This year consumers could face a bittersweet Halloween as spending for candy is expected to soar, driven in part by demand, but also by higher prices amid inflation and shrinkflation. Call it a different kind of sugar high, as the cost of candy rises, outpacing many other products.
Of course, inflation stretches virtually across the board, amid spikes from stores to restaurants to the web. The double-digit jumps, though, have hit candy hard. Food prices were up 11.2 % year-over-year as of September, according to the Consumer Price Index for Urban Consumers. Cakes, cupcakes, and cookies were up a whopping 16 %, while candy and chewing gum rose 13.1 %. And that’s before the Halloween sugar rush reaches its peak.
There are some key reasons for inflation when it comes to candy. NPR reported sugar is up 17 % since last September, fueled by supply chain issues and low beet sugar production. Beet production in the United States and worldwide overall was down in 2022, due to a wide range of factors ranging from weather to labor and cost. Since sugar beets require large amounts of fertilizer, which was more costly than usual, some farmers simply planted less. Issues such as heavy rainfall, contract negotiation delays, summer hailstorms and rising expenses in production all led to less sugar.
Candy prices that have been rising for months may have an even bigger impact as the Halloween surge arrives. Earlier this year Hershey reportedly raised prices 14%, including 17% on standard Hershey bars and 13% on King bars.
“Pricing will be an important lever for us this year and is expected to drive most of our growth,” Hershey CEO Michele Buck said in February.
Nestle announced a 6.5% price hike in July, citing rising costs for raw materials, energy, packaging and transportation. But despite of, and possibly even in part because of, rising prices, 2022 is expected to be a year when Halloween spending is bigger than ever.
The good news, at least for this sector of the food and beverage industry, is that Halloween shopping in general is back. After fluctuating for several years, Halloween spending roared to a record $10.2 billion in 2021 and is expected to reach a new high of $10.6 billion this year, according to the National Retail Federation.
Why the huge hunger for Halloween? Part of it is that Halloween has gone from a holiday to a season, much as Christmas did. Call it costume and candy creep. Nearly half (47 %) of Halloween shoppers begin buying in September or earlier. And candy remains as central a component of Halloween as turkey does for many celebrating Thanksgiving. As the weather gets colder, many people head for sugar to provide comfort, even at the expense of health. We are hooked on Halloween and sugar is a big part of that. According to Visually, 158 million Americans participate in Halloween. Americans buy nearly 600 million pounds of candy for each Halloween, and the average American consumes a whopping 3.4 pounds of candy related to the holiday.
One and done? Not anymore. NRF President and CEO Matthew Shay said, “As consumers continue to return to pre-pandemic behaviors,” they are heading to stores and online for everything from costumes to candy. The top ways consumers plan to celebrate? Number one is handing out candy (67%), followed by decorating their home or yard (51%), dressing up in costume (47%), carving a pumpkin (44%) and throwing or attending a Halloween party (28%), according to the NRF. Halloween is becoming a key component in America’s sugar high.
The sweet tooth
A breakdown of the Halloween business shows that about 96 % of consumers spending on Halloween buy candy, while about 75 % buy decorations, 67 % buy costumes, and 39 % buy greeting cards, according to the NRF.
Happy Halloween? If you’re making candy, it could be, despite higher ingredient costs. Chocolate and candy sales rose 11 % in 2021 after rocketing to 15.4 % in 2020, according to the National Confectioners Association’s State of Treating report. The confectionery category reached $36.9 billion at retail in 2021, with projections of $44.9 billion by 2026. To judge based on my own experience, I’m guessing stress may increase Americans’ hankering for sweets where price hikes aren’t likely to amount to big bucks for consumers.
“(In) contrast to rising costs for families related to inflation, healthcare, and simply putting food on the table, candy remains a simple, affordable treat,” John Downs, president & CEO of NCA, said.
You might be surprised by where Americans buy their candy. Nearly two thirds or 71 % of consumers primarily buy chocolate and candy at their local grocery store. Despite the downside of sugar, 78 % of all adults believe it’s alright occasionally to “treat” with chocolate or candy, according to the State of Treating.
Consumers like choices when it comes to quantity. About 72% of consumers said it’s important for chocolate and candy brands to offer portion size variety. Meanwhile, some companies are turning to shrinkflation as a sales strategy. Hershey’s trimmed nearly two ounces off 18-ounce packs of dark chocolate Kisses in 2019, according to The Washington Post. So portions sometimes are getting smaller, even as prices remain stable or rise.
Big candy brands still dominate the sector. Reese’s Peanut Butter Cups is the number one seller leading up to Halloween, according to Candystore.com. Skittles is second, followed by M&M’s, Starburst, Hot Tamales, Sour Patch Kids, Hershey Kisses, Snickers, Tootsie Pops and Candy corn.
Ogden Nash once famously wrote, “Candy is dandy, but liquor is quicker.” At least when it comes to inflation, the rise in price has been slower for alcohol than candy. Alcoholic beverage prices were up 4.1 % as of September, but with candy prices heading upward, some consumers may reach for a drink instead. Candy manufacturers will break out the champagne if profits continue to rise.