Halloween helps Big Candy get bigger

Published online: Nov 15, 2013
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It has been said that, in life, only death and taxes are certain.
Apparently, annual sales growth of Halloween candy could be added to that list.
"Halloween candy sales have a lot in common with Willy Wonka's everlasting gobstoppers. Despite war, financial crises, stock market slumps, hurricanes and dental bills, they never seem to shrink," TheWall Street Journal's Market Watch website reported on Oct. 31.
According to the National Confectioners Association, Halloween candy sales will hit $2.4 billion this year, up 1 percent from 2012. This new sales record follows back-to-back-to-back record-setting years in 2010, 2011, and 2012.
"Even at the height of the 2008 financial crisis, when stocks plummeted and holiday shopping dropped 4.4 percent, candy sales eked out a 0.3 percent gain," Market Watch noted.
But who is really profiting from this big-money holiday?
It's not just the mom and pop bakeries or small Main Street candy businesses. It's mainly the big, multinational players-the same companies bankrolling lobbying efforts to outsource America's sugar production in hopes of further padding profits with heavily subsidized sugar imports.
"Hershey and Mars possess 18 of the 20 best-selling chocolate brands, amounting to 88 percent market share," explained another investor website, InvestorPlace.com. "Meanwhile, Nestle's Butterfinger and Crunch brands fill out the mix."
InvestorPlace.com, which noted "an oligopoly definitely exists in the world of candy," encouraged its readers to "snack on Hershey stock."
After charting out Hershey stock returns (blue line) compared to the S&P 500 stock index (red line), this seems like good advice.
And despite Hershey stock trading near an all-time high, don't expect things to head south anytime soon. Last week, the company announced a 32 percent increase in quarterly profit, aided by boosted sales and a 10 percent price hike on its products.
Hershey isn't alone either. A recent study by University of Maryland professor Alexander Triantis showed that confectioners and other producers of sugar-containing products (SCP) are adding more jobs, growing revenues faster, and achieving higher profitability than other food manufacturers.
Share prices of the 10 largest publicly held SCP companies have shot up more than 300 percent since 2000, compared to an almost flat S&P index, Triantis found. In addition, net profit margins from 2004 to 2012 were 60 percent higher than other food processors.
With all this good news, it is hard to imagine that the Big Candy lobby is still complaining about sugar policy and sugar prices, which coincidently are as cheap today as they were during the 1980s. 
Unfortunately, that's exactly what is happening, says Phillip Hayes, a spokesperson for the American Sugar Alliance.
"During the current Farm Bill debate, large candy companies have routinely cried poverty in the halls of Congress in hopes of pressuring lawmakers to turn their backs on U.S. farmers," he said. "But lawmakers shouldn't be tricked. Because of low sugar prices, high-quality ingredients, and growing sales volumes, these confectioners are actually treating themselves to sweet returns."