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In the later books in The Series of Unfortunate Events, the sugar bowl becomes a cryptic macguffin -- everybody's after it, everybody mentions how important it is, but nobody explains why. There are implications that the sugar bowl would destroy Count Olaf, or exonerate Lemony Snicket, or both.

The plot proceeds, and the sugar bowl is fought over, and at very last it is hidden away in a safe location, albeit under tragic circumstances -- but, very pointedly, we never get to see what is inside.

This is strongly in line with the series' themes of uncertainty, complexity, and never being able to act with complete information. It makes perfect sense that there is no answer; that Handler didn't come up with an answer to "what is the sugar bowl really" because that would be 100% beside the point of the series.

At the same time, Handler builds it up so evocatively, puts such tremendous weight upon it and seems to sprinkle the series with oblique clues and references, that there might be an answer to be found. Even if the books don't actually give us enough information to puzzle it out, there might still be an answer that Handler has come up with, and is, at least, consistent with what we know.

Does an answer exist? Has anyone made a strong, plausible claim to uncovering it? Has Handler gone on the record anywhere, saying there is or isn't a solution?

I'm less interested in what the answer is (although, sure, that too); what I'm interested in is whether an answer exists at all.

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From the Lemony Snicket Wiki: (You can skip to the bottom if you don't want to read)

There are many clues and hints about the sugar bowl and what it is, but Lemony Snicket does not reveal its secret at all in the series, leaving an element of suspense for the readers. The Slippery Slope indicates that the sugar bowl contains something that proves Lemony Snicket innocent of arsons committed by Count Olaf; The Penultimate Peril implies that Lemony Snicket has gained possession of the bowl. If this is the case, Snicket may have gone on to use the sugar bowl to clear his name; The Beatrice Letters reinforces this, as by the time its later segments take place, Snicket is apparently able to publicly rent an office and have mail delivered there, something he would be unable to do as a wanted fugitive.

...

It is most likely that the sugar bowl is merely a MacGuffin, a plot device whose contents of it are actually completely irrelevant and whose function is simply to be a much sought-after object that motivates characters and drives the story along.

I've been told not to quote so here is a summary:

  • It is most likely that the Sugar bowl is nothing, just an object that Snicket uses to create suspense and he never intended it to actually have anything in it.

There are hints however which Snicket gives however, which points your imagination in a certain direction.

  • Slippery Slope indicates it contains something proving Snicket innocent of arson
  • Penultimate Peril indicates Snicket is in possession of the bowl
  • Beatrice Letters backs this up
  • Penultimate Peril indicates that it has something to do with the Baudelaires and Snickets history
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Author Daniel Handler maintains that a solution exists, and can be derived from the books.

In an interview on the Unfortunate Associates podcast, Handler maintains that a solution does exist, and that approximately one reader a year writes to him with the correct solution.

Here's the transcript, beginning at 50:30 minutes into the audio (emphasis mine):

Daniel Handler: You know, it's interesting to me because I keep -- and perhaps we'll see during this calendar year if it will be different -- but every year exactly one reader writes to me and says, I've figured out what is in the sugar bowl, because of this reference and this reference and this reference, and they've completely figured it out. And so I'm proud that I've made an obscure enough mystery that no-one seems to grasp it, but it's still graspable. At one per year.

B (host): And they're right? The people who write in, they're right? You agree that there's a thing?

Handler: Oh yeah. Many people have theories that are wrong. No, I mean, there's definitely an answer. There's some mysteries that don't have a clear answer in my head, but--

B: If I were to guess, would you say I was right?

Handler: I'll ask you this. If you were to guess if I'd tell you if you were right or not...?

The interview is from January 2017, soon after the first season of the Netflix TV adaptation was released.

Of course, it's possible he's still just being perverse, and pretending a solution exists. But he seems perfectly candid, so it seems likely we can take his word for it.

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There is a tumblr user by the name of SnicketSleuth who has proposed a brilliant theory. There's such an overwhelming amount of evidence for it that I've personally decided that's the answer Handler hid that he wanted us to find. You can read the theory online here and here and here, but here's a summary as well.

The short version goes like this: the sugar bowl is actually empty. V.F.D. is a morally questionable organization. Even the noble side. They try to do good, but they go about it in dubious ways (kidnapping children in the middle of the night to make them join, Beatrice and Bertrand murdering Olaf's parents, etc.) Some young members opposed these questionable actions, so to keep them in check, the older generation told them it was all for the greater good - to protect the sugar bowl. If they carried out the questionably moral missions they were given, they would share the sugar bowl secret with them. It was all B.S. of course. Just manipulation. However, after the schism happened, most of the older generation was killed. The only people left alive was the new generation, who never learned the sugar bowl secret. They had no idea it was actually empty since they had been taught to believe it was so important. So when the sugar bowl gets lost, everyone tries to find it. Those few people in the new generation who had somehow figured out that it was empty had to make sure they found it first so the others wouldn't find it and open it and realize it was empty, thus exposing decades of lies, as that would likely worsen the schism even more. It's canon that at some point, the sugar bowl was in Esmé's possession. It's also canon that Esmé firmly believes Beatrice stole it from her, even though Snicket admits that was actually him. Assuming Esmé had Olaf burn down the Baudelaire Mansion as revenge for the sugar bowl theft, perhaps there's evidence that the sugar bowl was the reason for the fire, and if there's evidence, it could probably exonerate Snicket from the arson accusations. Irony plays a huge role in the series and the sugar bowl being empty would be as ironic as can be because it would mean all deaths were for nothing. Anyways, I suck at explaining. Go read snicketsleuth's full explanation. All credit goes to him/her.

  • That Tumblr looks really promising. Thank you for posting this answer. I hope you don't mind but i edited in a link to one of the Tumblr posts discussing this theory. – user111 Jan 10 '18 at 20:10
  • LOL -- I avoided reading this answer for a week or so, because I assumed it would be somebody citing the Netflix series -- whose series finale on January 1st has an answer, albeit not necessarily one consistent with the books. – Standback Jan 19 at 20:18

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