Short rains in places like Mexico, India and Ivory Coast may lead to lighter bags of candy for trick-or-treaters this Halloween, as disappointing sugar and cocoa crops have pushed up candy prices.
price of candy That’s up 7.5 percent from last year and 20 percent from 2021, according to the latest data from the Bureau of Labor Statistics. This is a faster increase than overall inflation, and is driven by surges in prices of key ingredients such as sugar and cocoa, which are the highest in global wholesale markets in decades.
This is due to poor harvests caused by hot, dry weather and high costs of fertilizer, among other factors. Sugarcane, which is processed into sugar, and cocoa, a major ingredient in chocolate, are particularly sensitive to periods of low rainfall in tropical regions such as Asia, Central America, and parts of West Africa where these crops grow. .
The United States is dependent on sugar imports from Mexico, where sugar production was seen More than 15 percent decline this year As a result of drought conditions, according to the US Department of Agriculture. value of raw sugar Global markets recently traded at around 27 cents a pound, the highest since 2011.
Parts of Asia, home to many top sugar producers, also faced dry weather that affected harvests. India, one of the world’s largest sugar producers, has restricted sugar exports to protect its domestic supply.
“U.S. candy consumers are essentially paying the price of poor crops in Mexico and Asia,” said John Stansfield, senior sugar analyst at commodity data platform DNEXT.
For candy manufacturers, sugar is a more forgiving ingredient than cocoa because when sugarcane is scarce or expensive, the industry can rely on sugar beets, a crop that grows in cooler climates and can also be refined into sugar. According to David Branch, an analyst at the Wells Fargo Agri-Food Institute.
Cocoa grows only in areas near the equator, primarily in West Africa, which has experienced drought in the past year. The impact on prices has been severe: In commodity markets, cocoa recently traded above $3,800 per metric ton, the highest since the 1970s.
“Prices are going to increase due to increased demand for chocolate as well as a reduced harvest,” Mr Branch said.
US consumers have been struggling with high inflation, especially for food, for several months. Food prices are influenced by weather and geopolitics, which domestic policy makers have limited power to address.
Shoppers are still expected to spend big this Halloween, which the National Confectioners Association describes as its industry “Super Bowl.” Americans are expected to spend $3.6 billion According to the National Retail Federation, there is a 16 percent increase in purchases of Halloween candy this year compared to last year.
One reason for that increase is that food companies have been raising prices over the past year, often citing increased ingredient costs. Many of those companies have sold fewer candy bars or packs of gum as consumers have retreated, but they have still been able to increase their profits due to higher prices.
hersheyFor example, the company raised prices at its North American candy unit by 11 percent last quarter, the company reported Thursday. Although its sales volumes declined by 1 percent, the unit reported a 20 percent increase in profit for the period compared to the previous year.
Increasingly, consumers are responding to the higher prices of name brands by turning to private label products, including candy. But access to private label candies has historically been limited because shoppers are generally loyal to brands and may notice minor differences in taste, said Jeffries food analyst Rob Dickerson.
“Many people have tried to copy or recreate Reese’s Peanut Butter Cups,” he said. “No one has been able to figure it out.”