Rising sugar prices may push festive food prices higher
India’s rising sugar prices are likely to push up festive-season prices of sweets, biscuits, chocolates and beverages. Sugar retail prices rose to ₹62/kg in September from ₹47/kg in June. Companies may implement 2–5% price hikes or shrinkflation, while lower sugar production and tighter supplies add further cost pressure.
NEW DELHI: With the festive season approaching, consumers could face higher prices for sweets, biscuits, cookies, chocolates and beverages as rising sugar costs put pressure on food companies, India Today reported.
Companies are weighing higher retail prices against smaller pack sizes as they try to absorb increased raw material costs. Some brands have already begun adjusting prices, while others are focusing on operational efficiencies to protect margins.
Bikaji Foods is rolling out an approximately 2% price increase across its sweets portfolio, CFO Rishabh Jain told the Times of India. He said sugar procurement costs remain around 20% higher than they were a few months ago despite government measures aimed at containing prices.
Data from the Ministry of Consumer Affairs showed the all-India average retail price of sugar at Rs 62 per kg in September, up from Rs 47 per kg in June. Average wholesale prices increased to Rs 5,747 per quintal from Rs 4,350 during the same period.
The sharp rise has complicated cost calculations for packaged food companies, particularly those operating in sugar-intensive categories. A senior executive at a large packaged food company told the Times of India that the difference between the sugar prices factored into budgets and current procurement costs has become substantial.
Companies could respond by raising prices or reducing grammage at lower price points, while higher input costs could also lead some businesses to reduce marketing expenditure.
Another 2-5% hike possible
The pressure could continue beyond the price increases already announced. Analysts at Anand Rathi said in a late-August note that higher sugar, tea and coffee prices over the past three months could trigger another 2-5% round of price increases or shrinkflation, particularly in packaged foods.
Shrinkflation involves reducing the quantity of a product while maintaining its price.
For consumers, this could mean paying more for the same product or receiving a smaller pack for the same price.
The impact is significant for food companies because raw materials account for a larger share of their overall costs compared with several other consumer categories.
However, not all companies are immediately passing higher costs on to consumers. Parle Products chief marketing officer Mayank Shah said the company was focusing on improving efficiencies ahead of the festive season rather than immediately raising prices.
Sugar supply under pressure
Lower-than-expected sugar production is among the factors contributing to the pressure on prices.
Government estimates put sugar production for the current October-September season at around 306 lakh metric tonnes (LMT), well below the initial estimate of about 343 LMT. Pest infestation and waterlogging have affected production, according to government estimates.
Against the tighter supply situation, the government has permitted raw sugar imports for the first time in about a decade and introduced stock limits to contain price increases.
While these measures could help meet peak festive demand, their ability to provide sustained relief remains uncertain.
Pushan Sharma, director at Crisil Intelligence, said the government measures could help address the immediate demand-supply gap during the festive season but may not provide lasting relief to consumers.
He also pointed to a decline in India’s sugar recovery rate, from around 10% in 2022 to 9.3% in 2026, and said India needs to adopt better sugarcane varieties to improve sugar production.
The impact on food prices will vary by company and product. Sugar-intensive segments such as sweets, beverages, biscuits and confectionery are likely to face greater cost pressure.
For consumers, the festive season could therefore bring a familiar choice: pay more for the same product or get less for the same price.
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Source : ChiniMandi
