Big Candy, which boasted about being “recession proof” between 2008 and 2010, is apparently “deflation proof” in 2016.
In case you haven’t noticed, your grocery bill should be getting smaller this year. It’s been a big money saver for some, and the “epic fall in food prices” even garnered front-page attention in the Wall Street Journal last week.
“The U.S. is on track to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers,” the article began.
The reason? Economists say that it’s mostly due to falling farm commodity prices, along with lower energy costs for transportation and refrigeration.
“Deflation is a godsend for consumers,” the article quoted one expert as saying.
The problem? It apparently hasn’t made its way to the candy aisle.
As the American Sugar Alliance documented in its annual survey of sweetened product prices at the grocery store, the cost of chocolate bars, candy, cakes and other sweet treats are still at all-time highs.
Take a candy bar, for example. In July 2016, a candy bar cost $1.49 cents. That’s 10 cents more expensive than the exact same candy bar was in July 2014, 40 cents more expensive than it was in July 2010, and 77 cents more expensive than July 2006.
And don’t think that things have changed much since July. The same bar is still $1.49, or more than double its price 10 years earlier. Hard candy is up 40 percent over that time, too.
Unfortunately for sugar farmers, they haven’t been quite as fortunate. Sugar is 14 percent cheaper today than it was a decade ago, and the price food manufacturers pay sugar farmers is continuing to fall.
So if neither U.S. farmers nor U.S. consumers are benefiting under the current confection cost-structure, then who is?
Interestingly enough, the front page of the exact same Wall Street Journal shed some light on that question in an article about two food titans, Hershey Co. and Mondelez International Inc. Seems Mondelez offered the chocolatier an astounding $25 billion in recent acquisition talks.
Even though the merger failed to materialize, both companies should be just fine. “Hershey had $7.4 billion in annual sales last year, while Mondelez towered over it, with $30 billion,” the newspaper reported.
Deflation proof, indeed.