With Halloween right around the corner, many Canadians are thinking about how to budget for the holiday, leaving some wondering if buying candy early or waiting to capitalize on last minutes sales is more economical.
Survey results say most Canadians are expecting to spend the same amount of money on Halloween this year as they did last, but with costs on the rise, shoppers might have to get strategic if they want to save.
“It’s just becoming a larger expense,” said Stephanie Douglas, a portfolio manager at Harris Douglas Asset Management. “It’s something that I think Canadians are going to have to start considering and planning for.”
Halloween candy and treats, like many other food items, have been subject to inflation — including shrinkflation — over the last few years.
According to data compiled by Trading Economics, cocoa has seen a dramatic increase in cost. Since the beginning of this year, the cost of cocoa went from being nearly $4,200 USD a tonne, to being just under $8,000 a tonne now. In April, prices rose to more than $12,000 per tonne.
The cost of sugar around the globe has also increased by just over 10 cents per pound since 2019, Trading Economics’ website says.
“Commodity prices have gone up and that’s impacted candy prices, particularly for cocoa,” said Douglas. “Halloween and holidays in general are becoming more expensive.”
An online survey conducted by Caddle Inc. in partnership with the Retail Council of Canada (RCC) found that about 67 per cent of Canadians expect to match last year’s spending, with about 15 per cent expecting to spend more.
The survey also found that about 52 per cent of people intend to spend $50 or less on Halloween.
Dynamic pricing
There are many factors that can influence the cost of candy, said José Nuño-Ledesma, an assistant professor of food industry, economics and management at the University of Guelph. That includes the cost of ingredients, packaging materials, labour and transportation, but when it comes to Halloween candy and treats, he links the high cost to “dynamic” or surge pricing.
Dynamic pricing is a model where retailers set prices to align with demand, the price of storage and how much consumers value or are willing to pay for a product, among other factors, to maximize their profits.
“If the seller has a lot of candy left over as Halloween gets closer, the seller might decide to lower the price to attract more buyers,” Nuño-Ledesma explained. “But if there are a lot of eager buyers at the last minute, then the seller can increase the price because people are more willing to pay.”
Setting prices based on how much it costs to produce a product is “intuitive,” but not necessarily the most profitable or effective, explained Eric Dolansky an associate professor of marketing at Brock University’s Goodman School of Business.
“What it costs the manufacturer to make the bag of Halloween candy may have absolutely no relation to how much a customer is willing to pay for that bag,” he said.
Setting prices based on customer value “is much more difficult to do,” because that can change over time, but businesses that pull it off are “likely to make a lot more money,” said Dolansky.
Shrinkflation
Another factor contributing to increased prices is shrinkflation, which is when the size or quantity of a product is reduced while the price is kept the same or increased.
Real Canadian Superstore Flyers from October 2022 advertised a 120 count box of Nestlé chocolate bars for $13.99 each. At the time of writing, Superstore has the same box of chocolates on its website listed as $17.99 on sale, or $24.99 full price.
Though the box still has 120 bars inside, the box itself weighs 1.17 kilograms, while the one advertised in 2022 weighed 1.23.
Similarly, in October 2022, Food Basics advertised two boxes of 50 Nestlé bars for $10, but today, the same product is on their website on sale for $8.99 each, normally $11.49, and in a box that’s 20 grams lighter.
How consumers respond
“During a time of high inflation like this one, (consumers) will change their purchasing habits accordingly,” said Nuño-Ledesma.
Both he and Douglas, the portfolio manager, recommend shoppers hit the stores early, which based on the RCC’s survey, most already plan to do.
Responses found that 47 per cent of shoppers plan to make their purchases two to four weeks ahead of Halloween, up from 34.6 per cent last year. Buying in bulk could also save money for some people, but it may not be the best option for others because of the higher cost upfront.
Despite the pressures of rising costs, “it’s a matter of just giving out smaller portions sometimes if you want to stay within your budget,” said Douglas.
