Sugar supply crunch? Swiggy Instamart, Blinkit restrict purchases ahead of festive season, says report

Economic Times reports that several retail chains, including Swiggy Instamart, as well as quick-commerce platforms such as BigBasket and Blinkit, have placed limits on sugar purchases ahead of the festive season. These restrictions vary by location and brand, with some retailers permitting customers to buy only 3 kg to 5 kg of sugar per transaction.

The move is a response to rising input costs, primarily driven by higher prices of sugar and edible oil. As packaged food manufacturers face pressure on their margins, several companies are considering increasing product prices by 5% to 6%. Some anticipate further price hikes if sugar remains expensive.

Factors contributing to the sugar price surge include lower domestic production, anticipated increased demand during the festive period, weather-related crop damage, limited global supplies, and speculation and hoarding. Retailers are rationing sugar stocks by setting a cap on the number of sugar packs customers can purchase in a single transaction, aiming to ensure that more consumers can access the limited supply.

The government has authorized the import of one million tonnes of sugar to alleviate supply concerns and curb rising prices. However, the recent increase in sugar prices is attributed to several factors, such as production falling below initial estimates, exports amounting to 800,000 tonnes, and alleged stockpiling by certain trade intermediaries. The discrepancy in production projections from industry bodies, including the Indian Sugar and Bio-energy Manufacturers’ Association (ISMA), has also exacerbated the situation.

To address supply concerns and stabilize prices, the government permitted the import of one million tonnes of sugar last week. Leading snack food manufacturers have stated that they plan to raise prices by at least 5% to 6%, due to escalating sugar and input costs. According to Angshu Mallick, executive deputy chairman of AWL Agribusiness, many retail chains have implemented caps on the number of sugar pouches per customer to facilitate the maximum number of consumers to purchase the commodity from their respective chains.