Sugar Prices/Candy Prices: Who Will Be the Sucker?

With the staggering increases in sugar prices this year, it comes as no surprise that US candy makers are starting to see the effects.

While initially hesitant to raise prices on products in the interests of the consumer, US candy makers may reconsider.

According to an article in the Denver Post yesterday, sugar prices have soared 95 percent this year and cocoa beans have been selling near a 20 year high on reports of diminished production in Ivory Coast. This is taking a bite out of confectioners' profits.

Denver Post writer, Steve Raabe, reports comments from multiple local confectioners including Andrew Schuman, president of Hammond's Candies of Denver. Schuman's comments likely represent a microcosm for small local confectioners nationwide.

Since Hammond's candies are handmade, labor costs represent the largest percent of production expenses, exceeding the cost of sugar.

Still, this doesn't mean the company won't be impacted by increased sugar prices; actually, Hammond's predicts a 4 percent cost increase for the upcoming year due to the commodity price.

If we turn our attention to a large scale confectioners, Schuman discusses a greater impact on their business.

Large scale manufacturers (think Nestle, Mars, and Hershey's), have a different proportional breakdown of expenses. Since they have automated systems in place for mass-production, ingredient costs, like those for sugar, represent a larger expense.

This considered, major events like this year's dramatic sugar price increases, have a more detrimental effect on the large company.

If candy prices (for the consumer) are maintained, the confectioners will have to absorb the extra costs, while the consumer gets the same "number of licks to the center of a Tootsie roll pop."

Large candy manufacturers aren't 'suckers,' even though they manufacture them. So, it's probably best to expunge any sugar-coated reveries you may be having of Charlie and The Chocolate Factory, immediately.

As sweet as they are, large confectioners are big business... candy is not free (sigh) and candy manufacturing employees are not Oompa-Loompas.

Expect to see a change in price of your favorite candy at your local convenience mart or market over the coming months.

In addition, like Hammond's in Denver that keeps a two month sugar supply on site, it my be a good idea to stock up on the precious sugar commodity, in case prices continue their upward trend.