How sweet it is
Life in the candy world will always be sweet, but disruptions both large and small are causing challenges for candy retailers.
For one, the Wonka movie release came and went in late 2023, and there was no concurrent co-brand release of a Wonka chocolate bar. The Wall Street Journal reported that studio execs decided against releasing the classic chocolate Wonka Bars with a golden ticket inside one, even at $10 to $12 a bar. CandyStore.com, the world’s biggest online candy retailer, went so far as to issue a petition asking Wonka execs to release a bar. Seems like a miss.
Yet in late 2024, Hollywood will release follow-up movies to the titanic franchises of The Lion King and Beetlejuice, and both seem tailor-made for co-branding opportunities that appeal to children (always the biggest market for candy, what with fledgling sweet tooths) and are a fit for Halloween.
When the live-action The Lion King remake was released in 2019, for instance, PEZ Dispensers featuring four of the leading characters were released.
Crisis = opportunity
Now is the time for retailers to plan their product sets for the year-end holidays. Halloween and the winter holidays are the top two of the big four candy-centric holidays, each bringing in about $6.5 billion in annual sales, according to the National Confectioners Association’s State of Treating 2024 report, issued in March 2024.
[Read more: Generation next: Capturing millennial, Gen Z shoppers]
Even there, though, problems loom. In 2023, climate change-driven heat waves in West Africa, where some 70% of the world’s cocoa is grown, devastated crops and led to a doubling of prices of chocolates. Similarly, unusually dry weather damaged sugar harvests in India and Thailand, the world’s second- and third-largest exporters. Sugar prices increased 55% in two months near the end of 2023.
“Historic cocoa prices are expected to limit earnings growth this year,” Michele Buck, The Hershey Company president and CEO, noted in the chocolatier’s fourth quarter 2023 report. Yet while the company experienced declining sales volumes for 2023, it nevertheless had surging net profit margins, to 16.7%, for the year, because it passed increased costs to consumers.
Another major chocolate brand, Cadbury, owned by Mondelez, reported a similar story in its fourth quarter 2023 investor report—higher prices led to higher profits despite lower unit sales. “The chocolate and candy companies are not immune to the well-reported supply chain challenges,” said Carly Schildhaus, director of public affairs and communications at the National Confectioners Association, “but the companies are working diligently alongside their retail partners to do everything they can to manage down costs and make chocolate and candy accessible to consumers, especially around seasonal celebrations like the winter holidays.”
That said, while chocolate prices have surged because of the ingredient price spike, candy benefits from some inherently resilient qualities: It’s not such an expensive product, plus its core taste sensation is built on sugar, which is about as close to an addiction as any of the five taste qualities can have. Combined, consumers continue to buy candies regardless of price.
Overall, confectionery sales hit a record $48 billion in 2023, a big number thanks in part to inflation, according to the National Confectioners Association. The group estimates the confectionery market will reach $61 billion by 2028.
The undeniable delicacy
“Even in challenging economic times, consumers are celebrating and making room in their budgets for the affordable luxury of chocolate and candy,” said John Downs, president and CEO of the National Confectioners Association.
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“Given the important role that chocolate and candy play in the seasons, it’s no surprise that the category enjoys a high rate of permissibility, with 96% of U.S. consumers in agreement that it is perfectly fine to enjoy some treats during the holidays.” One of the things that make candy fun is innovations that hook new shoppers. Flavor tripping with the so-called miracle fruit hit a decade ago and changed flavors as it was eaten. In the chocolate world, high-end dark chocolate keeps raising the percent of cacao while new flavors like savory bacon and salt mixed with chocolate are a revelation.
Most popular
Halloween Candy
- Reese’s Cups
- M&M’s
- Hot Tamales
- Skittles
- Sour Patch Kids
- Starbust
- Hershey’s Kisses
- Candy Corn
- Hershey’s Mini Bars
- Snickers
15 years sales data (2007-2022) Sales data. Candystore.com
It helps that nine out of 10 people mention chocolate when asked what they buy when they want to do something nice for themselves.
Many innovative chocolate flavors are introduced as seasonal or limited-edition releases, especially around holidays or special occasions. Peppermint is a staple flavor during the holidays, and combining it with unexpected ingredients can create innovative candy flavors.
We’ve seen peppermint-infused chocolates with a hint of sea salt, peppermint bark with added layers of caramel or toffee and peppermint-flavored nougat in chocolate bars. If these limited-time offerings receive positive feedback and strong sales, retailers may consider adding them to their permanent product lineup.
“Innovation has always been at the heart of the confectionery industry,” said Schildhaus, “and consumers are excited to see their classic and nostalgic favorites alongside new and splashy products.”
