Rising sugar prices could sour Halloween festivities this year, with candy prices continuing to climb.
Last year alone, candy prices were up 13.1%, marking the biggest year-to-year (YoY) increase to date, according to the Consumer Price Index.
At the heart of the problem is a 90-year-old sugar program that mandates that 85% of U.S. sugar be sourced from some 4000 domestic producers instead of producers in Brazil, the Dominican Republic, and the Philippines. The requirement is resulting in a classic case of low supply and high demand, causing candy and chewing gum prices to go up 13.2% year over year.
To make matters worse, rising inflation has caused global sugar prices to go up by 42% since June 2022, and extremely dry weather caused by El Niño this year is expected to result in a 10% to 15% reduction in global sugar cane yield.
These challenges are not only impacting the cost of candy, but also carbonated drinks, including soda, costing an average of 9.1% more.
The good news is some of the major candy producers in the U.S. are optimistic about overcoming inventory shortages.
“Our production is busy, and our warehouses are full. There is not going to be a shortage for Halloween,” said Todd Scott, Hershey’s senior manager of communications.
Still, many candy manufacturers might struggle to meet demand amidst rising costs and demand for the holiday season.
“Most likely what consumers will sense this year is higher-priced Halloween candy, but there’s a chance, given the sugar supply issue globally, that some candy manufacturers could fall short,” Lisa Thompson from Shopmium cashback app told Axios.
One such player who is facing a hard time meeting Halloween orders is Spangler Candy, the maker of popular classics such as Dum-Dums, Jelly Belly Candy Canes, and Sweethearts.
According to Spangler President Kirk Vashaw, supplier cutbacks on available sugar have disrupted the company’s supply chain, forcing it to refuse Halloween Candy orders that it could not fulfill. The company anticipates the problem to extend well into the holiday season. It is not sure if it can deliver on demands for Christmas even though it is the biggest manufacturer of popular candy canes in the United States.
Another player facing severe challenges is Texas’ Atkinson Candy, the maker of candies such as Black Chow, Mary Jane, and Chick-O-Stick. The company’s President, Eric Atkinson, said 11 of its suppliers are out of sugar for the rest of 2023 — a problem that has forced the company to source sugar from Colombia.
“We were down to the point where we were about to run out,” Atkinson told WSJ. “We would’ve been going to Costco,” he added.
The problem is serious enough that the industry group National Confectioners Association (NCA) is teaming up with lawmakers to address the issue.
“The U.S. sugar program only fans the flames on these increased costs, forcing American consumers to pay $2.4 billion to $4 billion more per year for food,” said NCA Spokesperson Carly Schildhaus.
Schildhaus added that the antiquated government program is putting U.S. businesses at a disadvantage as they are being forced to pay two to three times more for sourcing sugar than their competitors in other countries.