Consumers are facing steep prices for Halloween candy this year after a global shortfall of sugar and cocoa.
Poor weather from West Africa to India has spurred shortages of the two crops, which are key ingredients for chocolate and candy makers. The El Niño weather phenomenon could make matters worse by bringing drier conditions and curbing production in the season that just started.
The dire crop outlook recently pushed wholesale cocoa prices to the highest in almost 45 years, and sugar to the most in over a decade, further raising the cost of making treats before Christmas. The two holidays are among the most important for candy purchases, with U.S. consumers expected to shell out 9.2% more for sugar and sweets this year, compared to a 5.8% increase for overall food prices.
“I would expect to see higher Halloween prices, but certainly higher Christmas and probably Valentine’s prices,” said Andrew Moriarty, Mintec’s U.S. director of commodity insights.
According to a National Retail Foundation report, Americans are expected to spend $3.6 billion on candy this Halloween, up from $3.1 billion in 2022.
The trend for more expensive candy is echoed in advanced economies across the globe, with UK confectionery costs up 13% in September compared to a year ago. In Germany, sweets like chocolate bars and gummy candies were over 19% more expensive the same month.
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David Branch, vice president of Wells Fargo’s Agri-Food Institute, believes that while the hike in sugar is a major factor behind candy inflation, it’s not the sole driver.
“The cost of ingredients is up by a lot, inflation is up and transportation costs are higher than they were two years ago. The rising prices of raw materials play a part, but you can’t pinpoint the rise in candy costs to one factor,” he said.
Branch does, however, cite climate change in West Africa as one of the main reasons that huge chocolate companies like Hershey have raised prices this year.
That’s a problem for shops like Economy Candy, which bills itself as the oldest candy retailer in New York City. The week before Halloween is the store’s busiest of the year, but third-generation owner Mitchell Cohen said profits will suffer this holiday.
His candy suppliers have raised prices as many as eight times since 2020, he said, jumping from a usual 1% to 2% gain every few years to 10% to 20% in three. For now he’s keeping prices steady to please trick-or-treaters, but he said that might spell smaller returns for the business.
“We have a big selection of Hershey, Kit Kat and candy that people love to eat, but these things pre-pandemic cost us 60-65 cents, now I can’t get any of it for less than a dollar,” Cohen said.
In addition, higher raw material costs take months to trickle through to candy prices, so while the prices of sugar and cocoa kept rising in the third quarter, the effects might not be felt until later.
“A lot of the time, the price that is actually going into the Halloween candy might be from several months ago when the price still wasn’t as high as it is now,” said Moriarty from Mintec.
This story was originally published at bloomberg.com. Read it here.
