In India, due to a shortage in supply ahead of the main festive season, retailers like D-Mart and quick commerce platforms like BigBasket, Blinkit and Swiggy Instamart have started restricting the purchase of sugar for their customers. The shortage has led to a 40 per cent hike in retail prices in the last two months. Some retailers have restricted the purchase limit to 3-5 kg. This comes at a time when packaged food companies are facing high production costs not only for sugar but also for edible oils. This is putting pressure on the companies’ profits, when demand usually increases rapidly during this period. Manufacturers are preparing to increase prices by at least 5 to 6 per cent, and some expect that the price may increase further if sugar prices remain high. The head of a major snack food company in the country said that we have no option but to increase prices by about 5 per cent.
The reasons for the price hike are being attributed to lower sugar production than initially estimated, export of 8,00,000 tonnes of sugar and illegal hoarding by some middlemen. It is said that incorrect production estimates by various industry groups like the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) have further worsened the situation.
Rationing process
India last week allowed the import of 1 million tonnes of sugar to control prices. According to an ET report, many retail and e-commerce companies are limiting their stocks to two-three packs of 1 kg or one pack of 5 kg.
Angus Mallick, executive deputy chairman, AWL Agribusiness, told a media report that many retail chains have imposed limits on the number of sugar pouches per customer, so that more customers can buy the product from their stores.
Wilmar International has a large stake in AWL and Shree Renuka Sugars. AWL and Renuka have partnered to market Renuka’s ‘Madhur’ brand of sugar. In Delhi-NCR, quick commerce platform Blinkit has limited purchases of brands like Mawana Premium Crystal Sugar and Dhampur Crystal White Sugar to one 5 kg pack per transaction, along with this disclaimer: “Sorry, we have limited stock of this product.”
In Pune, Blinkit allows customers to add only three packs of 1-1 kg to their shopping cart, while BigBasket has set a limit of up to five packs of 1-1 kg for certain brands.
In Delhi-NCR, Swiggy Instamart has set a limit of two packs of 1-1 kg for Supreme Harvest Crystal Sugar and two packs of 1-1 kg for Madhur Sugar. A board at a Pune store of supermarket chain D-Mart reads: “You can buy 5 kg of sugar per invoice. Sorry for the inconvenience.”
Export restrictions
India has allowed the export of 2 million (20 lakh) tonnes of surplus sugar. Under this, 1.5 million tonnes was to be exported in November and 0.5 million tonnes in February. However, the government imposed a freeze on exports in May due to rising domestic prices. At the mill level, sugar prices had risen from Rs 41 per kg to Rs 65 per kg in the first week of June, but after the government’s intervention, they have come down to Rs 58 this week. Ahead of the big festival of Samabandhan this weekend, major packaged food companies have said they will pass on the cost of sugar to consumers.
