Candy companies are hiking prices to offset spiking cocoa and sugar costs

Hot chocolate… Satisfying a sweet tooth is becoming more expensive than getting a root canal. As bad weather has killed crops this year, cocoa prices have doubled, hitting a record high of more than $9K/ton just yesterday. That makes cocoa costlier than copper, and the chocolatey powder’s 12-month gain has even outpaced bitcoin’s. Sugar’s on a high, too, reaching prices not seen since 2011. Mixing cocoa + sugar = higher sweet-treat prices ahead of Easter.

• Brittle beans: Heatwaves in West Africa (where 70% of cocoa is produced) have damaged crops, and dry spells in India and Thailand (major sugar exporters) have destroyed harvests, fueling the price surges.

• Wonkanomics: US shoppers paid 9% more for sugar and sweets last year and can expect another 6% hike this year. As cocoa costs climb, chocolatiers are shrinking the size of bars and testing lower-chocolate recipes.

• Sweetspiracy: A batch of federal antitrust lawsuits filed last week against US sugar companies — including United Sugars, Domino, and Cargill — accused producers of conspiring to inflate sugar prices since 2019.

Bittersweet symphony… Chocolate and candy cos have successfully passed their higher costs on to consumers. Hershey’s profit margin ticked up to 17% last year, while Cadbury and Oreo maker Mondelez’s rose to 14%. Last month, Tootsie Roll reported a 23% jump in profit over the past year. Still, sales volumes are melting across the industry (Hershey’s fell 7% in the most recent quarter) as prices got too rich for shrinkflation-weary shoppers. Easter candy spending is expected to dip 6% this year to $3.1B.