Deborah Cassell
Executive Editor
Candy Industry

getting fresh: Taxation without justification

Members of some generations may well-remember those five-and-dime stores that offered “penny candy” for, well, mere pennies. Confections may cost more now than they did back then, but such products have remained an affordable luxury, for the most part, even in these difficult economic times.
 
That said, many of today’s consumers find themselves pinching pennies like never before.
 
And very soon, residents of the state of Illinois (such as myself) will be forced to choose between that stress-relieving chocolate bar they’ve been craving and precious extra cents in their pockets.
 
As journalists Bob Secter and Ameet Sachdev this week reported in the Chicago Tribune, the state of Illinois has approved a new tax on grocery items previously counted as “food” by retailers. Under new legislation (which goes into effect Sept. 1), taxes on a number of mainstream candy products (such as Butterfinger) could run as high as 10.25% here in Chicago, the writers noted. (Tax rates outside of Chicago will vary.)
 
Yes, a number of mainstream candy products will be affected … but not all. As the Tribune explained, any item made with flour (such as Twix, Kit-Kat and Twizzlers) will remain under the “food” banner and, as such, remain exempt from increased taxation.
 
This new tax law (like most other tax laws) is confusing, to say the least. Unless consumers are provided with a list of which of their favorite confectionery products contain flour or are looking to read every ingredient statement in the candy aisle, they’re likely in for a surprise at the checkout when their receipts total more than they counted on. An additional eight cents for a single Hershey’s chocolate bar is one thing, but anyone purchasing more than a few pieces of chocolate or non-chocolate candy NOT containing flour is certain to notice a difference in their spending, especially in the long-term. (Pennies add up.)
 
If the kids get wind of this, all hell could break loose. Lucky for new Governor Pat Quinn, most children don’t follow the news. Plus, Mom and Dad are the ones buying most of the candy for young consumers, including teens – more so now that the part-time jobs once worked by high schoolers have been taken by adults in need of spare cash following paycuts and layoffs.
 
While we Illinoisans may not miss the negative media attention brought on our state by former Governor Rod Blagojevich (and his sweeping bangs), we’re less than thrilled by gratuitous tax changes such as these by Governor Quinn … especially confusing ones. And not only is this new legislation confusing, it seems a bit unfair, doesn’t it?
 
Just ask Mars, Inc. When I asked the manufacturer to comment on the issue, it responded that the recently passed Illinois tax "singles out and discriminates against confectionery products without justification, creating arbitrary and inconsistent categories of food products. In addition to being discriminatory, the tax is burdensome and confusing both to consumers who must pay it and to retailers who must collect it."
 
Although the National Confectioners Association (NCA) did not respond to Illinois’ actions directly, it did issue me its general stance on state taxes on candy: “Periodically, state legislatures consider enacting sales taxes that single out certain foods. The National Confectioners Association and it members oppose these discriminatory taxes for many reasons. First, tax policy should not interfere with the marketplace by creating competitive disadvantages for arbitrarily created food classifications. Furthermore, varying tax rates for different types of foods create confusion and compliance problems with retailers and others who are charged with collecting the taxes. Additionally, food taxes hurt lower and middle income American families who spend a larger portion of their income on food purchases.
 
“Occasionally, legislators claim that the aim of these discriminatory taxes is to help curb the obesity epidemic in the U.S. However, food taxes do not address the myriad of issues that lead to weight gain and can create an atmosphere of blame that is counterproductive to the real issues of overweight and obesity.”
 
As an NCA spokesperson added, “It’s hard to imagine a legitimate rationale as to why a dark chocolate covered almond would be taxed, for instance, while a doughnut would not.”
 
Looks like I might have to follow the advice of one Tribune reader, who at the end of the aforementioned article suggested heading to Indiana for candy from now on. That and some fireworks, of course. Both cost mere pennies in Illinois’ neighboring state.


Fannie May adds distribution center, stores

Fannie May Confections Brands, Inc., a subsidiary of 1-800-FLOWERS.COM, Inc., will open a new distribution facility in Maple Heights, Ohio. The new facility will support the growth of the company’s Harry London and Fannie May brands as well as create approximately 10 new full-time jobs.
In addition, the North Canton, Ohio-based company looks to open additional retail stores this fall in Northeast Ohio. Currently, Fannie May has retail store locations in Hudson and Fairview Park, Ohio.
 
