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Cotton Candy Sheep are sheep that are specially made to grow cotton candy instead of regular wool. It was located in the sheep room where the oompa loompa to cut the cotton candy off of their backs and in the film and the game.
and the wonkaevetor went in the cotton candy sheep,room and the tour see the oompa loompas are sheding the cotton candy sheep and mr wonka quotes. (i better not talk about this one,)and tour left this room and the room is unknown.
and in the game charlie was in the cotton candy sheep room,where all sheep sheds their cotton candy fur and charlie commands the sheep to go the shreder and the sheep went in and the fur was sucked in and the sheep was fur less and walking feeding on grass.