Key points: Cocoa and sugar prices are rising, and candy is facing above-average cost inflation. Consumers are shifting toward smaller candy packages. As a defensive stock, Hershey's share price has risen, but consumer cutbacks are also putting pressure on the company.
Halloween shopping costs are higher this year, with prices rising for everything from candy in trick-or-treat bowls to pumpkins placed by front doors. Consumers are not the only ones feeling the pinch, companies like Hershey (HSY) may also be affected.
A National Retail Federation survey shows that Americans are expected to spend $13.5 billion on Halloween this year, up from last year's record $13.1 billion. NRF Vice President of Industry and Consumer Insights Allison Zeller said: "Consumers are still willing to spend on Halloween, but they will also weigh their wallets when shopping and focus on value for money."
From candy to holiday costumes, inflation has swept across all kinds of goods, and pumpkin prices have also risen. USDA Market News data shows that the average retail price of pumpkins reached $5.36 this year, up 11% from September 2020. Texas is a major pumpkin-producing state, and drought there has caused pumpkin output to decline.
Candy and Chocolate Sector
Candy remains a major Halloween expense, and candy price increases have exceeded overall food inflation, although the pace of increases has slowed somewhat. Bureau of Labor Statistics CPI data shows that in September, candy and chewing gum prices rose 7.7% year over year; sugar and sweets rose 5.5% over the same period.
Adverse weather such as El Nino has tightened the outlook for sugar supply. Some producing areas received excessive rainfall, while other major growing regions suffered extreme weather such as drought, further affecting output. Food economist Richard Volpe said: "Halloween is almost here, and compared with last year, candy has become one of the more expensive categories in supermarkets." He also noted: "At this time in previous years, my desk was piled high with all kinds of candy; but now, with Halloween just around the corner, there are only three bags of candy on my desk."
Nielsen IQ early market data shows that as of September 19, Halloween candy sales fell 11.7% year over year. Four weeks later, the decline narrowed to 6.7%; among that, chocolate sales fell 7.2%, and candy and sweets fell 5.3%.
Chocolate has been hit the hardest. Deteriorating growing conditions in Ivory Coast and Ghana in West Africa have caused cocoa prices to soar. El Nino and dry Harmattan trade winds may continue to weigh on West Africa's cocoa harvest for 2026-2027. David Branch, industry manager at Wells Fargo Agri-Food Institute, said there has been a slight easing in commodity markets, with cocoa futures prices falling sharply from historic highs. But the drop in futures has not yet translated into cheaper chocolate on store shelves.
Wells Fargo Agri-Food Institute estimates that chocolate prices this Halloween may be about 8% higher than last year; after factoring in various promotions, actual transaction prices may rise about 5%-8%. Most chocolate on store shelves this year uses cocoa ingredients purchased 6-12 months earlier. Branch said: "The worst of the cocoa crisis has passed, but the benefit of lower prices has not yet been passed through to retail. For chocolate makers, the core issue in 2026 is no longer just whether there is enough cocoa. The contradiction is that cocoa futures are falling, but companies are holding high-cost inventory, still negotiating with retailers, and facing consumer price elasticity."
Nielsen IQ data shows that in the nine weeks ending October 17, Halloween chocolate sales fell 7.2% year over year, with the decline mainly coming from milk chocolate. The agency estimates that Halloween chocolate sales fell by $33.1 million from last year, with milk chocolate sales shrinking by $34.4 million; dark chocolate instead posted a $2.3 million increase. Overall Halloween candy, chewing gum, and mint sales fell 6.7%.
Retailers are relying on discounts to drive sales. Walmart and Target have both launched Halloween sections, with discounts on candy, holiday costumes, and other goods. At the same time, consumers are clearly more inclined to buy small packages. Sales of small packages of 9 ounces or less rose 24%, and unit sales rose 14%; sales of all larger package sizes declined.
Wells Fargo believes consumers will increasingly favor value-oriented bundles and alternatives with lower cocoa content, such as gummies, sour candy, wafers, and caramel candy. Branch said: "Consumers will still buy candy, but chocolate will account for a smaller share of their shopping carts, with more choosing discounted large packages and cocoa-light alternatives such as gummies, sour candy, wafers, and caramel."
Against the backdrop of market funds rotating from AI stocks to defensive consumer staples, Hershey's stock rose on Friday. But analysts believe risks are lurking for the candy giant. The company released third-quarter earnings on Thursday and cut its 2026 organic sales growth forecast to 3% from 3%-3.5%. Jefferies analyst Scott Marks said this signals that fourth-quarter organic growth is nearly "stalled." In a research note, he wrote that Hershey's comments were "cautious overall," and that "consumer pressure and cost pressure are weighing on the short-term outlook."
Hershey CEO Kirk Tanner said on the earnings call with analysts: "We see consumers feeling stretched. We need to tap into the convenience food track and enhance product value through customized promotional activities, rather than simply cutting prices directly." Marks cut his price target for Hershey to $170, and several brokerages including DA Davidson, BNP Paribas, Bernstein, and Deutsche Bank also lowered their target prices. FactSet data shows that the consensus forecast for 2027 earnings per share was cut 3.7% to $9.49.
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