halloween-jackolantern

Your kids may collect less candy this year. Or, at the very least, fewer chocolate bars.

That’s because major candy makers, such as Hershey’s and Mars, hiked product prices this summer by 8% and 7%, respectively, reports time.com. Further, the consumer price index for candy and gum saw its biggest increase in years in September.

According to a Hershey representative, adds the news outlet, the prices of cocoa, sugar and nuts have surged over the past few years, which has resulted in market pressure. Read more.

And the bad news for candy lovers is that the trend may continue, reports Canadian Press.

In fact, Hershey CEO John Bilbrey said in an interview with CNBC earlier this month that though the company’s negotiated stable prices for its holiday items this year, consumers could be impacted next year, notes CP.

What’s more, people in the developing economies of Asia and Latin America are acquiring a greater taste for chocolate—while North America and Western Europe still account for more than half of global chocolate sales, demand is growing faster in those emerging markets.

That’s raising concerns that demand for cocoa beans, the key ingredient in chocolate bars, will outstrip supply in coming years.

Already, chocolate sales in Asia are forecast to grow by 23% over the next five years, and by almost 31% in Latin America, according to London-based research firm Euromonitor International. That compares with growth of 8.3% in North America, and 4.7% in Western Europe.

Due to those forecasts, the price of cocoa beans rose as high as $3,371 a ton in September, the highest level recorded since March 2011. The price has since fallen back to $2,923 a ton, but it’s still 23% higher than two years ago.

Supply problems

West Africa is the world’s most active cocoa producing region, given it accounts for about two-thirds of the global crop.

But unlike large, modern farms in the U.S. and other developed economies, about 80% to 90% of the world’s supply comes from small, family-run operations, according to the World Cocoa Foundation, a trade organization.

The small-scale production of the commodity makes it more challenging to introduce modern farming techniques that boost productivity from season-to-season to faster match demand.

Problem is, West Africa is also at the centre of the Ebola outbreak. But concerns that cocoa production would be hampered by the virus’ spread have proven overblown thus far.

Halloween stats

In total, Americans were expected to spend about $1.5 billion this Halloween so they can fill bowls with chocolate, according to the NCA. Out of all year, the last day of October is considered the candy industry’s most important holiday for sales, ahead of even Easter, Christmas and Valentine’s Day.

It’s even better when the holiday falls on a Friday, according to Larry Wilson, vice-president for customer relations at the NCA. “We’re optimistic [this] Halloween,” he says, since people “will celebrate it later into the night, and they’ll celebrate it all weekend.”

Also read:

Halloween takes small bite out of wallets

Holiday retail sales expected to grow 3.3%: EY

Originally published on Advisor.ca

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