Has sugar consumption dropped this season? Here’s what the industry says
Despite reports of unsold sugar, experts affirm that India’s actual sugar consumption remains steady. Factors like unseasonal rains, health trends, and reduced stockpiling due to lower global prices have affected dispatches, not consumption. Pilferage to Bangladesh last year inflated figures. With current just-in-time inventory practices, dispatches appear flat, but real demand holds firm around 28 million tonnes.
There have been reports suggesting that sugar consumption has moved downwards compared to that of the previous season. According to the reports, sugar mills are unable to sell sugar even as per the allocated monthly sugar quota given by the Government. There was 1 lakh ton of unsold sugar during June from the government allocation of 23 lakh ton quota for the month, despite a lower allocation against 25.5 lakh ton year-ago.
But what is the true scenario? Has sugar consumption declined in the current season?
Prakash Naiknavre, MD, National Federation of Cooperative Sugar Factories, attributed the dip in sugar consumption mainly to two major contributing factors. He said, “Unseasonal rainfall and climate change have reduced the demand for ice cream and soft drinks this year,” he explained, noting that this trend appears to be temporary and limited to 2025. He also said that the urge to stay fit and trim is swaying the younger generation from sugary items.
Rahil Shaikh, MD, Founder & Managing Director, MEIR Commodities, has taken a studied approach in the debate. He said that there is a distinction between sugar dispatch and sugar consumption, which is often wrongly mixed up. While dispatches might appear flat year-on-year at around 28.7 million tons, actual consumption remains steady.
“Due to high international sugar prices, there was pilferage of around 7 lakh tons to Bangladesh. In the current season, the sugar prices have dipped in the global market. Although India was officially allowed some sugar exports, we haven’t even been able to meet that target. Bangladesh’s consumption, which was part of India’s dispatch figures last year, is not reflected this year”, he explained.
Shaikh also pointed out that when global markets are low, stockpiling activity reduces drastically. As of now, India has no significant buffer stock for the next year. Pipeline stocks are running as low as 5–7 days (compared to the usual 21 days).
“India is managing on a just-in-time basis. All stock remains with the mills, and traders are only buying what they immediately need it. So there is hardly any stocking happening. That’s why the dispatch number of 28 million tons appears flat, similar to last year. But if there’s any sign of upward price movement in the market, you’ll see dispatch numbers spike again, potentially hitting 29.5 million tons like last year”.
Industry veteran, G K Sood, feels that sugar consumption is not down, though the demand for carbonated beverages and premium sugar-based FMCG products has taken a hit, in the former case due to a mild winter, and in the latter due to stress on consumer earnings. However, the combined impact on overall sugar consumption is limited”.
He added that, “Last year’s MSP hike expectations ahead of Maharashtra elections led to pipeline stockpiling, inflating dispatch numbers. Adjusted for exports and stock movements, real consumption was closer to 28 million tonnes. This year, with weak prices and low stockholding, mill demand appears soft, but actual sugar consumption remains steady.”
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Source : Chinimandi
