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Industry consolidation has been a boon for Canada's confectionery manufacturers as the global leaders expand or relocate production to Canada. We have competitive labour rates, access to world price sugar, ready access to U.S. markets and over a century of confectionery expertise and innovation. Our exports rose 14% in 2002 and although this is probably an anomaly, January exports were up 25% from January 2002. The relocation of Life Savers production from Michigan to Montreal this year bodes well for further export growth.
The evidence of Canada's success can be seen in investments, production and exports. Capital and repair expenditures in the sugar and confectionery sector have more than doubled in the last seven years to over $250 million. Confectionery shipments have more than doubled in the last decade to $2.9 billion. Exports of chocolate and non-chocolate confectionery have increased four-fold over the same period to $1.4 billion. U.S.-based manufacturers are shifting production to Canada and our home-grown manufacturers such as Ganong Bros, of St. Stephen, N.B. and Sun-Rype Products of Kelowna, B.C., are expanding capacity to meet growing demand south of the border.
Canada's success is attributed to a highly competitive domestic market where imports claim 40% of sales and the presence of all the major global players. John Rowsome, president of the Confectionery Manufacturers Association of Canada, says, "Canada is the only country in the world where the global top five confectionery companies all have manufacturing operations-Hershey, Cadbury, Mars, Nestle, and Kraft."
Last fall Hershey Trust pulled Hershey Foods off the auction block after residents of Hershey, Penn. and the state's governor opposed the sale. Wm. Wrigley Jr., the world's largest gum maker, was reported to have offered US$12.5 billion for Hershey.
In January, Cadbury Schweppes plc of London became the world's largest confectionery company with the completion of its US$4.2 billion acquisition of the world's number two gum maker Adams brands (Halls, Trident, and the Bubbas bubble gums) from pharmaceutical maker Pfizer Inc.
Also in January, 15 months after Kraft Foods acquired Nabisco, the company announced plans to close the Holland, Mich., (Nabisco) Life Savers plant and shift North American Life Savers production to its Mount Royal plant near Montreal.
The Canadian sugar refining industry...