened in Oakdale, CA in November, employing 100 people immediately and looking to hire more. Tierra Nueva, a cocoa and chocolate-product factory, is expected to open a new facility in Miami this month, which should bring with it 160 new jobs. J.M. Smucker Co. announced last week that it will open a 557,000 square foot distribution facility in Atlanta. General Mills released plans earlier this month to expand its Albuquerque, NM facility and create 60 new jobs. On the heels of a 2005 expansion to the tune of $200 million, last month the Dreyer's Grand Ice Cream added a new production line to their Laurel, MD factory, and will add two more by year's end. The American Sugar Alliance has chronicled the good fortune of the candy business before, but the ability to sustain growth while the rest of the country struggles with a recession is truly remarkable. Maybe the National Confectioners Association had it right when they said, "Candy is also an expandable category due to the impulse nature of consumer purchases." In other words, people still need something sweet to munch on no matter how bad their bank accounts look. Unfortunately, farmers don't see much return on those candy purchases.