Orders have been pouring into Andrew Schuman’s candy cane business this year, but business has been anything but sweet.

“We have had to turn away business this year. I wouldn’t say that it is 30% of the overall business, but we certain probably had to turn away 10% of the business,” said Schuman, chief executive officer of Hammond’s, based in Denver, Colorado, who added that they’ve been struggling to keep up with demand.

Candy makers, like retailers and farmers, have been slammed during the pandemic with high commodity prices, labor shortages, and transportation and supply chain snarls, preventing them from fully cashing in on the holiday season.

For more than a century, Hammond’s Candies has twisted and packed up the classic Christmas treat for tiny gift shops and massive grocers alike. It is the largest wholesale supplier of U.S. handmade candy canes.

“So Hammond’s sells candy canes to thousands of retailers across the country, from your local candy store to your furniture store to your hardware store to some of the larger stores that we know of,” Schuman said, citing Target, Cracker Barrel, and Cost Plus World Market, among others.

This year, Hammond’s labor costs have increased 30%, yet staffing remains a problem: The company’s 250-person crew is down nearly 100 people.

“It’s been really hard hiring workers this year. In fact, this has probably been, in the 15 years that I’ve been involved with Hammond’s, this has been the hardest it’s been to hire workers. Not only was it hard to hire them, the wages have kept creeping up as well, so it’s been really competitive out in the market place just with the lack of labor force and so it’s been a little bit of a bottleneck for us,” Schuman said, adding that current long-term employees have worked overtime each week.

Hammond’s is not alone.

When Sam’s Club, a Walmart (WMT) unit, placed an order for Doscher’s Candy Co.’s gourmet candy canes, co-owner Greg Clark was thrilled. Still, he said, Doscher’s had staff and supplies to produce about 70% of the hand-crafted candies Sam’s Club wanted.

“More and more Sam’s Club members are shopping for seasonal candy, including candy canes,” a company spokeswoman said. “In an effort to meet the anticipated demand, we increased buys from other suppliers and pulled inventory and production forward where possible.”

Total seasonal confectionery sales are up 20% over last year, for the five-week period ending Dec. 5, according to the National Confectioners Association and IRI market data. Winter holiday non-chocolate sales - including candy canes - are up more than 34% from 2020.

Retailers have increased holiday candy items per store by more than 9%; and the total amount of non-chocolate products in stores is up nearly 23%, according to the data.

“It’s (business) been strong. It’s been strong since last October. Our business has just been on fire. I don’t know how to explain it but I hope it doesn’t stop because it’s good for the people who are buying the candy and taste it and get that yummy feeling and it’s great for our employees and for the business,” Schuman said.

Many consumers are scrambling to stock up for the holidays after missing family gatherings last year.

“This is the fourth grocery store I’ve hit today, trying to find enough candy canes for our tree and stockings,” grumbled Terri Andresson, 51, browsing at Mariano’s grocery store in Chicago.

Kroger (KR), which owns Mariano’s, declined to comment.

Spangler Candy Co., the largest U.S. candy cane maker, ran extra shifts this fall to meet demand, said president Kirk Vashaw. The Ohio-based firm turned away business and faced supply-chain headaches, like having to switch candy flavor schedules due to trucks being delayed.

For Schuman, the supply chain snarls have affected his ability to get displays and tin packaging materials from China, whereas he sources ingredients like sugar and corn syrup from Colorado and elsewhere within the United States.

“That was a bit of an issue. We lost some business because of it. Not controllable by us, but when you think you have something coming in August and it doesn’t come until October, that becomes a little bit of an issue to then have your customer put it out on their shelf to have it ready to sell for Christmas,” Schuman said.

Sugar shortages

Facing tight global supplies, some sugar suppliers have limited sales to food manufacturers.

The U.S. imports about a quarter of its annual sugar needs, according to U.S. Department of Agriculture data. A swath of this year’s domestic crop was destroyed when Hurricane Ida tore across Louisiana, the nation’s second-largest sugarcane producing state.

Meanwhile, freight prices are soaring, and Brazil and Thailand – two of the world’s top sugar producers – had smaller-than-expected crops. Sugar prices are at a decade-high.

On these commodity prices, Schuman said the company will just have to adapt.

“We’re trying to adjust our prices or adjust our ounces to combat it, but there’s only so much a person is going to pay for a gourmet candy cane, so we’re just going to have to eat some of that as a company and just become more efficient,” he said.

One industry expert said some “commercial buyers are looking at erythritol as a substitute sweetener,” referring to a sugar substitute made from corn.

But prices are rising for corn-based sweeteners too. Clark from Doscher’s Candy said suppliers of corn syrup - used to make candy canes - are quoting a 10% hike in 2022.

As sugar supplies tightened, the U.S. government adjusted sugar import quotas after some overseas sugar suppliers failed to deliver the product.

Rick Pasco, president of the Sweetener Users Association trade group, said candy producers are hurt by the U.S. sugar policy, which limits imports to protect local growers and therefore only provides a faction of the sugar producers need for their products.