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Striped candies are absorbed in destroying a licorice wheel (and in popping popcorn later in the game). So they are working just fine. The level is designed specifically to require you to break down the icing on each side individually. If, as is very likely, you're getting stuck because there are no matches on the right side when you break through then you'll either have to break out the lollipops and gloves or just accept that it won't be defeated on that attempt. It can be frustrating, I know, but you will get there.