Like many things during this period of high inflation, Halloween candy is more expensive this year.
The price of chocolate bars went up 20%, licorice 22% and jelly gummies 15% from last Halloween, according to St. Petersburg-based marketing firm Catalina.
And with that, Catalina found consumers are buying less candy ahead of the trick-or-treat holiday.
As overall candy prices are up 16%, the volume of sales fell 8.4% ahead of Halloween with chocolate buyers being some of the most price-sensitive, Catalina’s study found.
In this conversation, Wes Bean, the marketing firm’s chief revenue officer, explains how the post-pandemic economy and the return of student loan payments are affecting candy sales ahead of the holiday shopping season.
This interview has been edited for length and clarity.
How are candy sales looking ahead of Halloween?
We look at it in terms of revenue. The revenue trends are looking to continue to show growth year over year but not by much. Revenue only shows us one side of the story.
What we’re seeing overall is, in terms of the actual units that are moving and being sold right now, there are some substantial declines year over year. So what that speaks to is a significant amount of inflation that has come into the market this past year through pricing of the underlying commodities that influenced the composition of candy categories — whether that’s cocoa futures, sugar futures or supply chain-related costs to the distribution of the products.
We’ll see from a total sales standpoint some positivity overall. But the concerning thing when we look at it, most of that growth is being driven primarily by false inflation underneath it rather than total number of units that are being brought out into the consumers’ baskets.
What kinds of candies are being affected the most by this?
It’s some of the more branded areas, single chocolate bars is a great example of a very much brand-driven category. Those more specialty chocolates are where we’re seeing the highest increases come through in terms of pricing and shelf edge but also some of the steepest declines overall in unit volume.
When you move down into much more commodity categories, especially when you think about this time of year, everyone immediately dreams up candy corn and all the Halloween memories that come along with it. Those more basic commodity-driven categories that are less branded — like gummy and jelly-type candies and Halloween stuffers — where there’s a tremendous amount of price increase but we still feel like, because of the seasonal nature of the distribution of products, they’re holding their own pretty well and turning a pretty consistent amount of units.
And that’s not surprising in that regard for those types of candies as we lead into Halloween.
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Why are chocolate buyers more price-sensitive?
What we’re seeing more and more right now is compression overall in what a consumer considers truly disposable from an income standpoint.
We have several different macro-level trends that are hitting a broad base of consumers. Outside of the inflation challenges that hit the entire base of American consumers, one is a reduction in SNAP (Supplemental Nutrition Assistance Program) benefits that we saw as the COVID relief financials that were funded from federal subsidies begin to decrease.
Secondarily, the start of student loan repayments that were deferred during COVID, as well. That also impacts shoppers several hundred dollars per month as they begin to divert their income that way. As we dig through all of the data, customers are now just being more (choosy) inside the grocery store on what they can spend. Because of the increased pricing, they’re actually just buying less.
What do the lower Halloween candy sales say about how the rest of the holiday shopping season will do?
It’s really going to be a tale of two predominant trends. Inflation seems to be relatively sticky at the moment. However, the lagging indicator is many of our retail partners are already talking about deflation that is on the horizon.
They are beginning to see improvements in the overall cost of their supply chain and their categories. So as they bleed through the inventory in Q4, we’re going to begin to see a better price position in the marketplace.
Is there anything else that you think people should know?
I would say right now just continue to shop for value. Value is in the marketplace. It becomes much more important for the customer to be able to do their homework.
With some of these price pressures in the marketplace, there are indications that tell us we’re rounding a curve. And we’re probably about one to two quarters out from being able to see some relief to consumers in that regard.
So positivity as we look on into the next year on a pricing front for the average U.S. household.