Have a go at this teaching activity, which includes a downloadable worksheet and suggested answers

Sales increase for sweet retailers despite challenging economic conditions.

Despite falling consumer confidence and rising inflation, the US confectionery market is showing remarkable resilience.

When household incomes are squeezed, consumers tend to cut back on expensive items rather than small, affordable treats. Confectionery is one of the last things consumers give up, even when the cost of living is rising sharply, known as the 'lipstick effect'.

During economic downturns, demand for small, inexpensive luxuries actually increases as consumers substitute them for more costly purchases.

Businesses have responded to this opportunity by differentiating their products. BonBon positions itself in the premium segment, focusing on unique product characteristics, distinctive store environments, and locations on quieter side streets where rents are lower.

Candor Candy has adopted a different approach, widening its product range beyond confectionery to include groceries. Its pick-and-mix model also reduces labour costs as customers serve themselves.

However, these businesses face rising wholesale prices, driven largely by import tariffs and higher global fuel costs. Key ingredients such as cocoa are sourced internationally. Additionally, growing consumer awareness around health and nutrition, along with government sugar taxes in some markets, represents a threat to demand.