"Fannie May is honored to be an important part of so many of our customers' celebratory occasions and we plan to continue expanding in the years to come," says Terry Mitchell, president of Fannie May.
 
For additional information, visit: www.fanniemay.com.


Just Born receives Waste Watchers Award

In recognition of its recycling program, the Professional Recyclers of Pennsylvania, Pennsylvania Waste Industries Association and the Keystone Chapter of the Solid Waste Association of North America have bestowed Just Born, Inc. with a PA 2009 Waste Watchers Award.
Each year, the three groups honor Pennsylvania-based companies with exemplary recycling, waste reduction, reuse and composting programs. This marks the third year in a row that Just Born has received the honor.
 
Just Born promotes recycling and conservation efforts through an internal Green Team, made up of employees from different functions of the organization. The Green Team’s primary goal is to educate and involve all employees in incorporating recycling into their daily activities, both at work and at home. Just Born recycles 87% of its waste.
 
For more information, visit www.justborn.com.


Hershey, Kraft Foods enlist author Jen Singer to celebrate National S'mores Day

Given that 60% of consumers will opt to take a “staycation” this year, The Hershey Co. and Kraft Foods have tapped Jen Singer, mother and author of multiple parenting books, including the recently released “Stop Second Guessing Yourself” series, to encourage families to re-create the camping tradition of making s’mores right in their own back yards.
 
To celebrate National S’mores Day on August 10, Senger will ask Americans to light a campfire, start a grill or use the microwave to create the perfect combination of Hershey’s Milk Chocolate, Jet-Puffed Marshmallows and Honey Maid Graham Crackers to make a delectable S’more.
 
“I have so many great childhood memories of s’mores, and now I’m sharing the classic family treat with my kids,” says Singer, adding that having “National S’mores Day gives parents like me a great reason for remembering their childhood campfires while creating new family memories by hosting a National S’mores Day staycation in your own backyard.”
 
In addition to celebrating National S’mores Day on Aug. 10, Hershey and Kraft Foods are offering consumers the chance to win a backyard makeover with the “S’mores Truly” photo contest. Families are invited to capture and share photos of their s’mores-making experiences on www.SmoresTruly.com. The grand prize winner will receive a backyard makeover, making it even easier to have “s’more” fun.
 
For more information, visit www.hersheys.com or www.kraft.com.


Nestlé's creates global awareness award

As a means of encouraging innovative ideas that make a positive impact in the areas of water, nutrition or rural development, Nestlé has created the Nestlé Prize, a biennial award. Individuals, non-government organization, or small enterprises that offer innovative solutions to improve nutritional deficiencies, access to clean water or progress in rural development will be eligible to expand their impact with an investment of up to 500,000 Swiss francs, about $465,000.
Nominees must have proven the innovation on a small-scale, ensure it is applicable on a broader scale and demonstrate a high promise of improving rural development, nutrition, access to clean water, or having a significant impact on water management.
 
Nominations are open from now through October 31, 2009. The winner will be announced at the next Nestlé Forum on Creating Shared Value in April 2010. The Nestlé Prize Screening Committee will judge the entries and select five finalists, while an Advisory Board on Creating Shared Value will choose a winner.
 
For more information, visit www.nestle.com/CSV/CSVatNeslte/CsvPrize/.


Sweet of the week: Chocopotamus

Created by fledgling artisanal chocolatier NYDC Chocolate, Cocopotamus is a spin on that wonderful American tradition: old-fashioned fudge. Set to launch regionally over a seven-state area (Colorado, Wyoming, Texas, Arkansas, Oklahoma, Louisiana and Mississippi),Cocopotamus is a richer, creamier and less sweet chocolate fudge made with dark chocolate and infused with exotic flavors. Available in 18 flavors, the all-natural fudge (no preservatives, no corn syrup, no wheat, no gluten) is handmade in artisanal small-batch fashion and then hand-dipped in dark chocolate to form fudge truffles.
 
"We believe chocolate should be delicious, creative, and most of all, fun," says Maxwell Sinclair, ceo of Albuquerque, N.M.-based NYDC Chocolate. "A lot of the inspiration came from NYDC," he adds, referring to the award-winning New York Dessert Cafes he and his wife, Ally Sinclair, co-founded in 1995.
 
A 15-piece box of assorted fudge truffles range from $24 to $30 online.
 
For more information, visit www.cocopatomus.com.