Frightful economy worries candy makers
MILWAUKEE - With a big pullback evident in consumer spending, candy makers were a bit spooked about this year's Halloween season.
They introduced fewer new Halloween-themed products for their third-biggest selling season of the year, but analysts say the companies have nothing to worry about: They expect this Halloween to be bigger than ever as people seek a break from the downright scary economy.
Candy makers, judging by the fewer debuts of Halloween candy this year, weren't sure how the holiday would go because of the economy, said Marcia Mogelonsky, a senior research analyst with Mintel International in Chicago. But as the economic situation worsens, Halloween seems to be getting stronger.
"Halloween for grown-ups is a chance to let off some steam," she said.
Research firm IBISWorld Inc. predicts total retail spending will be up 5 percent this year to $5.77 billion, with one-third of that on candy. The two reasons for the boost? Higher prices as well as a need to escape from reality, IBIS says.
But there was some hesitation by candy makers. There were 35 new chocolate products for this season, compared with 49 last year, Mogelonsky said. For sugar and gum confectionaries, new product launches went from 119 to 54.
"Manufacturers are perhaps going into the holiday season a little more cautiously than they did last year because it's very hard to sell that stuff after Halloween," she said.
Hershey Co. chief executive Dave West voiced concern in his company's recent third-quarter earnings call when asked about the effects of the economy and price increases, which many food makers have implemented to recoup high input costs. "We are cautious about what we put into the system for both Halloween and the holidays," he told investors
Ryan Bowling, a spokesman for Mars Inc., the maker of M&Ms and Snickers, said the number of varieties the company produced for Halloween did not change this year.
"It's still business as usual," he said, noting the company has enhanced its website, including having a virtual haunted house and is holding promotions to drive the season's sales.
The stakes can be big if Halloween - or any specially themed - candies don't sell. Leftover items typically are sold at a steep discount - often 50 percent or more - so retailers and candy makers may take a big hit to their profits. That's what the companies could have been scared of when they introduced fewer new Halloween products this year, Mogelonsky said.
Most retailers try to avoid giving those big discounts and focus on selling their candy by Halloween, said Tom Pirovano, director of Industry Insights at The Nielsen Co.
Sales this year have been strong, hitting $201 million of seasonal Halloween candy in the 52 weeks ending Sept. 6, up from $174.8 million last year, Nielsen reported.