Halloween could taste different this year thanks to soaring cocoa prices

By CNN

Published October 20, 2024 3:00 am

CNN

By Erika Tulfo, CNN

(CNN) — Everybody knows it’s not Halloween without candy, but trick-or-treaters might find less chocolate filling their buckets this year.

That’s because cocoa prices have more than doubled since the start of the year and have remained at record highs, according to Wells Fargo data shared with CNN.

The surging prices have caused grief for confectioners during prime chocolate sales seasons like Valentine’s Day and Easter. And with Halloween as the next major candy-centric holiday, companies are getting creative with their ways of coping with the lack of cocoa. This means consumers might see smaller chocolate bars in different flavors and more non-chocolate treats on grocery aisle shelves.

The continuing cocoa crisis

“Cocoa is not like a normal agriculture crop where you have it grown everywhere, like other commodities. It takes a very specific site and temperature range to grow,” said David Branch, sector manager at Wells Fargo’s Agri-Food Institute.

But for the past three years, a series of adverse weather events has slammed the cocoa-producing regions of West Africa responsible for over 70% of global cocoa supply.

El Niño raised temperatures and led to drought stress on the cocoa trees; torrential rains spread black pod, a fungal disease that affects cocoa trees and reduces yields; dry and dusty trade winds shaded the crop from sunlight and impacted development.

As a result, the International Cocoa Organization projected in August that global cocoa production this season would fall by 14.2%.

Chocolate giant Hershey was among the companies forced to grapple with sky-high prices. In August, it reported an operating profit of $287.8 million, a decrease of 48.7% from the previous year.

The company’s president, Michele Buck, said in a call in August with analysts that cocoa prices are “not sustainable,” and pointed toward higher prices. (Hershey told CNN in a statement that the pricing changes do not impact its Halloween items this year.)

But the outlook for cocoa isn’t looking too dark, as cocoa analysts and traders expect the current deficit to flip to a surplus due to improved weather conditions.

“So far we’re having really decent weather for this year’s crop,” said Branch. “It will start helping to boost supply, so that’s why we expect that the prices will come down.”

What does this mean for Halloween?

Though hope is on the horizon, experts project cocoa prices will remain high until at least September 2025. So, in the meantime, companies are pursuing a combination of workarounds.

One of those ways is simply reducing the size of the product — a change perhaps most visible in candy variety packs.

“There is probably some shrinkflation in these bags,” said Branch. “You get a two-pound bag of a mixture of all these different candies from a company. Well, that bag is probably going down to be less than two pounds now at the same price point.”

Another common change companies might pursue is altering the product’s flavor profile entirely, which could mean swapping out a layer of chocolate for other fillings like wafers or nuts.

“There have been (products) that might be filled with something in addition to being encased in chocolate because then you don’t need to have as much chocolate to make that product,” said Sally Lyons Wyatt, chief advisor of consumer packaged goods at Circana.

Candy giant Mars, maker of popular brands Skittles and M&M’s, told CNN in a statement that while chocolate still reigned supreme in terms of customer preferences, the company has expanded its fruity candy and gummy offerings for Halloween amid growing popularity from younger consumers. Mars has responded by rolling out Halloween-themed Skittles and offering variety bags with chocolate and non-chocolate goods together.

Analysts have also noted growth in both sales and production of non-cocoa candies. Non-chocolate candy dollar sales growth (12.1%) outpaced chocolate sales growth (5.8%) last year, according to the National Confectioners’ Association (NCA) 2024 State of Treating Report.

But chocolate lovers don’t need to be spooked — the candy staple isn’t going away anytime soon. The category still made up more than half of total confectionary sales last year at $25.9 billion, according to the NCA.

“Consumers are buying less than what they may have in the past, but chocolate is still a top-selling category,” Lyons Wyatt said. “Halloween will still have chocolate showing up at consumers’ doors.”