Halloween spending is projected to reach $13.5 billion, an increase from last year's record $13.1 billion, according to the National Retail Federation. However, rising costs for candy and pumpkins are altering consumer behavior and pressuring manufacturers like Hershey. The average retail price of pumpkins hit $5.36 this year, up 11% from September 2020, driven by droughts that reduced yields by 30% to 40% in Texas. Candy prices rose 7.7% in September compared to a year earlier, outpacing broader food inflation, while sugar-and-sweets categories increased by 5.5%. Supply chain disruptions, including adverse weather in Brazil affecting sugarcane harvests and poor growing conditions in West Africa impacting cocoa, have tightened supply outlooks.
Despite higher overall spending projections, specific sales metrics indicate strain. Nielsen IQ data showed Halloween candy sales down 6.7% through mid-October, with chocolate sales declining 7.2%. Milk chocolate accounted for a $34.4 million drop in dollar sales, while dark chocolate gained $2.3 million. Consumers are shifting toward smaller packages, with nine-ounce or less packs seeing a 24% rise in dollar terms. Retailers such as Walmart and Target are offering discounts to stimulate demand. Wells Fargo Agri-Food Institute estimates chocolate prices will remain about 8% higher than last Halloween due to high-cost inventories produced using cocoa purchased six to twelve months prior.
Hershey lowered its 2026 organic sales growth forecast to 3%, down from a previous range of 3%-3.5%, citing consumer pressure and cost issues. Analysts at Jefferies, DA Davidson, BNP Paribas, Bernstein, and Deutsche Bank cut price targets on Hershey stock, with consensus estimates for 2027 earnings falling 3.7% to $9.49 per share. CEO Kirk Tanner noted that convenience stores require bespoke promotions rather than overall price decreases to drive value.
The divergence between record total Halloween spending and declining unit sales for key categories like chocolate highlights a critical shift in consumer elasticity. While households are allocating more budget to the holiday, they are actively trading down to lower-cost alternatives such as gummies, sour candies, and smaller package sizes. This behavior suggests that price sensitivity has overridden brand loyalty for many shoppers, forcing retailers to rely heavily on promotional discounts to move inventory. For manufacturers, this creates a complex operational challenge: maintaining margins while adapting product portfolios to meet demand for cheaper, non-chocolate options.
Hershey’s downward revision of its organic growth forecast underscores the lag effect of commodity volatility on corporate performance. Although cocoa futures have fallen from historic highs, the immediate impact on shelf prices remains muted because current inventory was procured during peak cost periods. This timing mismatch means that financial relief for consumers may not materialize until future production cycles utilize cheaper raw materials. Consequently, Hershey faces near-term margin compression and volume loss, requiring strategic adjustments in pricing and promotion to stabilize its market position against competitors who may have better hedged their supply chains.
