Candy Manufacturing

The US candy manufacturing industry includes about 1,600 companies with combined annual revenue of $17 billion. Major companies include Mars, Nestle, Cadbury, and The Hershey Company. The total candy industry is fragmented: the largest 50 companies hold less than 40 percent of the market. However, consolidation is occurring and each major market has dominant companies: Hershey and Mars in chocolates, Wrigley in chewing/bubble gum, and Jelly Belly in jelly beans.

The industry includes three major segments: companies that make chocolate from beans, companies that use purchased chocolate to make candies, and companies that make non-chocolate candy.

COMPETITIVE LANDSCAPE

Demand is driven by consumer tastes and population growth. The profitability of individual companies depends on manufacturing efficiency, supply chain efficiency, and marketing. Large companies have advantages in economies of scale in manufacturing and purchasing. Small companies can compete effectively by offering premium and specialty products. The industry is highly automated: average annual revenue per worker for a typical company is about $300,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major industry products are chocolates, candy made from purchased chocolate, and non-chocolate candy. Candy made from purchased chocolate accounts for about half of industry revenue, non-chocolate candy for 30 percent, and chocolate for 20 percent. Non-chocolate candies include a wide variety of products: jellybeans, chewing/bubble gum, marshmallows, mints, and hard candies.

Chocolate is made from dried beans of the cacao tree. The beans are roasted and the inner meat is ground and ...