getting fresh: The candy tax canThe night before Illinois’ new tax on candy, soft drinks, toiletries and alcohol went into effect, I considered a grocery run for non-flour-based sweets, Arizona iced tea, sensitivity toothpaste and liquor. I then remembered that I have no need for more confections (occupational hazard), am trying to cut back on my intake of caffeine, have plenty of oral hygiene products on hand (courtesy of my dentist) and don’t need to restock my bar anytime soon.
That said, this new tax might drive some people to drink, once they realize what’s happened.
Truth is, few consumers may know what’s going on here. That’s because Illinois’ latest tax increase has largely gone under the radar, receiving little media attention, other than some articles in the Chicago Tribune. Of course, we in the candy industry have been following the new legislation quite closely.
A quick recap: As reported in the Tribune a few weeks back and mentioned in my “Taxation without justification” column in our Aug. 5 sweet & healthy eNewsletter, the state of Illinois recently approved a new tax on grocery items previously counted as “food” by retailers. Under new legislation (which went into effect Sept. 1), a number of mainstream candy products (such as Butterfinger) will be affected … but not all. As the Tribune explained, any item made with flour (such as Twix and Kit-Kat) will remain under the “food” banner and, as such, remain exempt from increased taxation.
This week, The Associated Press broke down the tax into layman’s terms. According to the AP, Illinois’ current state sales tax is 6.25% for general merchandise and 1% for food and drugs. Under the new legislation, bottled or canned beverages will be taxed at 6.25%, just like soda pop. Toiletries that carry medicinal qualities will be taxed at 6.25%, as well.
So will candy, which until yesterday enjoyed the same low tax rate as food and drugs.
The AP notes in a second article that Illinois’ plan should raise “about $150 million a year toward a $30 billion roads and schools building plan,” as well as “hundreds of millions of dollars for local pet projects of lawmakers.”
It remains to be seen what those “pet” projects are. It also remains to be seen how consumers will react in the short- and long-term.
It’s now been more than 24 hours since the tax went into effect, and chances are no one’s really feeling the increase … yet. Kids counting their pennies at the checkout may feel the burn and turn to parents for raises in their allowances, to be sure. But the average consumer may not notice a difference in his or her receipt at first.
But Halloween is right around the corner. Soon, shoppers will be buying bags upon bags of snack-sized candy bars and other sweets … and they’re gonna see a price difference when they pay the cashier. This might lead to more label reading, as consumers search for the word “flour” in effort to save some dough (pun intended). And trick-or-treaters might find themselves the recipients of doughnuts (yum) and cookies … not to mention a lot of Twizzlers, which are among those lucky confections exempt from the higher tax bracket.
Yes, the candy man may be able to take a sunrise, sprinkle it with dew, cover it in chocolate and a miracle for two … but he would never raise the price of everyone’s favorite confections. However, the candy tax can, and will, do just that.
I may need a drink after all.
Editor's Note: What do YOU think of the practice of taxing candy at a higher rate to raise money for state programs? Is it fair? Should candy be taxed as high as, say, alcohol? How do you expect it to affect candy sales, or have you already felt the effects? E-mail your thoughts to firstname.lastname@example.org.
ECRM presents 2nd Kid's Choice AwardsEfficient Collaborative Retail Marketing (ECRM) will host the 2nd Kid’s Choice Awards during its Candy Annual Planning event on Sept. 22 in Dallas. Approximately 60 children ages 10-14 from the Boys & Girls Clubs of Greater Dallas will participate in the event, sampling and voting on their favorite candy products. Items donated from manufacturing attendees will be judged based on taste, packaging, quality and uniqueness. Participating vendors include American Licorice Company, Harry & David Wholesale, Hershey’s, Just Born Inc., Snyder's of Hanover and Turin Chocolates.
During the event, the kids also will learn about trade shows and the candy industry from experts such as Deborah Cassell, executive editor of Candy Industry and Retail Confectioner magazines, who will educate them on trends and share her experience as a candy editor. In addition, a candy buyer from a leading drug store chain will talk about his work in the industry.
“This event will give the Boys & Girls Clubs of Greater Dallas a behind-the-scenes look at trade shows and the candy industry in a fun, unique way,” says Ed Reilly, ECRM’s v.p. of grocery. “In addition, many of our manufacturers get very excited about receiving feedback on their products.”
The winning manufacturer will receive a complementary full-page ad in Retail Confectioner magazine. Second and third place winners will receive a free ad on the magazine’s Web site.
ECRM’s Kid’s Choice Awards were first introduced in February 2009 at the Winter Confectionary EPPS event. Due to the program’s popularity, ECRM has reintroduced it for this year and next, in partnership with Candy Industry and Retail Confectioner.
For more information, contact Maria DiFranco at mdifranco@ECRM.Marketgate.com or visit www.ecrm.marketgate.com.
Cadbury commits to Fair Trade-certified Dairy Milk in Canada by summer 2010Cadbury North America in Canada will roll out Cadbury Dairy Milk bars sporting the Fair Trade Certification mark by next summer. Cadbury Dairy Milk is the first major confectionery brand in Canada to be Fair Trade-certified. With an estimated 22 million bars sold annually, Cadbury is expected to double the amount of Fair Trade chocolate sold in Canada.
"We are deeply proud to make Fair Trade-certified chocolate accessible right across Canada by working together with TransFair Canada to achieve certification for our biggest global brand and one of Canada's leading chocolate bars," says Gary Scullion, general manager for Toronto-based Canada, Cadbury North America.
"Fair Trade is designed to improve the lives of the cocoa farmers in Ghana, Africa, that we source from by guaranteeing fair payment for their crop and also paying an additional social premium fee that goes to community improvements,” he continues. ”Canadians have the opportunity to be catalysts of change by purchasing Fair Trade-certified Dairy Milk chocolate, knowing it will improve the lives of 40,000 farmers in Ghana, and that is truly extraordinary."
Cadbury's Fair Trade commitment means that approximately 11% of all chocolate products it sells in Canada will be Fair Trade-certified. This announcement applies to the entire pure chocolate Cadbury Dairy Milk range: 42-, 100- and 200-g. bars; Thins; and Halloween treat sizes.
For more information, visit www.canada.cadbury.com or www.transfair.ca.
Industry executive John Kitt passes awayJohn Kitt, 65, died on Wednesday, August 26. The well-known and respected confectionery researcher and patents-holder spent 43 years in the industry, beginning his career with Barratt’s Ltd. in 1966. He subsequently worked for Knechtel Laboratories, Standard Brands and Nabisco Brands before retiring from the Wm. Wrigley Jr. Co. in 2006. He remained active in the industry, working to establish a central confectionery research and educational center in the United States.
Always involved in education and research, Kitt served on various industry technical and educational committees. In 1986, he received a National Confectioners Association Certificate of Appreciation for guidance and contributions to its technical program. In 1997, Kitt was Candy Industry’s Kettle Award recipient. The following year, he was recognized by the American Association of Candy Technologists with its Stroud Jordan Award. Kitt also has been honored with an NCA Research and Education Award and was inducted into the Candy Hall of Fame in 2008.
Born in Beckenham, England, on March 7, 1944, Kitt attended high school in Bramhall and then studied sugar, cocoa and chocolate technology at Borough Polytechnic in London and the City and Guilds of London Institute. He is survived by his wife, Jeannette. A service celebrating his life will be held at Goble Funeral Home in Sparta, N.J. on Saturday, Sept. 5.