Indian sweet makers face rising dairy input costs

Traditional sweet producers across India are reporting tighter margins as the cost of core dairy ingredients has risen in the months before the main autumn festivals. Raw milk, khoya, paneer and ghee have all become more expensive, while higher transport and other operating expenses have added to production costs.

Purchasing costs for key dairy inputs are 8% to 15% above comparable seasonal levels in major urban trading centres. Khoya, also called mawa, is facing particular pressure because supplies of liquid milk have become tighter at a time when institutional buyers are seeking more of the evaporated milk product used in many regional sweets.

Sweet businesses are also paying more for packaging, commercial cooking-gas cylinders and fuel used in transport. These increases affect both independent confectioners and larger organised sweet chains. The impact is especially direct for products made with concentrated milk solids, which form a substantial part of the recipes for many traditional Indian sweets.

Trade associations say many regional shops are considering retail increases of 5% to 10%. Producers are limiting the size of any increase because they are concerned that higher prices could reduce consumer purchases during major cultural celebrations. Other businesses are retaining current prices and accepting lower margins while relying on higher sales volumes during the festive period.

Businesses are responding in several ways. Larger manufacturers are negotiating direct arrangements with dairy processors for bulk purchases of ghee and condensed milk solids, including agreements intended to secure wholesale prices. They are also revising procurement systems and production timetables to reduce the amount of ingredients wasted during manufacturing.

Smaller independent sweet makers are changing their product mix, giving more space to dry-fruit products and sweets that use fewer dairy ingredients alongside traditional milk-based items. The sector is making these adjustments as dairy processors increase payments to farmers to encourage milk production, while confectioners decide how much of the resulting cost increase to pass on to customers before the expected annual peak in festive demand.