El Niño Lifts Candy Prices for Halloween

As Halloween approaches, El Niño is disrupting more than weather patterns and crop cycles — it’s hitting the candy aisles in US supermarkets. Americans purchase around 600 million pounds of candy for the holiday every year. But with chief ingredients like sugar and cocoa facing reduced global supplies, satisfying trick-or-treaters’ sweet tooths will cost more in 2023.

While overall US food price inflation is little changed from this time last year — according to the consumption-weighted Gro US Food Price Index — candy-making costs are another matter. Ingredients that go into making a milk chocolate bar are up a combined 10% year over year, according to Gro’s Custom Price Index application. For some brands, the ingredient costs of  their chocolate bars are up as much as 13%.

The Gro Custom Price Index allows food manufacturers to track inflationary pressures by creating customized price indices of product ingredients. 

Much of the higher candy ingredient costs is being passed on to consumers. For example, list prices for one major US candy manufacturer have risen in every quarter since late 2021, even as gross profit margins bounced back in the 2023 first half from last year’s lows. 

El Niño, together with other extreme weather events, is a big factor driving up prices for a host of candy bar ingredients: 

Sugar

• Sugar costs for manufacturers have jumped 25% year over year, according to the Gro Custom Price Index application. 
• Global sugar supplies are tight — world sugar stocks have fallen for the past two years and are currently at the lowest level since 2011.
• Dry conditions in the western Pacific, brought on by El Niño, have reduced sugarcane harvests in major producers India and Thailand, as Gro wrote about here. 

Cocoa 

• Cocoa costs candy manufacturers 56% more than it did a year ago, the Gro Custom Price Index shows. 
• A driving factor behind the higher prices: El Niño threatens to reduce the main Ivory Coast cocoa crop that will be harvested through the 2024 first quarter. The West African country produces more than 50% of the world’s cocoa.  
• While Ivory Coast has seen abundant rainfall so far in 2023, previous El Niño years have produced drier conditions in the region, curtailing yields, as Gro highlighted here. 

Other ingredients often added to chocolate bars

• Peanut costs are up 7.5% from last year, according to Gro’s Custom Price Index. Extreme heat in the US South could signal trouble for the 2023 harvest and further support prices. Crop ratings in Georgia and Texas are currently at record lows.
• Rice costs are up 5% from this time last year, according to the Gro index. Tightening supplies and trade restrictions in many big producers, including India, have pushed up rice export prices globally and could sustain upward price pressures for food manufacturers. Global rice ending stocks are forecast to decline for a fourth year in a row, as seen in this Gro display.
• Almond costs are down more than 2% year over year, providing some relief to food manufacturers after steep increases that drove prices up 17.4% since 2021, Gro’s index shows. California almond production declined two years in a row and is forecast to be up only slightly this year.