Pumpkin spice foods cost up to 160% more than regular version

Fall is here, and retailers are trotting out a wide variety of products in the most popular flavor of the season — pumpkin spice. But prepare to pay a mint. 

That's because food manufacturers commonly bake an informal "pumpkin spice tax" into the price of dozens of flavored foods and grocery products, from lattes and croissants to hummus and dog treats. And this year, a combination of inflation and robust demand has made that premium even steeper than usual — 14% more compared to the traditional varieties of the same products, according to MagnifyMoney, a personal finance site. That's up roughly 6 percentage points compared to October 2020, the last time the study was conducted. 

For retailers, upcharging consumers for seasonal or limited-run products is a tried and true marketing tactic. 

"They see an opportunity, that there is demand, and they are going to capitalize on it," MagnifyMoney executive editor Ismat Mangla told CBS MoneyWatch. 

A flavor phenomenon

Pandemic-related supply chain snarls as well as the war in Ukraine have driven up food production costs across the board. Inflation has also contributed to rising food prices. While pumpkin spice is not in short supply, other staples like vegetable oil are costing retailers more.

"It's no secret we're in inflationary times, and everything is a little bit more expensive now. But [retailers] can offset certain costs by raising prices on things they know people are clamoring for for a short period of time," Mangla said. "Pumpkin spice is not difficult to procure, but it's a way for restaurants and stores to capitalize and make a little bit more money on what is in demand."

It's also a way for retailers to recoup losses on other food categories.

"If there is no shortage of pumpkin spice, you're better served upcharging products you know will be in high demand and hope customers will be insensitive to the price increases," said Kelly Goldsmith, a professor of marketing at Vanderbilt University and an expert on scarcity. "They're taking advantage of the fact that they have an active and excited base of people willing to pay."

"Gold standard of innovation"

Customer demand for fall flavors has steadily grown ever since Starbucks first spawned the trend with the launch of its Pumpkin Spice Latte 19 years ago. The beverage has become so popular that the coffee giant recently launched what it calls a "pumpkin portal" where customers can take quizzes about Starbucks products and other trivia.

The beverage has been in such high demand in the U.K. that the coffee giant says it is dealing with a temporary shortage of the coffee confection, The Sun reported. 

"The Pumpkin Spice Latte continues to be one of our most popular and requested beverages that customers look forward to every year," a Starbucks spokesperson told the British newspaper. "We can confirm there is no national shortage and only a handful of stores are experiencing temporary shortages due to high demand."

Starbucks executive Peter Dukes, the creator of the pumpkin spice latte, told CBS Mornings last year that the coffee confection's success lies in the fact that it was a "unique" beverage when it launched. To date, the company has sold more than 600 million pumpkin flavored lattes.

"It took off to a whole other level that again, nobody could ever have predicted," he said. 

Indeed, at a recent Wall Street conference, Starbucks executive Michael Conway described the company's suite of pumpkin spice products as nothing less than "the gold standard of innovation in the U.S."

A pumpkin spice latte from Starbucks this year costs $6.45 — 18% more than the $5.45 Starbucks charges for a regular 16-ounce drink, according to MagnifyMoney's survey. That's the average price of the beverage across stores in Brooklyn, New York, but the cost of the drink varies across the U.S. and sells for less in many markets. 

Pumpkin spice pretzels from TraderJoe's saw the largest markup, at 161%. The grocery chain's "Pumpkin Spiced Teeny Tiny Pretzels" cost 50 cents an ounce, compared to 19 cents an ounce for its regular "Honey Wheat Pretzel Sticks."

While these sound like whopping markups, the products are all small-ticket items, which means many consumers may not even notice the higher cost or are simply willing to pay up for a favorite treat. 

"It sounds dramatic how much the pumpkin spice tax has increased, but when you get into it it's pennies on the dollar to the consumer," Goldsmith said.

Scarcity marketing 

Of course, there's a limit to how much retailers can tack on to the price of even the most popular items.  

"Whenever a price deviates from expectation, it is more likely to get your attention. "The tipping point depends on what is the expectation and when does that expectation get violated," Goldsmith said. 

That lets retailers charge more for a product to capitalize on consumer fears of missing out on beloved seasonal products available only for a limited time.  

These are the top five pumpkin spice products with the biggest markups, according to MagnifyMoney.

• Trader Joe's Pumpkin Spiced Teeny Tiny Pretzels: 161%
• Whole Foods Market spiced pumpkin pancake & waffle mix: 130%
• Trader Joe's Pumpkin Spice Hummus: 50%
• Trader Joe's Pumpkin Bisque: 46%
• Trader Joe's Pumpkin Cheesecake Croissants: 30%

"The pandemic trained people to understand that things do run out," Goldsmith said. "We've been conditioned to respond, and scarcity marketing tactics are even more effective than they were pre-pandemic."