SOTIC 2024

Downs: US confectionery is robust enough to survive and thrive

22-Mar-2024 - Last updated on 22-Mar-2024 at 14:03 GMT

John Downs (right) mingles with attendees at this year's SOTIC in Miami. Pic: NCA

Confectionery’s resilience in the face of global inflationary pressures and the rising costs of raw materials has lifted John Downs, the National Confectioners Association’s (NCA) president and CEO, who said he is confident the category is in excellent health to weather geopolitical - and domestic storms.

Although the numbers look good for US confectionery - sales hit an all-time high of $48 billion in 2023 - there are still some significant challenges to overcome if the industry wants to reach its forecasted $61 billion sales by 2028.

At the close of the NCA’s State of the Industry Conference (SOTIC) in Miami earlier this month, Downs informed attendees: “A lot is happening in the world today related to the public affairs and legislative and regulatory theatres of operation, but as I said before, our number one job is to protect your social licence to operate and provide the right level of interference and air cover when you need us.”

Sugar reform

He was referring to the continual political impasse surrounding sugar reform (which currently places extra costs on manufacturers for sugar because of outdated legislation) and arbitrary bans by some states on certain food additives and ingredients.

In an election year, the political will to renew the Farm Bill (which sugar reform is part of) is becoming a low priority, and it could be left to the next administration to push through Congress in 2025.

In the meantime, Downs is left to put out fires caused by various states following California and imposing unilateral bans on food ingredients independent of the Food and Drug Administration (FDA), the centralised regulatory body.

Consumers have been feeling financial pressure, and there's competition for spending their money across a wide landscape ... every segment has felt a little bit of that financial pressure

Speaking to ConfectioneryNews, Downs, celebrating 10 years at the helm of the trade body, said: “We have transformed NCA into a mission-driven advocacy. That's what I've achieved in my tenure, and it's critical to the success of our category …for our member companies so they can continue to do the things that they do well to grow their business.

“But for all business leaders, for all companies, for all trade associations, it is a very frustrating time.”

While Downs and the NCA can try to exert some influence on these domestic struggles, the chocolate industry is facing severe issues on a global level, such as a potential shortage of cocoa beans, record high commodity prices, and economic turmoil in the markets - some of which were flagged up at SOTIC.

Consumer spending

“Consumers have been feeling financial pressure, and there's competition for spending their money across a wide landscape, whether it's our category, snacks, food, beverages, travel, entertainment, or family gatherings. Every segment has felt a little bit of that financial pressure,” said Downs.

In his view, the soaring costs of two big commodities [cocoa and sugar] present a big short-term challenge – and he admitted that's an issue as it is pushing the prices of candy and chocolate in stores, and consumers are changing their spending habits.

“But people are optimistic—and we're very optimistic about what's going to happen in 2024. Okay, there could still be some softening in units and volume, but the category is still powerful and vibrant.”

Last year, 74% of consumers said, ‘Yes, confectionery is very affordable’; that figure has decreased to 55%, according to the NCA's State of Treating Report 2024. Still, for some, price is not the only factor that influences their buying decisions; health and wellbeing are also considerations.

“The biggest learning laboratory for all of our lives, both personally and professionally in business, was the Covid pandemic,” Downs explained.

“It’s the biggest thing that's ever happened to the world; if you look at the performance of this category coming out of the Covid pandemic, it's nothing short of remarkable.

“So if you think about resilience, performance, and execution, it was a great testament to how consumers really love their treats.”

Sweets & Snacks Expo

The trend now is for healthy indulgent splurges, and Downs points to the better-for-you category, which made a big impression at last year’s NCA trade show, the Sweets & Snacks Expo. He said one of the main trends is the personalization factor of giving consumers more healthier options.

Downs also mentioned he is looking forward to seeing latest innovations in the category at the next Sweets & Snacks Expo, which will be held in Indianapolis in May.

“Indianapolis is a perfect fit for sweets and snacks. It's convenient, walkable, and very accessible for our attendees. And it looks like we will have record attendance, exhibitors, and sponsorships.

“We’ve got the whole city—ours for the week. We did a test run during Covid. The city welcomed us, and everybody who attended that show gave positive feedback. I think people are going to be excited to go back there.”